PART I — FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Hillenbrand, Inc.

Consolidated Statements of ~~Income~~Operations (Unaudited)

(in millions, except per share data)


	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
Net revenue	$	607.5	$	446.6	$	1,823.3	$	1,321.5
Cost of goods sold	400.2		298.2		1,250.5		865.2
Gross profit	207.3		148.4		572.8		456.3
Operating expenses	118.5		90.8		411.9		275.2
Amortization expense	16.4		8.6		55.2		25.0
Impairment charges	—		—		82.5		—
Interest expense	19.7		5.2		55.3		16.1
Other income (expense), net	0.6		(0.5)		1.8		0.1
Income (loss) before income taxes	53.3		43.3		(30.3)		140.1
Income tax expense	28.3		11.6		17.7		39.9
Consolidated net income (loss)	25.0		31.7		(48.0)		100.2
Less: Net income attributable to noncontrolling interests	1.0		1.3		5.1		3.5
Net income (loss) attributable to Hillenbrand	$	24.0	$	30.4	$	(53.1)	$	96.7

Net income (loss) attributable to Hillenbrand — per share of common stock:
Basic earnings (loss) per share	$	0.32	$	0.48	$	(0.73)	$	1.54
Diluted earnings (loss) per share	$	0.32	$	0.48	$	(0.73)	$	1.52
Weighted average shares outstanding (basic)	75.1		63.0		72.8		62.9
Weighted average shares outstanding (diluted)	75.1		63.4		72.8		63.4

See Condensed Notes to Consolidated Financial Statements

Three Months Ended
June 30, Nine Months Ended
June 30,
2019 2018 2019 2018
Net revenue $ 446.6
$ 446.0
$ 1,321.5
$ 1,295.4
Cost of goods sold 298.2
282.5
865.2
817.1
Gross profit 148.4
163.5
456.3
478.3
Operating expenses 90.8
98.3
275.2
285.7
Amortization expense 8.6
7.6
25.0
22.7
Impairment charge —
—
—
63.4
Interest expense 5.2
5.5
16.1
17.8
Other (expense) income, net (0.5 ) (0.7 ) 0.1
(2.2 )
Income before income taxes 43.3
51.4
140.1
86.5
Income tax expense 11.6
15.2
39.9
52.5
Consolidated net income 31.7
36.2
100.2
34.0
Less: Net income attributable to noncontrolling interests 1.3
0.3
3.5
1.9
Net income (1) $ 30.4
$ 35.9
$ 96.7
$ 32.1

Net income (1) — per share of common stock:
Basic earnings per share $ 0.48
$ 0.57
$ 1.54
$ 0.51
Diluted earnings per share $ 0.48
$ 0.56
$ 1.52
$ 0.50
Weighted average shares outstanding (basic) 63.0
62.8
62.9
63.2
Weighted average shares outstanding (diluted) 63.4
63.5
63.4
63.9

Table of Contents

Hillenbrand, Inc.

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

~~(1) Net income attributable to Hillenbrand~~(in millions)


	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
Consolidated net income (loss)	$	25.0	$	31.7	$	(48.0)	$	100.2
Changes in other comprehensive income (loss), net of tax:
Currency translation adjustment	11.9		6.1		(1.0)		(3.4)
Pension and postretirement (net of quarter-to-date tax of $0.4 and $0.5 and year-to-date tax of $1.3 and $0.7)	1.3		1.5		3.8		2.0
Change in net unrealized gain (loss) on derivative instruments (net of quarter-to-date tax of $0.3 and $1.2 and year-to-date tax of $0.3 and $3.8)	2.4		(4.3)		0.5		(12.7)

Total changes in other comprehensive income (loss), net of tax	15.6		3.3		3.3		(14.1)
Consolidated comprehensive income (loss)	40.6		35.0		(44.7)		86.1
Less: Comprehensive income attributable to noncontrolling interests	0.9		1.3		4.4		3.7
Comprehensive income (loss) attributable to Hillenbrand	$	39.7	$	33.7	$	(49.1)	$	82.4

See Condensed Notes to Consolidated Financial Statements

Table of Contents

~~Hillenbrand, Inc.~~

~~Consolidated Statements of Comprehensive Income (Unaudited)~~

~~(in millions)~~

Three Months Ended
June 30, Nine Months Ended
June 30,
2019 2018 2019 2018
Consolidated net income $ 31.7
$ 36.2
$ 100.2
$ 34.0
Changes in other comprehensive income (loss), net of tax

Currency translation adjustment 6.1
(26.1 ) (3.4 ) (5.1 )
Pension and postretirement (net of quarter-to-date tax of $0.5 and $0.2 and year-to-date tax of $0.7 and $0.9) 1.5
0.7
2.0
2.1
Change in net unrealized gain (loss) on derivative instruments (net of quarter-to-date tax of $1.2 and $0.0 and year-to-date tax of $3.8 and $0.1) (4.3 ) (0.1 ) (12.7 ) 0.2
Total changes in other comprehensive income (loss), net of tax 3.3
(25.5 ) (14.1 ) (2.8 )
Consolidated comprehensive income 35.0
10.7
86.1
31.2
Less: Comprehensive income attributable to noncontrolling interests 1.3
—
3.7
1.6
Comprehensive income (2) $ 33.7
$ 10.7
$ 82.4
$ 29.6

~~(2) Comprehensive income attributable to Hillenbrand~~

~~See Condensed Notes to Consolidated Financial Statements~~

~~Table of Contents~~

Hillenbrand, Inc.

Consolidated Balance Sheets ~~(Unaudited)~~

(in millions)


	June 30, 2020 (unaudited)		September 30, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	263.1	$	399.0
Trade receivables, net	297.2		217.4
Receivables from long-term manufacturing contracts	166.2		181.1
Inventories, net	424.3		176.6

Prepaid expenses and other current assets	93.7		49.1

Total current assets	1,244.5		1,023.2
Property, plant, and equipment, net	331.6		140.3
Operating lease right-of-use assets	161.4		—
Intangible assets, net	1,093.6		454.9
Goodwill	1,143.1		578.0
Other long-term assets	55.7		32.2
Total Assets	$	4,029.9	$	2,228.6

LIABILITIES
Current Liabilities
Trade accounts payable	$	264.9	$	236.2
Liabilities from long-term manufacturing contracts and advances	168.4		158.2
Current portion of long-term debt	36.3		—
Accrued compensation	87.8		73.2

Other current liabilities	211.6		121.7
Total current liabilities	769.0		589.3
Long-term debt	1,674.8		619.5
Accrued pension and postretirement healthcare	159.3		131.3
Operating lease liabilities	126.2		—
Deferred income taxes	187.6		73.6
Other long-term liabilities	57.9		45.1
Total Liabilities	2,974.8		1,458.8

Commitments and contingencies (Note 15)

SHAREHOLDERS’ EQUITY
Common stock, no par value (75.8 and 63.9 shares issued, 74.7 and 62.7 shares outstanding)	—		—
Additional paid-in capital	719.7		345.3
Retained earnings	504.4		599.5
Treasury stock (1.1 and 1.2 shares)	(44.9)		(50.1)
Accumulated other comprehensive loss	(142.6)		(140.6)
Hillenbrand Shareholders’ Equity	1,036.6		754.1
Noncontrolling interests	18.5		15.7
Total Shareholders’ Equity	1,055.1		769.8

Total Liabilities and Shareholders’ Equity	$	4,029.9	$	2,228.6

June 30,
2019 September 30,
2018
ASSETS

Current Assets

Cash and cash equivalents $ 64.4
$ 56.0
Trade receivables, net 198.8
218.5
Receivables from long-term manufacturing contracts 158.6
120.3
Inventories 186.7
172.5
Prepaid expenses 29.0
25.2
Other current assets 20.7
18.1
Total current assets 658.2
610.6
Property, plant, and equipment, net 136.6
142.0
Intangible assets, net 471.1
487.3
Goodwill 586.8
581.9
Other assets 37.9
42.8
Total Assets $ 1,890.6
$ 1,864.6

LIABILITIES

Current Liabilities

Trade accounts payable $ 224.5
$ 196.8
Liabilities from long-term manufacturing contracts and advances 109.2
125.9
Accrued compensation 68.9
71.9
Other current liabilities 123.7
137.1
Total current liabilities 526.3
531.7
Long-term debt 323.2
344.6
Accrued pension and postretirement healthcare 114.2
120.5
Deferred income taxes 70.8
76.4
Other long-term liabilities 60.3
47.3
Total Liabilities 1,094.8
1,120.5

Commitments and contingencies (Note 14)

SHAREHOLDERS’ EQUITY

Common stock, no par value (63.9 and 63.9 shares issued, 62.6 and 62.3 shares outstanding) —
—
Additional paid-in capital 345.3
351.4
Retained earnings 588.1
531.0
Treasury stock (1.3 and 1.6 shares) (53.7 ) (67.1 )
Accumulated other comprehensive loss (98.5 ) (84.2 )
Hillenbrand Shareholders’ Equity 781.2
731.1
Noncontrolling interests 14.6
13.0
Total Shareholders’ Equity 795.8
744.1

Total Liabilities and Equity $ 1,890.6
$ 1,864.6

See Condensed Notes to Consolidated Financial Statements

Table of Contents

Hillenbrand, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(in millions)

Nine Months Ended
June 30,
2019 2018
Operating Activities

Consolidated net income $ 100.2
$ 34.0
Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization 44.3
42.0
Impairment charge —
63.4
Deferred income taxes 0.2
(4.8 )
Share-based compensation 8.7
8.8
Trade accounts receivable and receivables from long-term manufacturing contracts (15.5 ) (43.4 )
Inventories (15.0 ) (32.4 )
Prepaid expenses and other current assets (6.0 ) (2.5 )
Trade accounts payable 28.3
17.1
Liabilities from long-term manufacturing contracts and advances,
accrued compensation, and other current liabilities (29.8 ) 46.4
Income taxes payable (5.3 ) 28.9
Defined benefit plan and postretirement funding (6.8 ) (8.2 )
Defined benefit plan and postretirement expense 2.6
3.4
Other, net 3.7
3.6
Net cash provided by operating activities 109.6
156.3

Investing Activities

Capital expenditures (12.6 ) (16.3 )
Acquisition of business, net of cash acquired (25.9 ) —
Other, net 0.1
0.4
Net cash used in investing activities (38.4 ) (15.9 )

Financing Activities

Repayments on term loan —
(148.5 )
Proceeds from revolving credit facilities, net of financing costs 449.7
946.5
Repayments on revolving credit facilities (470.1 ) (837.2 )
Payments of dividends on common stock (39.4 ) (39.1 )
Repurchases of common stock —
(60.6 )
Proceeds from stock option exercises and other 2.4
10.3
Payments for employee taxes on net settlement equity awards (4.2 ) (4.1 )
Other, net (0.9 ) (1.8 )
Net cash used in financing activities (62.5 ) (134.5 )

Effect of exchange rates on cash and cash equivalents (0.2 ) (1.0 )

Net cash flows 8.5
4.9

Cash, cash equivalents, and restricted cash:

At beginning of period 56.5
66.7
At end of period $ 65.0
$ 71.6


	Nine Months Ended June 30,
	2020		2019
Operating Activities
Consolidated net (loss) income	$	(48.0)	$	100.2
Adjustments to reconcile net (loss) income to cash provided by operating activities:
Depreciation and amortization	98.4		44.3
Impairment charges	82.5		—
Deferred income taxes	(23.4)		0.2
Amortization of deferred financing costs	2.5		0.9
Share-based compensation	9.4		8.7
Settlement of Milacron share-based equity awards	5.9		—
Net loss on divestiture	3.0		—
Trade accounts receivable and receivables from long-term manufacturing contracts	59.6		(15.5)
Inventories	35.9		(15.0)
Prepaid expenses and other current assets	6.5		(6.0)
Trade accounts payable	(76.4)		28.3
Liabilities from long-term manufacturing contracts and advances,
accrued compensation, and other current liabilities	(46.7)		(29.8)
Income taxes payable	15.5		(5.3)
Defined benefit plan and postretirement funding	(7.5)		(6.8)
Defined benefit plan and postretirement expense	4.6		2.6
Other, net	(1.7)		2.8
Net cash provided by operating activities	120.1		109.6

Investing Activities
Capital expenditures	(20.3)		(12.6)
Proceeds from sales of property, plant, and equipment	14.2		—

Acquisition of businesses, net of cash acquired	(1,503.1)		(25.9)
Proceeds from divestiture, net of cash divested	222.4		—
Other, net	—		0.1
Net cash used in investing activities	(1,286.8)		(38.4)

Financing Activities
Proceeds from issuance of long-term debt	1,125.2		—
Repayments on long-term debt	(27.2)		—
Proceeds from revolving credit facilities	1,157.8		449.7
Repayments on revolving credit facilities	(1,158.9)		(470.1)
Payment of deferred financing costs	(13.7)		—
Payments of dividends on common stock	(47.6)		(39.4)

Proceeds from stock option exercises	0.4		2.4
Payments for employee taxes on net settlement equity awards	(1.9)		(4.2)
Other, net	(3.0)		(0.9)
Net cash provided by (used in) financing activities	1,031.1		(62.5)

Effect of exchange rates on cash and cash equivalents	1.1		(0.2)

Net cash flows	(134.5)		8.5

Cash, cash equivalents, and restricted cash:
At beginning of period	399.4		56.5
At end of period	$	264.9	$	65.0

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same amounts shown in the Consolidated Statements of Cash Flows:

June 30, 2019 June 30, 2018
Cash and cash equivalents 64.4
71.1
Short-term restricted cash included in other current assets 0.6
0.5
Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows $ 65.0
$ 71.6


	June 30, 2020		June 30, 2019
Cash and cash equivalents	$	263.1	$	64.4
Short-term restricted cash included in other current assets	1.8		0.6
Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows	$	264.9	$	65.0

See Condensed Notes to Consolidated Financial Statements

Table of Contents

Hillenbrand, Inc.

Consolidated Statements of ~~Shareholders'~~Shareholders’ Equity (Unaudited)

(in millions)


	Three Months Ended June 30, 2020
	Common Stock	Additional Paid-in Capital		Retained Earnings		Treasury Stock					Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total
	Shares						Shares		Amount
Balance at March 31, 2020	75.8	$	716.3	$	496.4	1.1	$	(45.4)	$	(158.3)	$	18.0	$	1,027.0
Total other comprehensive income (loss), net of tax	—	—		—		—	—		15.7		(0.1)		15.6
Net income	—	—		24.0		—	—		—		1.0		25.0
Issuance/retirement of stock for stock awards/options	—	(0.4)		—		—	0.5		—		—		0.1
Share-based compensation	—	3.7		—		—	—		—		—		3.7
Dividends ($0.2125 per share)	—	0.1		(16.0)		—	—		—		(0.4)		(16.3)


Balance at June 30, 2020	75.8	$	719.7	$	504.4	1.1	$	(44.9)	$	(142.6)	$	18.5	$	1,055.1

	Nine Months Ended June 30, 2020
	Common Stock	Additional Paid-in Capital		Retained Earnings		Treasury Stock					Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total
	Shares						Shares		Amount
Balance at September 30, 2019	63.9	$	345.3	$	599.5	1.2	$	(50.1)	$	(140.6)	$	15.7	$	769.8
Total other comprehensive income (loss), net of tax	—	—		—		—	—		4.0		(0.7)		3.3
Net (loss) income	—	—		(53.1)		—	—		—		5.1		(48.0)
Issuance/retirement of stock for stock awards/options	—	(6.7)		—		(0.1)	5.2		—		—		(1.5)
Share-based compensation	—	9.4		—		—	—		—		—		9.4
Dividends ($0.6375 per share)	—	0.4		(48.0)		—	—		—		(1.6)		(49.2)
Common stock issued to acquire Milacron (see Note 4)	11.9	371.3		—		—	—		—		—		371.3
Reclassification of certain income tax effects ⁽¹⁾	—	—		6.0		—	—		(6.0)		—		—
Balance at June 30, 2020	75.8	$	719.7	$	504.4	1.1	$	(44.9)	$	(142.6)	$	18.5	$	1,055.1

Three Months Ended June 30, 2019
Shareholders of Hillenbrand, Inc.
Common Stock
Additional
Paid-in
Capital

Retained
Earnings
Treasury Stock
Accumulated
Other
Comprehensive
Loss

Noncontrolling
Interests
Total
Shares Shares Amount
Balance at March 31, 2019 63.9
$ 343.1
$ 571.1
1.3
$ (55.6 ) $ (101.8 ) $ 13.3
$ 770.1
Total other comprehensive income (loss), net of tax —
—
—
—
—
3.3
—
3.3
Net income —
—
30.4
—
—
—
1.3
31.7
Issuance/retirement of stock for stock awards/options —
(0.9 ) —
—
1.9
—
—
1.0
Share-based compensation —
2.9
—
—
—
—
—
2.9
Dividends ($0.2100 per share) —
0.2
(13.4 ) —
—
—
—
(13.2 )
Balance at June 30, 2019 63.9
$ 345.3
$ 588.1
1.3
$ (53.7 ) $ (98.5 ) $ 14.6
$ 795.8

Nine Months Ended June 30, 2019
Shareholders of Hillenbrand, Inc.
Common Stock
Additional
Paid-in
Capital

Retained
Earnings
Treasury Stock
Accumulated
Other
Comprehensive
Loss

Noncontrolling
Interests
Total
Shares Shares Amount
Balance at September 30, 2018 63.9
$ 351.4
$ 531.0
1.6
$ (67.1 ) $ (84.2 ) $ 13.0
$ 744.1
Total other comprehensive income (loss), net of tax —
—
—
—
—
(14.3 ) 0.2
(14.1 )
Net income —
—
96.7
—
—
—
3.5
100.2
Issuance/retirement of stock for stock awards/options —
(15.2 ) —
(0.3 ) 13.4
—
—
(1.8 )
Share-based compensation —
8.7
—
—
—
—
—
8.7
Dividends ($0.6300 per share) —
0.4
(39.8 ) —
—
—
(2.1 ) (41.5 )
Other —
—
0.2
—
—
—
—
0.2
Balance at June 30, 2019 63.9
$ 345.3
$ 588.1
1.3
$ (53.7 ) $ (98.5 ) $ 14.6
$ 795.8

⁽¹⁾Income tax effects of the Tax Act (as defined in Note 2) were reclassified from accumulated other comprehensive loss to retained earnings due to the adoption of ASU 2018-02. See Note 2 for more information.

See Condensed Notes to Consolidated Financial Statements

Table of Contents

Hillenbrand, Inc.

Consolidated Statements of ~~Shareholders'~~Shareholders’ Equity (Unaudited)

(in millions)


	Three Months Ended June 30, 2019
	Common Stock	Additional Paid-in Capital		Retained Earnings		Treasury Stock					Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total
	Shares						Shares		Amount
Balance at March 31, 2019	63.9	$	343.1	$	571.1	1.3	$	(55.6)	$	(101.8)	$	13.3	$	770.1
Total other comprehensive income, net of tax	—	—		—		—	—		3.3		—		3.3
Net income	—	—		30.4		—	—		—		1.3		31.7
Issuance/retirement of stock for stock awards/options	—	(0.9)		—		—	1.9		—		—		1.0
Share-based compensation	—	2.9		—		—	—		—		—		2.9
Dividends ($0.2100 per share)	—	0.2		(13.4)		—	—		—		—		(13.2)


Balance at June 30, 2019	63.9	$	345.3	$	588.1	1.3	$	(53.7)	$	(98.5)	$	14.6	$	795.8

	Nine Months Ended June 30, 2019
	Common Stock	Additional Paid-in Capital		Retained Earnings		Treasury Stock					Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total
	Shares						Shares		Amount
Balance at September 30, 2018	63.9	$	351.4	$	531.0	1.6	$	(67.1)	$	(84.2)	$	13.0	$	744.1
Total other comprehensive (loss) income, net of tax	—	—		—		—	—		(14.3)		0.2		(14.1)
Net income	—	—		96.7		—	—		—		3.5		100.2
Issuance/retirement of stock for stock awards/options	—	(15.2)		—		(0.3)	13.4		—		—		(1.8)
Share-based compensation	—	8.7		—		—	—		—		—		8.7
Dividends ($0.6300 per share)	—	0.4		(39.8)		—	—		—		(2.1)		(41.5)

Other	—	—		0.2		—	—		—		—		0.2
Balance at June 30, 2019	63.9	$	345.3	$	588.1	1.3	$	(53.7)	$	(98.5)	$	14.6	$	795.8

Three Months Ended June 30, 2018
Shareholders of Hillenbrand, Inc.
Common Stock
Additional
Paid-in
Capital

Retained
Earnings
Treasury Stock
Accumulated
Other
Comprehensive
Loss

Noncontrolling
Interests
Total
Shares Shares Amount
Balance at March 31, 2018 63.9
$ 346.4
$ 476.9
1.2
$ (48.0 ) $ (58.5 ) $ 15.2
$ 732.0
Total other comprehensive income (loss), net of tax —
—
—
—
—
(25.2 ) (0.3 ) (25.5 )
Net income —
—
35.9
—
—
—
0.3
36.2
Issuance/retirement of stock for stock awards/options —
(0.5 ) —
(0.1 ) 1.5
—
—
1.0
Share-based compensation —
2.6
—
—
—
—
—
2.6
Purchases of common stock —
—
—
0.5
(21.7 ) —
—
(21.7 )
Dividends ($0.2075 per share) —
—
(13.1 ) —
—
—
—
(13.1 )
Balance at June 30, 2018 63.9
$ 348.5
$ 499.7
1.6
$ (68.2 ) $ (83.7 ) $ 15.2
$ 711.5

Nine Months Ended June 30, 2018
Shareholders of Hillenbrand, Inc.
Common Stock
Additional
Paid-in
Capital

Retained
Earnings
Treasury Stock
Accumulated
Other
Comprehensive
Loss

Noncontrolling
Interests
Total
Shares Shares Amount
Balance at September 30, 2017 63.8
$ 349.9
$ 507.1
0.7
$ (24.4 ) $ (81.2 ) $ 14.5
$ 765.9
Total other comprehensive income (loss), net of tax —
—
—
—
—
(2.5 ) (0.3 ) (2.8 )
Net income —
—
32.1
—
—
—
1.9
34.0
Issuance/retirement of stock for stock awards/options 0.1
(10.6 ) —
(0.5 ) 16.8
—
—
6.2
Share-based compensation —
8.8
—
—
—
—
—
8.8
Purchases of common stock —
—
—
1.4
(60.6 ) —
—
(60.6 )
Dividends ($0.6225 per share) —
0.4
(39.5 ) —
—
—
(0.9 ) (40.0 )
Balance at June 30, 2018 63.9
$ 348.5
$ 499.7
1.6
$ (68.2 ) $ (83.7 ) $ 15.2
$ 711.5

See Condensed Notes to Consolidated Financial Statements

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Hillenbrand, Inc.

Condensed Notes to Consolidated Financial Statements (Unaudited)

(in millions, except share and per share data)


1.	~~Background and Basis of Presentation~~

1.Background and Basis of Presentation

Hillenbrand, Inc. ~~(“Hillenbrand”~~(the “Company” or “Hillenbrand”) is a global diversified industrial company with multiple leading brands that serve a wide variety of industries around the world. ~~We strive~~The Company strives to provide superior return for our shareholders, exceptional value for our customers, great professional opportunities for our employees, and to be responsible to our communities through deployment of the Hillenbrand Operating Model (“HOM”). The HOM is a consistent and repeatable framework designed to produce sustainable and predictable results. The HOM describes ~~our~~the Company’s mission, vision, values, and mindset as leaders; applies our management practices in Strategy Management, Segmentation, Lean, Talent Development, and Acquisitions; and prescribes three steps (Understand, Focus, and Grow) designed to make ~~our~~the Company’s businesses both bigger and better. ~~Our~~The Company’s goal is to continue developing Hillenbrand as a world-class global diversified industrial company through the deployment of the HOM.

On July 12, 2019, Hillenbrand entered into a definitive agreement (the “Merger Agreement”) to acquire Milacron Holdings Corp. (“Milacron”) in a cash and stock merger transaction. The Company completed the acquisition on November 21, 2019 through a merger of its wholly-owned subsidiary with and into Milacron, resulting in ownership of 100% of Milacron’s common stock that was issued and outstanding after the merger. The Consolidated Financial Statements include the financial results of Milacron from the date of acquisition. See Note 4 for further information on the acquisition.

Hillenbrand’s portfolio is composed of ~~two business~~3 reportable operating segments: the Process Equipment Group, Milacron^®, and Batesville^®. The Process Equipment Group businesses design, develop, manufacture, and service highly engineered industrial equipment around the world. Milacron is a global leader in highly engineered and customized systems in plastic technology and processing. Batesville is a recognized leader in the death care industry in North America. “Hillenbrand,” ~~“the Company,~~the “Company,” “we,” “us,” “our,” and similar words refer to Hillenbrand and its subsidiaries within this Form 10-Q unless context otherwise requires.

The accompanying unaudited ~~consolidated financial statements~~Consolidated Financial Statements include the accounts of Hillenbrand and its subsidiaries. They also include two subsidiaries where the Company’s ownership percentage is less than 100%. The Company’s fiscal year ends on September 30. Unless otherwise stated, references to years relate to fiscal years.

These unaudited ~~consolidated financial statements~~Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements and therefore do not include all information required in accordance with ~~accounting principles~~United States generally accepted ~~in the United States~~accounting principles (“GAAP”). The unaudited ~~consolidated financial statements~~Consolidated Financial Statements have been prepared on the same basis as, and should be read in conjunction with, the audited ~~consolidated financial statements~~Consolidated Financial Statements and notes thereto included in ~~our~~the Company’s latest Annual Report on Form 10-K for the year ended September 30, ~~2018,~~2019, as filed with the SEC. The September 30, 2018 Consolidated Balance Sheet included in this Form 10-Q was derived from audited consolidated financial statements, but does not include all disclosures required by GAAP for a year-end balance sheet included in Form 10-K. In the opinion of management, these ~~financial statements~~Consolidated Financial Statements reflect all adjustments necessary to present a fair statement of the Company’s consolidated financial position and the consolidated results of operations and cash ~~flow~~flows as of the dates and for the periods presented. The interim period results are subject to variation and are not necessarily indicative of the results of operations to be expected for the full fiscal year.

The preparation of ~~financial statements~~the Consolidated Financial Statements in conformity with GAAP requires usthe Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the ~~financial statements~~Consolidated Financial Statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Examples of such estimates include, but are not limited to, revenue recognition under the percentage-of-completion method, preliminary purchase price allocations, determination of reporting unit and identifiable intangible asset fair value, and the establishment of reserves related to customer rebates, doubtful accounts, warranties, early-pay discounts, inventories, income taxes, litigation, self-insurance, and progress toward achievement of performance criteria under incentive compensation programs.

On March 11, 2020, the World Health Organization declared the outbreak of the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide, and the effects of the COVID-19 pandemic and such associated measures on management’s estimates and results of operations through June 30, 2020 are reflected in the Consolidated Financial Statements. Given the unprecedented nature of the COVID-19 pandemic, the Company cannot reasonably estimate the full extent of the impact that COVID-19 will have on its consolidated financial condition, results of operations, or cash flows in the foreseeable future. The ultimate impact of COVID-19 on the Company is highly uncertain and will depend on future developments, and such impacts could exist for an extended period of time, even after the COVID-19

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2.	~~Summary of Significant Accounting Policies~~

pandemic subsides. Events and changes in circumstances arising after June 30, 2020, including those resulting from the ongoing impacts of the COVID-19 pandemic, will be reflected in management’s estimates for future periods in subsequent periodic filings.

2.Summary of Significant Accounting Policies

The significant accounting policies used in preparing ~~these consolidated financial statements~~the Consolidated Financial Statements are consistent with the accounting policies described in ~~our~~the Company’s Annual Report on Form 10-K for ~~2018,~~2019, except as described below.

Recently Adopted Accounting and Reporting Standards

In ~~August 2017,~~February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 requires lessees to recognize a right of use asset and related lease liability for leases that have terms of more than twelve months. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance, with the classifications based on criteria that are similar to those applied under the current lease guidance, without the explicit bright lines. ASU 2016-02 became effective for the Company’s fiscal year that began on October 1, 2019. The Company adopted ASU 2016-02 under the allowable transition method to use the effective date as the date of initial application on transition without adjusting the comparative periods presented (modified retrospective method).

At transition, the Company elected the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification, and initial direct costs. Additionally, ASU 2016-02 also provides practical expedients for an entity’s ongoing accounting. The Company elected to not separate lease and non-lease components. Additionally, the Company will not recognize an asset for leases with a term of twelve months or less and will apply a portfolio approach in determining discount rates.

The Company surveyed its businesses, assessed its portfolio of leases, and compiled a central repository of all leases. Additionally, the Company identified and implemented appropriate changes to policies, procedures, and controls pertaining to existing and future lease arrangements to support recognition and disclosure requirements under ASU 2016-02. As a result of the adoption of ASU 2016-02, the Company recorded right-of-use assets of $161.4 and corresponding lease liabilities of $158.9 for its operating leases at June 30, 2020. The adoption of ASU 2016-02 did not have a material impact to the Consolidated Statements of Operations or Consolidated Statements of Cash Flows. See Note 6 for additional information.

In February 2018, the FASB issued ASU ~~2017-12,~~2018-02, ~~Derivatives~~Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). ASU 2018-02 allows for the reclassification of stranded tax effects resulting from the Tax Cuts and ~~Hedging (Topic 815): Targeted Improvements~~Jobs Act of 2017 (the “Tax Act”) from accumulated other comprehensive loss to ~~Accounting for Hedging Activities.~~ retained earnings. The Company adopted ASU 2017-12 intends to better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components, and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. In addition, this ASU makes certain targeted improvements to simplify the application of hedge accounting guidance. ASU 2017-12 was early adopted for our fiscal year beginning2018-02 on October 1, ~~2018 on~~2019, which resulted in a ~~prospective basis. The adoption~~decrease to accumulated other comprehensive loss and an increase to retained earnings of ~~this standard did not have a significant impact on our consolidated financial statements.~~

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows: Restricted Cash.~~ ~~ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described~~

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as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown$6.0 each on the ~~statement of cash flows. ASU 2016-18 became effective~~Consolidated Balance Sheets, primarily related to deferred taxes previously recorded for pension and ~~was adopted for our fiscal year beginning on October 1, 2018.~~other postretirement benefits. The adoption of ASU ~~2016-18 had a financial statement presentation and disclosure impact only.~~

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Clarifying the Definition of a Business~~. ASU 2017-01 assists entities in determining whether a transaction involves an asset or a business. Specifically, it states that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. If this initial test is not met, a set cannot be considered a business unless it includes an input and a substantive process that together significantly contribute to the ability to create output. ASU 2017-01 became effective and was adopted for our fiscal year beginning on October 1, 2018. The adoption of ASU 2017-012018-02 did not have ~~a significant~~an impact ~~on our consolidated financial statements.~~

~~In March 2017, the FASB issued ASU 2017-07,~~ ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~. ASU 2017-07 states that an employer must report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period and present the other components of net benefit cost (as defined in paragraphs 715-30-35-4 and 715-60-35-9) in the income statement separately from the service cost component and outside a subtotal of income from operations (if one is presented). In addition, ASU 2017-07 limits the capitalization of compensation costs to ~~the service cost component only (if capitalization is appropriate). ASU 2017-07 became effective and was adopted for our fiscal year beginning on October 1, 2018. On~~ the Consolidated Statements of ~~Income,~~Operations or Consolidated Statements of Cash Flows.

In March 2020, the ~~adoption~~SEC amended Rule 3-10 of ~~this standard resulted in the reclassification of $0.2 credit from Cost of goods sold~~Regulation S-X regarding financial disclosure requirements for registered debt offerings involving subsidiaries as either issuers or guarantors and $0.1 from Operating expenses to Other (expense) income, net, for the three months ended June 30, 2018, and $0.4 credit from Cost of goods sold and $0.2 from Operating expenses to Other (expense) income, net, for the nine months ended June 30, 2018.

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.~~ ~~ASU 2017-09 clarifies when changes to the terms or conditions of a share-based payment award must be accounted for~~affiliates whose securities are pledged as ~~modifications (in accordance with Topic 718). The~~collateral. This new guidance ~~will provide relief to entities~~narrows the circumstances that ~~make non-substantive changes to share-based payment awards. ASU 2017-09 became effective~~require separate financial statements of subsidiary issuers and ~~was~~guarantors and streamlines the alternative disclosure required in lieu of those statements. We adopted ~~for our fiscal year beginning on October 1, 2018. The adoption of ASU 2017-09 did not have a significant impact on our consolidated financial statements.~~

~~Beginning in 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers (“ASC 606”)~~, plus a number of related ASUs designed to clarify and interpret ASC 606. The new standard requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard supersedes U.S. GAAP guidance on revenue recognition and requires the use of more estimates than the previously effective standards. It also requires significant disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The new standard became effective for our fiscal year beginning on October 1, 2018 and was adopted on a modified retrospective basis. The Company elected the practical expedient and only evaluated contracts for which substantially all revenue had not been recognized under ASC Topic 605, with the cumulative effect of the new guidance recorded as of the date of initial application.

The primary changes from the adoption of ASC 606 resulted from certain performance obligations that were previously recognized at a point in time that are now recognized over time. The cumulative effect of the changes made to the Consolidated Balance Sheet as of October 1, 2018 for the adoption of ASC 606 was as follows:

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Balance at September 30, 2018 Adjustments due to ASC 606 Balance at October 1, 2018
Assets
Receivables from long-term manufacturing contracts $ 120.3
$ 1.9
$ 122.2
Inventories 172.5
(1.6 ) 170.9

Liabilities
Deferred income taxes $ 76.4
$ 0.1
$ 76.5

Shareholders’ Equity
Retained earnings $ 531.0
$ 0.2
$ 531.2

~~The following tables summarize the impacts of adopting ASC 606 on the Company’s consolidated financial statements~~these amendments as of and for the ~~three and nine months~~quarter ended June 30, ~~2019.~~

~~Consolidated Statements of Income:~~

Three Months Ended June 30, 2019 Nine Months Ended June 30, 2019
As Reported Adjustments Due to ASC 606 Balances without Adoption As Reported Adjustments Due to ASC 606 Balances without Adoption
Net revenue $ 446.6
$ 1.0
$ 447.6
$ 1,321.5
$ (0.1 ) $ 1,321.4
Cost of goods sold 298.2
1.0
299.2
865.2
—
865.2
Gross profit 148.4
—
148.4
456.3
(0.1 ) 456.2
Income before income taxes 43.3
—
43.3
140.1
(0.1 ) 140.0
Consolidated net income 31.7
—
31.7
100.2
(0.1 ) 100.1

~~Consolidated Balance Sheet:~~

June 30, 2019
As Reported Adjustments Due to ASC 606 Balances without Adoption
Assets

Receivables from long-term manufacturing contracts $ 158.6
$ (2.0 ) $ 156.6
Inventories 186.7
1.7
188.4

Liabilities
Deferred income taxes $ 70.8
$ (0.1 ) $ 70.7

Shareholders’ Equity
Retained earnings $ 588.1
$ (0.2 ) $ 587.9

~~The Company~~2020. Accordingly, combined summarized financial information has ~~elected the following as a result of adopting the new standard on revenue recognition:~~

~~Hillenbrand elected not to adjust the promised amount of consideration~~been presented only for the ~~effects~~issuer and guarantors of our senior notes for the most recent fiscal year and the year-to-date interim period, and the location of the ~~time value of money for contracts in which~~required disclosures has been removed from the ~~anticipated period between when Hillenbrand transfers the goods or services~~Condensed Notes to the ~~customer~~Consolidated Financial Statements and ~~when the customer pays is equal~~moved to ~~one year or less.~~Part I, Item 2, of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~Hillenbrand elected to account for shipping and handling activities that occur after the customer has obtained control of a good as fulfillment activities rather than as a promised service.~~

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Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, and that are collected by the Company from a customer, are excluded from revenue.

Recently Issued Accounting Standards

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~. ASU 2016-02 requires lessees to recognize a right of use asset and related lease liability for leases that have terms of more than twelve months. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance, with the classifications based on criteria that are similar to those applied under the current lease guidance, without the explicit bright lines. ASU 2016-02 will be effective for our fiscal year beginning on October 1, 2019. We have developed an implementation plan that we continue to make progress on, including compiling a central repository of leases and evaluating key policy elections and practical expedients that are available under the new standard. The adoption is anticipated to have a significant impact on assets and liabilities within our Consolidated Balance Sheets due to the recognition of right-of-use assets and corresponding lease liabilities.

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial ~~Statements.~~Statements (“ASU 2016-13”). ASU 2016-13 replaces the current incurred loss impairment model with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. ASU 2016-13 will be effective for ~~our~~the Company’s fiscal year beginning on October 1, ~~2020, with early adoption permitted for our fiscal year beginning October 1, 2019. We are~~2020. The Company is currently evaluating the impact that ASU 2016-13 will have on ~~our consolidated financial statements.~~the Consolidated Financial Statements and believes the primary impact of ASU 2016-13 will relate to the Company's assessment of its allowance for doubtful accounts on trade receivables and receivables from long-term manufacturing contracts. The Company does not expect the adoption of ASU 2016-13 to have a material impact on the Consolidated Financial Statements.


3.	~~Revenue Recognition~~

~~We adopted ASC 606,~~In December 2019, the FASB issued ASU 2019-12, ~~Revenue from Contracts with Customers~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ,(“ASU 2019-13”). ASU 2019-13clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles, the methodology for calculating income tax rates in an interim period, and recognition of deferred taxes for outside basis differences in an investment, among other updates. ASU 2019-12 will be effective for the Company’s fiscal year beginning on October 1, ~~2018. As~~2021. The Company is currently evaluating the impact of ASU 2019-12 on the Consolidated Financial Statements.

No other new accounting pronouncements recently adopted or issued had or are expected to have a ~~result, we have changed our accounting policy for revenue recognition as detailed below.~~material impact on the Consolidated Financial Statements.

3.Revenue Recognition

Net revenue includes gross revenue less sales discounts, customer rebates, sales incentives, and product returns, all of which require usthe Company to make estimates for the portion of these allowances that have yet to be credited or paid to ~~our~~ customers. ~~We estimate~~The Company estimates these allowances using the expected value method, which is based upon historical rates and projections of customer purchases toward contractual rebate thresholds.

~~Performance Obligations & Contract Estimates~~

The Process Equipment Group designs, engineers, manufactures, markets, and services differentiated process and material handling equipment and systems for a wide variety of industries. A large portion of our revenue across the Process Equipment Group is derived from manufactured equipment, which may be standard, customized to meet customer specifications, or turnkey.

Our contracts with customers in the Process Equipment Group segment often include multiple performance obligations. Performance obligations are promises in a contract to transfer a distinct good or service to the customer, and are the basis for determining how revenue is recognized. For instance, a contract may include obligations to deliver equipment, installation services, and spare parts. We frequently have contracts for which the equipment and the installation services, as well as highly engineered or specialized spare parts, are all considered a single performance obligation, as in these instances the installation services and/or spare parts are not separately identifiable. However, due to the varying nature of equipment and contracts across the Process Equipment Group, we also have contracts where the installation services and/or spare parts are deemed to be separately identifiable and are therefore deemed to be distinct performance obligations.

A contract’s transaction price is allocated to each distinct performance obligation based on its respective stand-alone selling price, and recognized as revenue when, or as, the performance obligation is satisfied. When a distinct performance obligation is not sold separately, the value of the standalone selling price is estimated considering all reasonably available information. When an obligation is distinct, as defined in ASC~~606, we allocate a portion of the contract price to the obligation and recognize it separately from the other performance obligations.~~

The timing of revenue recognition for each performance obligation is either over time or at a point in time. We recognize revenue over time for contracts that have an enforceable right to collect payment for performance completed to-date upon customer cancellation and provide one or more of the following: (i) service over a period of time, (ii) highly customized equipment, or (iii) parts which are highly engineered and have no alternative use. Revenue generated from standard equipment and highly customized equipment or parts contracts without an enforceable right to payment for performance completed to-date, as well as non-specialized parts sales and sales of death care products, is recognized at a point in time.

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We use the input method of “cost-to-cost” to recognize revenue over time. Accounting for these contracts involves management judgment in estimating total contract revenue and cost. Contract revenues are largely determined by negotiated contract prices and quantities, modified by our assumptions regarding contract options, change orders, and incentive and award provisions associated with technical performance clauses. Contract costs are incurred over longer periods of time and, accordingly, the estimation of these costs requires judgment. We measure progress based on costs incurred to date relative to total estimated cost at completion. Incurred cost represents work performed, which corresponds with, and we believe thereby best depicts, the transfer of control to the customer. Contract costs include labor, material, and certain overhead expenses. Cost estimates are based on various assumptions to project the outcome of future events, including labor productivity and availability, the complexity of the work to be performed, the cost of materials, and the performance of subcontractors. Significant factors that influence these estimates include inflationary trends, technical and schedule risk, internal and subcontractor performance trends, business volume assumptions, asset utilization, and anticipated labor agreements. Revenue and cost estimates are regularly monitored and revised based on changes in circumstances. Anticipated losses on long-term contracts are recognized immediately when such losses become evident. We maintain financial controls over the customer qualification, contract pricing, and estimation processes to reduce the risk of contract losses.

Stand-alone service revenue is recognized either over time proportionately over the period of the underlying contract or as invoiced, depending on the terms of the arrangement. Stand-alone service revenue is not material to the Company.

For the Process Equipment Group and Batesville segment products where revenue is recognized at a point in time, we recognize it when our customers take control of the asset. We define this as the point in time at which the customer has the capability of full beneficial use of the asset as intended per the contract.

Contract balances

In the Process Equipment Group segment, the Company requires an advance deposit based on the terms and conditions of contracts with customers for many of its contracts. Payment terms generally require an upfront payment at the start of the contract, and the remaining payments during the contract or within a certain number of days of delivery. Typically, revenue is recognized within one year of receiving an advance deposit. For contracts where an advance payment is received greater than one year from expected revenue recognition, or a portion of the payment due extends beyond one year, the Company has determined it does not constitute a significant financing component.

The timing of revenue recognition, billings, and cash collections can result in customer receivables, advance payments, and billings in excess of revenue recognized. Customer receivables include amounts billed and currently due from customers and are included in Trade receivables, net, as well as unbilled amounts (contract assets) which are included in Receivables from long-term manufacturing contracts on our Consolidated Balance Sheets. Amounts are billed in accordance with contractual terms or as work progresses in accordance with contractual terms. Unbilled amounts arise when the timing of billing differs from the timing of revenue recognized, such as when contract provisions require specific milestones to be met before a customer can be billed. Unbilled amounts primarily relate to performance obligations satisfied over time when the cost-to-cost method is used and the revenue recognized exceeds the amount billed to the customer as there is not yet a right to payment in accordance with contractual terms. Unbilled amounts are recorded as a contract asset when the revenue associated with the contract is recognized prior to billing and derecognized when billed in accordance with the terms of the contract. Trade receivables are recorded at face amounts and represent the amounts we believe to be collectible. The Company maintains allowances for doubtful accounts for estimated losses as a result of customers’ inability to make required payments. Management evaluates the aging of the customer receivable balances, the financial condition of its customers, historical trends and the time outstanding of specific balances to estimate the amount of customer receivables that may not be collected in the future, and records the appropriate provision.

Advance payments and billings in excess of revenue recognized are included in Liabilities from long-term manufacturing contracts and advances on our Consolidated Balance Sheets. Advance payments and billings in excess of revenue recognized represent contract liabilities and are recorded when customers remit contractual cash payments in advance of us satisfying performance obligations under contractual arrangements, including those with performance obligations satisfied over time. Billings in excess of revenue recognized primarily relate to performance obligations satisfied over time when the cost-to-cost method is used and revenue cannot yet be recognized as the Company has not completed the corresponding performance obligation. Contract liabilities are derecognized when revenue is recognized and the performance obligation is satisfied.

The balance ~~in Receivables~~of receivables from long-term manufacturing contracts at June 30, ~~2019~~2020 and September 30, ~~2018~~2019 was ~~$158.6~~$166.2 and ~~$120.3.~~$181.1, respectively. The change was driven by ~~the adoption of ASC 606 ($2.0) and~~ the impact of net revenue recognized prior to ~~billings ($36.3).~~billings. The balance ~~in the Liabilities~~of liabilities from long-term manufacturing contracts and advances at June 30, ~~2019~~2020 and September 30, ~~2018~~2019 was ~~$109.2~~$168.4 and ~~$125.9~~$158.2, respectively, and consists primarily of cash payments received ~~or due~~ in advance of satisfying ~~our~~ performance obligations. The revenue recognized for the nine months ended June 30, 2020 and 2019 related to ~~Liabilities~~liabilities from long-term manufacturing

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contracts and advances as of September 30, 2019 and 2018 was ~~$113.0.~~$104.7 and $113.0, respectively. During the three and nine months ended June 30, 2020 and 2019, the adjustments related to performance obligations satisfied in previous periods were immaterial.

Costs incurred to obtain a customer contract are not material to the Company. The Company elected to apply the practical expedient to not capitalize contract costs to obtain contracts with a duration of one year or less, which are expensed as incurred.

Transaction price allocated to the remaining performance obligations

As of June 30, ~~2019,~~2020, the aggregate amount of transaction price of remaining performance obligations within the Process Equipment Group and Milacron reportable segments, which corresponds to backlog as defined in Item 2 of this Form 10-Q, ~~for the Company~~ was ~~$940.3.~~$1,123.7. Approximately ~~88%~~78% of these performance obligations are expected to be satisfied over the next twelve months, and the remaining performance obligations, primarily within one to three years.

Disaggregation of revenue

Three Months Ended June 30, 2019 Nine Months Ended June 30, 2019
Process Equipment Group Batesville Total Process Equipment Group Batesville Total
Revenue by End Market
  Plastics $ 197.9
$ —
$ 197.9
$ 561.0
$ —
$ 561.0
  Chemicals 28.3
—
28.3
80.8
—
80.8
Food & Pharmaceuticals 20.0
—
20.0
60.9
—
60.9
  Minerals & Mining 14.1
—
14.1
64.3
—
64.3
  Water & Wastewater 8.3
—
8.3
25.5
—
25.5
  Death Care —
131.3
131.3
—
397.3
397.3
  Other 46.7
—
46.7
131.7
—
131.7
    Total $ 315.3
$ 131.3
$ 446.6
$ 924.2
$ 397.3
$ 1,321.5

Three Months Ended June 30, 2019 Nine Months Ended June 30, 2019
Process Equipment Group Batesville Total Process Equipment Group Batesville Total
Products and Services
Equipment $ 212.4
$ —
$ 212.4
$ 623.4
$ —
$ 623.4
Parts and Services 102.9
—
102.9
300.8
—
300.8
Death Care —
131.3
131.3
—
397.3
397.3
Total $ 315.3
$ 131.3
$ 446.6
$ 924.2
$ 397.3
$ 1,321.5

Three Months Ended June 30, 2019 Nine Months Ended June 30, 2019
Process Equipment Group Batesville Total Process Equipment Group Batesville Total
Timing of Transfer
Point in Time $ 164.6
$ 131.3
$ 295.9
$ 505.1
$ 397.3
$ 902.4
Over Time 150.7
—
150.7
419.1
—
419.1
Total $ 315.3
$ 131.3
$ 446.6
$ 924.2
$ 397.3
$ 1,321.5

As a result of completing the acquisition of Milacron during the current fiscal year, the Company now sells products in the following additional end markets: custom molders, automotive, consumer goods, packaging, electronics, and construction. The following tables present net revenue by end market, which include reclassifications in the prior year period to conform to the current year presentation:

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	Three Months Ended June 30, 2020														Nine Months Ended June 30, 2020
	Process Equipment Group		Milacron		Batesville		Total		Process Equipment Group		Milacron		Batesville		Total
End Market
Plastics	$	181.0	$	—	$	—	$	181.0	$	589.6	$	—	$	—	$	589.6
Automotive	—		28.7		—		28.7		—		91.8		—		91.8
Chemicals	21.5		—		—		21.5		69.9		—		—		69.9
Consumer goods	—		25.4		—		25.4		—		76.6		—		76.6
Food and pharmaceuticals	19.7		—		—		19.7		54.9		—		—		54.9
Custom molders	—		28.4		—		28.4		—		66.5		—		66.5
Packaging	—		23.8		—		23.8		—		60.5		—		60.5
Construction	—		20.0		—		20.0		—		51.8		—		51.8
Minerals and mining	15.0		—		—		15.0		43.7		—		—		43.7
Electronics	—		20.3		—		20.3		—		43.1		—		43.1
Death care	—		—		139.9		139.9		—		—		405.7		405.7
Other industrial	44.1		39.7		—		83.8		140.9		128.3		—		269.2
Total	$	281.3	$	186.3	$	139.9	$	607.5	$	899.0	$	518.6	$	405.7	$	1,823.3


	Three Months Ended June 30, 2019								Nine Months Ended June 30, 2019
	Process Equipment Group		Batesville		Total		Process Equipment Group		Batesville		Total
End Market
Plastics	$	197.9	$	—	$	197.9	$	561.0	$	—	$	561.0
Chemicals	28.3		—		28.3		80.8		—		80.8
Food and pharmaceuticals	20.0		—		20.0		60.9		—		60.9
Minerals and mining	14.1		—		14.1		64.3		—		64.3
Death care	—		131.3		131.3		—		397.3		397.3
Other industrial	55.0		—		55.0		157.2		—		157.2
Total	$	315.3	$	131.3	$	446.6	$	924.2	$	397.3	$	1,321.5

The following tables present net revenue by products and services:


	Three Months Ended June 30, 2020														Nine Months Ended June 30, 2020
	Process Equipment Group		Milacron		Batesville		Total		Process Equipment Group		Milacron		Batesville		Total
Products and Services
Equipment	$	186.7	$	124.7	$	—	$	311.4	$	600.6	$	305.8	$	—	$	906.4
Parts and services	94.6		49.2		—		143.8		298.4		139.7		—		438.1
Death care	—		—		139.9		139.9		—		—		405.7		405.7
Other	—		12.4		—		12.4		—		73.1		—		73.1
Total	$	281.3	$	186.3	$	139.9	$	607.5	$	899.0	$	518.6	$	405.7	$	1,823.3

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	Three Months Ended June 30, 2019								Nine Months Ended June 30, 2019
	Process Equipment Group		Batesville		Total		Process Equipment Group		Batesville		Total
Products and Services
Equipment	$	212.4	$	—	$	212.4	$	623.4	$	—	$	623.4
Parts and services	102.9		—		102.9		300.8		—		300.8
Death care	—		131.3		131.3		—		397.3		397.3
Total	$	315.3	$	131.3	$	446.6	$	924.2	$	397.3	$	1,321.5

The following tables present net revenue by timing of transfer:


	Three Months Ended June 30, 2020														Nine Months Ended June 30, 2020
	Process Equipment Group		Milacron		Batesville		Total		Process Equipment Group		Milacron		Batesville		Total
Timing of Transfer
Point in time	$	151.6	$	186.3	$	139.9	$	477.8	$	448.3	$	518.6	$	405.7	$	1,372.6
Over time	129.7		—		—		129.7		450.7		—		—		450.7
Total	$	281.3	$	186.3	$	139.9	$	607.5	$	899.0	$	518.6	$	405.7	$	1,823.3


	Three Months Ended June 30, 2019								Nine Months Ended June 30, 2019
	Process Equipment Group		Batesville		Total		Process Equipment Group		Batesville		Total
Timing of Transfer
Point in time	$	164.6	$	131.3	$	295.9	$	505.1	$	397.3	$	902.4
Over time	150.7		—		150.7		419.1		—		419.1
Total	$	315.3	$	131.3	$	446.6	$	924.2	$	397.3	$	1,321.5

4.Business Acquisitions and Divestitures

Acquisition of Milacron

Background

On November 21, 2019, the Company completed the acquisition of Milacron, a global leader in highly engineered and customized systems in plastic technology and processing, through a merger of its wholly-owned subsidiary with and into Milacron, resulting in ownership of 100% of Milacron common stock that was issued and outstanding after the acquisition. The acquisition provides Hillenbrand with increased scale and meaningful product diversification, enhancing its ability to serve customers with expanded capabilities across the plastics value chain.

The results of Milacron are reported separately in its own reportable segment. See Note 17 for further information.

Purchase price consideration

As a result of the acquisition, Milacron stockholders received $11.80 in cash per share and a fixed exchange ratio of 0.1612 shares of Hillenbrand common stock for each share of Milacron common stock they owned, with cash paid in lieu of fractional shares. In addition, concurrent with the closing of the acquisition, the Company made a cash payment of $772.9 to repay outstanding Milacron debt, including accrued interest. The Company funded the acquisition through a combination of cash on hand, new debt financing, and the issuance of common stock. See Note 8 for a discussion of the debt financing.

Pursuant to the Merger Agreement, certain of Milacron’s outstanding stock options, restricted stock awards, restricted stock unit awards, and performance stock unit awards immediately vested and converted into the right to receive $11.80 per share in

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cash and 0.1612 shares of Hillenbrand common stock per share. Additionally, certain of Milacron’s stock appreciation rights were canceled and converted into the right to receive a lump sum cash payment. The fair value of share-based equity awards was apportioned between purchase price consideration and immediate expense. The portion of the fair value of partially vested awards associated with pre-acquisition service of Milacron employees represented a component of the total purchase price consideration, while the remaining portion of the fair value was immediately recognized as expense within operating expenses in the Consolidated Statement of Operations during the nine months ended June 30, 2020.

The following table summarizes the aggregate purchase price consideration to acquire Milacron:


4.Cash consideration paid to Milacron stockholders	~~Business Acquisitions~~$	835.9
Repayment of Milacron debt, including accrued interest	772.9
Cash consideration paid to settle outstanding share-based equity awards	34.2
Total cash consideration	1,643.0
Fair value of Hillenbrand common stock issued to Milacron stockholders ⁽¹⁾	356.9
Stock consideration issued to settle outstanding share-based equity awards ⁽¹⁾	14.4
Total consideration transferred	2,014.3
Portion of cash settlement of outstanding share-based equity awards recognized as expense ⁽²⁾	(14.1)
Portion of stock settlement of outstanding share-based equity awards recognized as expense ⁽²⁾	(5.9)
Total purchase price consideration	$	1,994.3

⁽¹⁾The fair value of the 11.4 million shares of Hillenbrand’s common stock issued as of the acquisition date was determined based on a per share price of $31.26, which was the closing price of Hillenbrand’s common stock on November 20, 2019, the last trading day before the acquisition closed on November 21, 2019. This includes a nominal amount of cash paid in lieu of fractional shares. Additionally, 0.5 million shares of Hillenbrand’s common stock were issued to settle certain of Milacron’s outstanding share-based equity awards, as previously discussed.

⁽²⁾In total, $20.0 was immediately recognized as expense within operating expenses in the Consolidated Statement of Operations during the nine months ended June 30, 2020, which represents the portion of the fair value of outstanding share-based equity awards that was not associated with pre-acquisition service of Milacron employees.

Purchase price allocation

The acquisition was accounted for as a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. The purchase price was allocated to the assets acquired and liabilities assumed based on management’s estimate of the respective fair values at the date of acquisition. Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The factors contributing to the recognition of goodwill were based on strategic benefits that are expected to be realized from the acquisition. None of the goodwill is expected to be deductible for income tax purposes.

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


	November 21, 2019 (as initially reported)			Measurement Period Adjustments		November 21, 2019 (as adjusted)
Assets acquired:
Cash and cash equivalents	$	125.8		$	—	$	125.8
Trade receivables	135.5			1.3		136.8
Inventories	288.7			4.7		293.4
Prepaid expense and other current assets	64.3			1.3		65.6
Property, plant, and equipment	262.9			(22.7)		240.2
Operating lease right-of-use assets	41.3			—		41.3
Identifiable intangible assets	865.0			(50.0)		815.0
Goodwill	666.5			41.1		707.6
Other long-term assets	22.6			7.6		30.2
Total assets acquired	2,472.6		—	(16.7)		2,455.9

Liabilities assumed:
Trade accounts payable	110.2			—		110.2
Liabilities from long-term manufacturing contracts and advances	32.7			—		32.7
Accrued compensation	23.2			(2.4)		20.8
Other current liabilities	72.2			0.9		73.1
Accrued pension and postretirement healthcare	29.4			—		29.4
Deferred income taxes	166.3			(15.2)		151.1
Operating lease liabilities - long-term	31.2			—		31.2
Other long-term liabilities	13.1			—		13.1
Total liabilities assumed	478.3		—	(16.7)		461.6

Total purchase price consideration	$	1,994.3		$	—	$	1,994.3

Measurement period adjustments

The preliminary purchase price allocation was based upon a preliminary valuation, and the Company’s estimates and assumptions are subject to change within the measurement period (defined as one year following the acquisition date). As a result of further refining its estimates and assumptions since the date of the acquisition, the Company recorded measurement period adjustments to the initial opening balance sheet as shown in the table above. Adjustments were primarily made to property, plant, and equipment, identifiable intangible assets, goodwill, and deferred income taxes. There were no measurement period adjustments materially impacting earnings that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition date.

As of June 30, 2020, the allocation of the purchase price has not been finalized and the one-year measurement period has not ended. The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the fair value of certain tangible assets acquired and liabilities assumed, the valuation of identifiable intangible assets acquired and deferred income taxes. The Company expects to continue to obtain information for the purpose of determining the fair value of the assets acquired and liabilities assumed at the acquisition date throughout the remainder of the measurement period.

Intangible assets identified

The preliminary purchase price allocation included $815.0 of acquired identifiable intangible assets. The preliminary fair value of the identifiable intangible assets has been estimated using the income approach through a discounted cash flow analysis. The cash flows are based on estimates used to price the Milacron acquisition, and the discount rates applied were benchmarked with reference to the implied rate of return to the Company’s pricing model and the weighted-average cost of capital. Definite-lived intangible assets are being amortized over the estimated useful life on a straight-line basis. The determination of the useful lives is based upon various industry studies, historical acquisition experience, economic factors, and future cash flows of the Company post-acquisition of Milacron. In addition, Hillenbrand reviewed certain technological trends and considered the relative stability in the current Milacron customer base.

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The preliminary amounts allocated to identifiable intangible assets are as follows:

Gross Carrying Amount

Weighted-Average Useful Life

Customer relationships

560.0

19 years

Trade names

150.0

Indefinite

Technology, including patents

95.0

10 years

Backlog

10.0

3 months

Total

815.0

The Company is required to provide additional disclosures about fair value measurements as part of the Consolidated Financial Statements for each major category of assets and liabilities measured at fair value on a nonrecurring basis (including business acquisitions). The working capital assets and liabilities, as well as the property, plant, and equipment acquired, were valued using Level 2 inputs which included data points that are observable, such as definitive sales agreements, appraisals or established market values of comparable assets (market approach). Goodwill and identifiable intangible assets were valued using Level 3 inputs, which are unobservable by nature, and included internal estimates of future cash flows (income approach). Significant increases (decreases) in any of those unobservable inputs in isolation would result in a significantly higher (lower) fair value measurement. Management used a third-party valuation firm to assist in the determination of the preliminary purchase accounting fair values, and specifically those considered Level 3 measurements along with Level 2 measurements for certain tangible assets. Management ultimately oversees the third-party valuation firm to ensure that the transaction-specific assumptions are appropriate for the Company.

Impact on results of operations

The results of Milacron’s operations have been included in the Consolidated Financial Statements since the November 21, 2019 acquisition date. The following table provides the results of operations for Milacron included in the Consolidated Statements of Operations for the three and nine months ended June 30, 2020:


	Three Months Ended June 30, 2020		Nine Months Ended June 30, 2020
Net revenue	$	186.3	$	518.6
Income (loss) before income taxes	12.0		(17.5)

In connection with the acquisition of Milacron, the Company incurred a total of $5.0 and $62.7 of business acquisition and integration costs during the three and nine months ended June 30, 2020, respectively, which were recorded within operating expenses in the Consolidated Statements of Operations.

Supplemental Pro Forma Information

The supplemental pro forma financial information presented below is for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have been realized if the Milacron acquisition had been completed on the date indicated, does not reflect synergies that might have been achieved, nor is it indicative of future operating results or financial position. The pro forma adjustments are based upon currently available information and certain assumptions that Hillenbrand believes are reasonable under the circumstances.

The supplemental pro forma financial information reflects pro forma adjustments to present the combined pro forma results of operations as if the Milacron acquisition had occurred on October 1, 2018 to give effect to certain events that Hillenbrand believes to be directly attributable to the Milacron acquisition. These pro forma adjustments primarily include:

•an increase to depreciation and amortization expense that would have been recognized due to acquired tangible and identifiable intangible assets;

•an adjustment to interest expense to reflect the additional borrowings of Hillenbrand and the repayment of Milacron’s historical debt in conjunction with the acquisition;

•an adjustment to remove business acquisition and integration costs, inventory step-up costs, and backlog amortization during the three and nine months ended June 30, 2020, as these costs are non-recurring in nature and will not have a continuing effect on Hillenbrand’s results; and

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•the related income tax effects of the adjustments noted above.

The supplemental pro forma financial information for the periods presented is as follows:


	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
Net revenue	$	607.5	$	718.0	$	1,939.0	$	2,132.1
Net income (loss) attributable to Hillenbrand	30.4		23.0		(0.7)		85.1

Net income (loss) attributable to Hillenbrand — per share of common stock:
Basic earnings (loss) per share	$	0.40	$	0.31	$	(0.01)	$	1.14
Diluted earnings (loss) per share	$	0.40	$	0.31	$	(0.01)	$	1.13

Sale of Milacron facility

In December 2019, the Company completed the sale of a Milacron manufacturing facility located in Germany. As a result of the sale, the Company received net cash proceeds of $13.1 during the nine months ended June 30, 2020. There was no material impact to the Consolidated Statement of Operations resulting from the sale of the facility during the nine months ended June 30, 2020.

Divestiture of Cimcool

On March 30, 2020, the Company completed the sale of its Cimcool business (“Cimcool”), which represented the former Fluids Technologies reportable segment of Milacron before its acquisition by the Company, to DuBois Chemicals, Inc. The sale resulted in cash proceeds received at closing of $222.4, net of cash divested.

In addition, the Company may receive contingent consideration for the sale of Cimcool of up to an aggregate of $26.0 based on multiple earn-out provisions. The Company accounts for contingent consideration under a loss recovery approach. Under a loss recovery approach, the Company records a contingent consideration asset only to the extent of the lesser of (1) the amount that the non-contingent consideration received is exceeded by the net assets deconsolidated, or (2) the amount of contingent consideration that it is probable will be received. As of the transaction date (and at June 30, 2020), the Company was unable to determine that it was probable that any of the contingent consideration would be received, and accordingly no asset was recorded for contingent consideration. Subsequent measurement of contingent consideration will be based on the guidance for gain contingencies and any gain from contingent consideration will be recorded at the time the consideration is received.

As a result of the sale, the Company recorded a pre-tax loss of $3.0, using Level 2 nonrecurring fair value measurements, within other income (expense), net in the Consolidated Statement of Operations during the nine months ended June 30, 2020. The related tax effect resulted in tax expense of $13.0 and was included within income tax expense in the Consolidated Statement of Operations during the nine months ended June 30, 2020. The Company incurred $0.4 and $4.2 of transaction costs associated with the sale during the three and nine months ended June 30, 2020, respectively, which were recorded within operating expenses in the Consolidated Statements of Operations.

The Company determined that the sale of Cimcool did not represent a strategic shift that had or will have a major effect on its consolidated results of operations, and therefore Cimcool was not classified as a discontinued operation. Cimcool’s results of operations were included within the Milacron reportable segment until the completion of the sale on March 30, 2020.

Acquisition of Burnaby Machine and Mill Equipment Ltd.

The Company completed the acquisition of Burnaby Machine and Mill Equipment Ltd. (“BM&M”) in November 2018 for $25.9 in cash, which included post-closing working capital adjustments. WeThe Company used ~~our~~its revolving credit facility ~~(the “Facility”)~~ to fund the acquisition. Based in Canada, BM&M provides high-speed gyratory screeners for a variety of industries. The results of BM&M are reported in the Process Equipment Group reportable segment. ~~Based~~

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5.Supplemental Consolidated Balance Sheet Information


	June 30, 2020		September 30, 2019
Trade accounts receivable reserves	$	22.3	$	22.8

Accumulated depreciation on property, plant, and equipment	$	341.9	$	309.0

Inventories, net:
Finished goods	$	178.5	$	60.3
Raw materials and components	146.0		72.3
Work in process	99.8		44.0
Total inventories, net	$	424.3	$	176.6

Trade accounts receivable reserves consist of the allowance of doubtful accounts, which is a best estimate of the amount of probable credit losses and collection risk in the existing trade receivables portfolio, and the allowance for cash discounts and sales returns, which is based upon historical experience and trends. The Company considers a variety of factors when determining the accounts receivable reserves including macroeconomic conditions, specific industry trends, and customer classes. The Company specifically considered the impact of the COVID-19 pandemic on ~~our purchase~~its trade receivables and inventories, and determined there was no material impact on existing trade receivables or inventories at June 30, 2020.

6.Leases

The Company’s lease portfolio is comprised of operating leases primarily for manufacturing facilities, offices, vehicles, and certain equipment. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on whether the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Leases are classified as operating or finance leases at the commencement date of the lease. Operating leases are recorded within operating lease right-of-use assets, other current liabilities, and operating lease liabilities in the Consolidated Balance Sheets. The Company’s finance leases were insignificant as of June 30, 2020. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets. We have elected an accounting policy to combine lease and non-lease components for all leases.

Operating lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the implicit rate is generally not readily determinable for most leases, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate reflects the estimated rate of interest that the Company would pay to borrow on a collateralized basis over a similar term in a similar economic environment. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

Leases may include renewal options, and the renewal option is included in the lease term if the Company concludes that it is reasonably certain that the option will be exercised. A certain number of the Company’s leases contain rent escalation clauses, either fixed or adjusted periodically for inflation of market rates, that are factored into the calculation of lease payments to the extent they are fixed and determinable at lease inception. The Company also has variable lease payments that do not depend on a rate or index, primarily for items such as common area maintenance and real estate taxes, which are recorded as variable costs when incurred.

For the three and nine months ended June 30, 2020, the Company recognized $9.2 and $27.0, respectively, of operating lease expense, including short-term lease expense and variable lease costs, which were immaterial in both periods.

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The following table presents supplemental Consolidated Balance Sheet information related to the Company’s operating leases:


	June 30, 2020
Operating lease right-of-use assets	$	161.4

Other current liabilities	32.7
Operating lease liabilities	126.2
Total operating lease liabilities	$	158.9

Weighted-average remaining lease term (in years)	7.6

Weighted-average discount rate	2.5		%

As of June 30, 2020, the maturities of the Company’s operating lease liabilities were as follows:


2020 (excluding the nine months ended June 30, 2020)	$	13.4
2021	33.7
2022	28.8
2023	23.0
2024	16.3
Thereafter	58.2
Total lease payments	173.4
Less: imputed interest	(14.5)
Total present value of lease payments	$	158.9

Supplemental Consolidated Statement of Cash Flow information is as follows:


	Nine Months Ended June 30, 2020
Cash paid for amounts included in the measurement of operating lease liabilities	$	28.0
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	22.1

7.Intangible Assets and Goodwill

Impairment assessment

Annual impairment assessment

Testing for impairment of goodwill and indefinite lived assets must be performed annually, or on an interim basis upon the occurrence of triggering events or substantive changes in circumstances that indicate that the fair value of the asset or reporting unit may have decreased below the carrying value. The Company’s annual assessment was performed in the third quarter of 2020 and consists of determining each reporting unit’s current fair value compared to its current carrying value. For all reporting units tested, the fair value of goodwill was determined to exceed the carrying value, resulting in no further impairment to goodwill. Additionally, the fair value of indefinite lived trade names was determined to meet or exceed the carrying value for all trade names, resulting in no further impairment to trade names.

Interim impairment assessment

In connection with the preparation of the Consolidated Financial Statements for the second quarter of 2020, an interim impairment assessment was performed for select reporting units within the Process Equipment Group and Milacron reportable segments as a result of certain triggering events and changes in circumstances discussed in detail below. Additionally, based on the macroeconomic factors below, as well as the decline in the Company’s common stock price ~~allocation, we~~during the second quarter of 2020, the Company performed a qualitative review for all remaining reporting units and determined that those reporting units did not require an interim impairment test as it was more likely than not that the current fair value of those reporting units exceeded their carrying value, based on their current and projected financial performance as well as the headroom from previous goodwill impairment tests.

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For certain reporting units within the Process Equipment Group reportable segment, an interim impairment review was triggered during the second quarter of 2020 by the Company’s decision to redirect its strategic investments as it remains focused on deleveraging following two major events: (1) the continued evaluation of the Company’s operations following the acquisition of Milacron completed on November 21, 2019, and (2) current adverse macroeconomic conditions primarily driven by the COVID-19 pandemic. In connection with these events, the Company made the decision to limit its future strategic investment in its two reporting units that primarily sell and manufacture products in the flow control sector. The decision to limit future investment, as well as the Company’s updated forecasts, which considered the impact of the COVID-19 pandemic, reduced those reporting units’ anticipated annual revenue growth rates and corresponding profitability and cash flows. The annual revenue growth rates utilized in the Company’s fair value estimate are consistent with the reporting units’ operating plans. As a result of the change to expected future cash flows, along with comparable fair value information, the Company concluded that the carrying value for these reporting units exceeded their fair value, resulting in goodwill impairment charges of $72.3 during the second quarter of 2020. The pre-impairment goodwill balance for these reporting units was $95.2. A 10% further reduction in the fair value of these reporting units would indicate a potential additional goodwill impairment of approximately $12.0. Additionally, under the relief-from-royalty fair value method, the Company concluded that the carrying value of a trade name associated with one of these reporting units exceeded its fair value. As a result, an impairment charge of $0.7 was recorded ~~$14~~for this trade name during the second quarter of ~~intangibles, which consisted~~2020. The pre-impairment balance for this trade name was $4.4. During the three months ended June 30, 2020, there were no material changes to the Company’s previous forecasts or significant changes in macroeconomic conditions that triggered an interim impairment review.

For the reporting units within the Milacron reportable segment, an interim impairment review was triggered during the second quarter of ~~$10~~2020, due to macroeconomic conditions primarily driven by the COVID-19 pandemic. Subsequent to the Company completing the acquisition of ~~customer relationships, $1~~Milacron on November 21, 2019, the Company revised its forecasts for all reporting units within the Milacron reportable segment due to the deterioration in the overall global economy as a result of the pandemic. As a result of the decline in forecasted revenues, under the relief-from-royalty fair value method, the Company concluded that the carrying value of certain trade names and $3technology associated with these reporting units exceeded their fair value. As a result, impairment charges of ~~backlog. In addition, we~~$9.5 were recorded $9for these intangible assets during the second quarter of 2020. The pre-impairment balance for these intangible assets was $125.0. A 10% further reduction in the fair value of these intangible assets, caused by further declines in forecasted revenues and changes in the discount rate selected by the Company, would indicate a potential additional impairment of approximately $12.0. During the three months ended June 30, 2020, there were no material changes to the Company’s previous forecasts or significant changes in macroeconomic conditions that triggered an interim impairment review.

The impairment charges to goodwill and ~~$3 of net tangible~~the identifiable intangible assets ~~primarily working capital. Goodwill is not deductible~~were nondeductible for tax purposes. The following table summarizes the impairment charges recorded by the Company during the nine months ended June 30, 2020:


	Impairment Charges
	Process Equipment Group		Milacron		Total
Goodwill	$	72.3	$	—	$	72.3
Trade names	0.7		7.9		8.6
Technology, including patents	—		1.6		1.6
Total	$	73.0	$	9.5	$	82.5

As a result of the interim impairment review triggered during the second quarter of 2020 for all reporting units within the Milacron reportable segment, as discussed above, the Company determined that no impairment of goodwill occurred for these reporting units. The estimated fair value, ~~did not ascribe~~as calculated, for all four reporting units within the Milacron reportable segment ranged from approximately 3% to 16% greater than their carrying value. During the three months ended June 30, 2020, there were no material changes to the Company’s previous forecasts or significant changes in macroeconomic conditions that triggered an interim impairment review.

The valuation used to test goodwill for impairment is dependent upon a number of significant ~~amount~~estimates and assumptions, including macroeconomic conditions, growth rates, competitive activities, cost containment, achievement of synergy initiatives, margin expansion, and the Company's business plans. The Company believes these estimates and assumptions are reasonable. However, future changes in the judgments, assumptions and estimates that are used in the impairment testing for goodwill, including discount and tax rates or future cash flow projections, could result in significantly different estimates of the fair values. As a result of these factors and the limited cushion (or headroom as commonly referred) due to ~~tangible~~the recent acquisition of Milacron, goodwill for the reporting units within the Milacron reportable segment are more susceptible to impairment risk.

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The Company is required to provide additional disclosures about fair value measurements as part of the Consolidated Financial Statements for each major category of assets ~~as we often seek~~and liabilities measured at fair value on a nonrecurring basis (including impairment assessments). Goodwill and intangible assets were valued using Level 3 inputs, which are unobservable by nature, and included internal estimates of future cash flows (income approach). Significant increases (decreases) in any of those unobservable inputs in isolation would result in a significantly higher (lower) fair value measurement.

The most significant assumptions used in the determination of the estimated fair value of the reporting units are the revenue and EBITDA growth rates (including terminal growth rates) and the discount rate. The terminal growth rate represents the rate at which the reporting unit is expected to ~~acquire companies~~grow beyond the shorter-term business planning period. The terminal growth rate utilized in the Company’s fair value estimate is consistent with the reporting unit operating plans and approximates expected long-term category market growth rates and inflation. The discount rate, which is consistent with a ~~relatively low physical asset base in order~~weighted-average cost of capital that is likely to ~~limit~~be expected by a market participant, is based upon industry required rates of return, including consideration of both debt and equity components of the ~~need to invest significant additional cash post-acquisition.~~


5.	~~Supplemental Balance Sheet Information~~

June 30,
2019 September 30,
2018
Trade accounts receivable reserves $ 19.1
$ 22.2

Accumulated depreciation on property, plant, and equipment $ 311.1
$ 303.8

Inventories:

Raw materials and components $ 75.2
$ 68.3
Work in process 47.8
44.7
Finished goods 63.7
59.5
Total inventories $ 186.7
$ 172.5

~~We had restricted cash of $0.6 and $0.5 included in Other current assets~~capital structure. The discount rates may be impacted by adverse changes in the ~~Consolidated Balance Sheets at June 30, 2019~~macroeconomic environment, specifically the COVID-19 pandemic, volatility in the equity and ~~at September 30, 2018.~~debt markets or other factors.

While the Company can implement and has implemented certain strategies to address these events, changes in operating plans or adverse changes in the future could reduce the underlying cash flows used to estimate reporting unit fair values and could result in a further decline in fair value that would trigger a future material impairment charge of the reporting units’ goodwill balance.


6.	~~Intangible Assets and Goodwill~~

Intangible Assets

Intangible assets are stated at the lower of cost or fair value. With the exception of most trade names, intangible assets are amortized on a straight-line basis over periods ranging from three to 21 years, representing the period over which ~~we expect~~the Company expects to receive future economic benefits from these assets. ~~We assess~~The Company assesses the carrying value of most trade names annually, or more often if events or changes in circumstances indicate there may be an impairment.

The following ~~tables summarize~~table summarizes the carrying amounts and related accumulated amortization for intangible assets as of June 30, ~~2019~~2020 and September 30, ~~2018.~~2019:


	June 30, 2020						September 30, 2019
	Cost		Accumulated Amortization		Cost		Accumulated Amortization
Finite-lived assets:
Trade names	$	0.2	$	(0.2)	$	0.2	$	(0.2)
Customer relationships	948.3		(206.0)		464.2		(169.2)
Technology, including patents	157.0		(59.1)		76.8		(49.4)
Software	70.8		(56.2)		58.7		(51.7)
Backlog	10.0		(10.0)		—		—
Other	0.1		(0.1)		0.2		(0.2)
	1,186.4		(331.6)		600.1		(270.7)
Indefinite-lived assets:
Trade names	238.8		—		125.5		—

Total	$	1,425.2	$	(331.6)	$	725.6	$	(270.7)

June 30, 2019 September 30, 2018
Cost
Accumulated
Amortization
Cost
Accumulated
Amortization
Finite-lived assets:

Trade names $ 0.2
$ (0.2 ) $ 0.2
$ (0.2 )
Customer relationships 472.1
(165.8 ) 464.5
(148.4 )
Technology, including patents 78.8
(49.0 ) 79.6
(45.1 )
Software 58.4
(51.2 ) 58.0
(48.9 )
Other 2.8
(2.8 ) 0.2
(0.2 )
612.3
(269.0 ) 602.5
(242.8 )
Indefinite-lived assets:

Trade names 127.8
—
127.6
—

Total $ 740.1
$ (269.0 ) $ 730.1
$ (242.8 )

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As a result of the required annual impairment assessment performed in the third quarter of 2019, the fair value was determined to meet or exceed the carrying value for all indefinite-lived trade names, resulting in no impairment to trade names.

The net change in intangible assets during the nine months ended June 30, ~~2019~~2020 was driven primarily by the following:

•the acquisition of ~~BM&M in November 2018,~~Milacron, which included acquired intangible assets of ~~approximately $14,~~ $815.0;

•the divestiture of Cimcool, which included divested gross intangible assets of $122.1;

•impairment charges to intangible assets of $10.2;

•normal ~~amortization,~~amortization; and

•foreign currency adjustments.

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See Note 4 for further ~~detail~~information on the acquisition of ~~BM&M.~~Milacron and the divestiture of Cimcool. Estimated amortization expense related to intangible assets for the next five years is as follows: $71.6 in 2020 (includes nine months actual and three months estimated), $65.8 in 2021, $64.8 in 2022, $64.3 in 2023, and $64.2 in 2024.

Goodwill

~~Goodwill~~As discussed above, goodwill is not amortized but is ~~subject to annual~~tested for impairment ~~tests.~~at least annually, or on an interim basis upon the occurrence of triggering events or substantive changes in circumstances. Goodwill has been assigned to reporting units. ~~We assess~~The Company assesses the carrying value of goodwill annually, or more often if events or changes in circumstances indicate there may be impairment. Impairment testing is performed at a reporting unit level.

Process
Equipment
Group
Batesville Total
Balance as of September 30, 2018 $ 573.6
$ 8.3
$ 581.9
Acquisition 8.8
—
8.8
Foreign currency adjustments (3.9 ) —
(3.9 )
Balance as of June 30, 2019 $ 578.5
$ 8.3
$ 586.8

~~As a result of~~The following table summarizes the ~~required annual impairment assessment performed~~changes in the ~~third quarter~~Company’s goodwill, by reportable segment, for the nine months ended June 30, 2020:


	Process Equipment Group		Milacron		Batesville		Total
Balance as of September 30, 2019	$	569.7	$	—	$	8.3	$	578.0
Acquisitions ⁽¹⁾	1.7		707.6		—		709.3
Divestiture ⁽²⁾	—		(77.9)		—		(77.9)
Impairment charges	(72.3)		—		—		(72.3)
Foreign currency adjustments	11.2		(5.2)		—		6.0
Balance as of June 30, 2020 ⁽³⁾	$	510.3	$	624.5	$	8.3	$	1,143.1

⁽¹⁾See Note 4 for further information on the acquisitions of ~~2019,~~Milacron and BM&M.

⁽²⁾See Note 4 for further information on the ~~Company tested the recoverability~~divestiture of ~~its~~Cimcool.

⁽³⁾There was accumulated goodwill ~~and in all reporting units, the fair value of goodwill was determined to exceed the carrying value, resulting in no~~ impairment of ~~goodwill.~~

~~In connection with the preparation of the quarterly financial statements for the second quarter of 2018, an interim impairment assessment was performed at a reporting unit in~~$131.1 and $58.8 within the Process Equipment Group ~~segment most directly impacted by domestic coal mining~~as of June 30, 2020 and ~~coal power. During~~September 30, 2019, respectively.

8.Financing Agreements

The following table summarizes Hillenbrand’s current and long-term debt as of the quarter ended March 31, 2018, published industry reports reduced their forecasts for domestic coal production and consumption. The reporting unit also experienced a larger than expected decline in orders for equipment and parts useddates reported in the ~~domestic coal mining~~Consolidated Balance Sheets:


	June 30, 2020		September 30, 2019
$500.0 term loan ⁽¹⁾	$	479.9	$	—
$400.0 senior unsecured notes ⁽²⁾	394.5		—
$375.0 senior unsecured notes, net of discount ⁽³⁾	370.6		370.1
$225.0 term loan ⁽⁴⁾	216.2		—
$150.0 senior unsecured notes, net of discount ⁽⁵⁾	150.0		149.7
$100.0 Series A Notes ⁽⁶⁾	99.7		99.7
$900.0 revolving credit facility (excluding outstanding letters of credit)	—		—
Other	0.2		—
Total debt	1,711.1		619.5
Less: current portion	36.3		—
Total long-term debt	$	1,674.8	$	619.5

⁽¹⁾Includes unamortized debt issuance costs of $1.4 at June 30, 2020.

⁽²⁾Includes unamortized debt issuance costs of $5.5 at June 30, 2020.

⁽³⁾Includes unamortized debt issuance costs of $3.9 and ~~coal power industries. In conjunction~~$4.3 at June 30, 2020 and September 30, 2019, respectively.

⁽⁴⁾Includes unamortized debt issuance costs of $0.4 at June 30, 2020.

⁽⁵⁾Includes unamortized debt issuance costs of $0.2 at September 30, 2019.

⁽⁶⁾Includes unamortized debt issuance costs of $0.3 at both June 30, 2020 and September 30, 2019.

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The following table summarizes the scheduled maturities of long-term debt for 2020 through 2024:


	Amount
2020 (remaining three months) ⁽¹⁾	$	159.1
2021	36.3
2022	54.4
2023	223.1
2024	50.0

(1)Includes the $150.0 senior unsecured notes which matured in July 2020. Upon maturity, the Company refinanced the notes on a long-term basis, as they were repaid with available borrowing capacity from the Revolver. There were no outstanding borrowings under the Revolver as of June 30, 2020, primarily due to repayments made with proceeds from the $400.0 senior unsecured notes issued in June 2020. As such, these ~~events~~obligations were classified as long-term debt within the Consolidated Balance Sheet as of June 30, 2020.

$400.0 senior unsecured notes

On June 16, 2020, the Company issued $400.0 of senior unsecured notes due June 2025 (the “2020 Notes”). The 2020 Notes were issued at par value and ~~as part~~bear interest at a fixed rate of 5.75% per year, payable semi-annually in arrears beginning December 2020. Deferred financing costs associated with the 2020 Notes of $5.5 are being amortized to interest expense on a straight-line basis over the term of the ~~long-term strategic forecasting process,~~2020 Notes. The 2020 Notes are unsubordinated obligations of the Company ~~made~~and rank equally in right of payment with all other existing and future unsubordinated obligations.

Subject to certain limitations, in the ~~decision~~event of a change of control repurchase event, the Company will be required to ~~redirect strategic investments~~make an offer to purchase the 2020 Notes at a price equal to 101% of the principal amount of the 2020 Notes, plus any accrued and unpaid interest to, but excluding, the date of repurchase. In addition, the 2020 Notes are redeemable with prior notice at a price equal to par plus accrued interest and a make-whole amount.

Financing for ~~growth, significantly reducing~~Milacron Acquisition

Upon completing the ~~reporting unit’s terminal growth rate. As~~acquisition of Milacron on November 21, 2019, Hillenbrand incurred borrowings under its two term loans in aggregate principal amounts of $500.0 and $225.0 (the “Term Loan Facilities”), which are provided for under the Company’s Third Amended and Restated Credit Agreement dated August 28, 2019, as amended (the “Credit Agreement”). The $500.0 term loan matures on the fifth anniversary of the date on which it was borrowed, subject to quarterly amortization payments (equal to 5% of the original principal amount of the term loan in each of years 1 and 2, 7.5% in each of years 3 and 4, and 10% in year 5) and the $225.0 term loan matures on the third anniversary of the date on which it was borrowed, subject to quarterly amortization payments (equal to 5% of the original principal amount of the term loan in each of years 1 and 2, and 7.5% in year 3). The $500.0 term loan accrues interest, at the Company’s option, at the LIBO Rate or the Alternate Base Rate (each as defined in the Credit Agreement) plus a ~~result~~margin based on the Company’s leverage ratio, ranging from 1.00% to 2.375% for term loans bearing interest at the LIBO Rate and 0.0% to 1.375% for term loans bearing interest at the Alternate Base Rate. The $225.0 term loan accrues interest, at the Company’s option, at the LIBO Rate or the Alternate Base Rate plus a margin based on the Company’s leverage ratio, ranging from 0.875% to 2.25% for term loans bearing interest at the LIBO Rate and 0.0% to 1.25% for term loans bearing interest at the Alternate Base Rate. For the three and nine months ended June 30, 2020, the weighted average interest rates were 2.59% and 3.07%, respectively, for the $500.0 term loan and 2.46% and 2.94%, respectively, for the $225.0 term loan. Deferred financing costs of ~~this change~~$2.0 are being amortized to interest expense over the respective terms of the Term Loan Facilities.

In addition to the Term Loan Facilities, Hillenbrand incurred $650.0 of additional borrowings from its revolving credit facility under the Credit Agreement (the “Revolver”) at the closing of the Milacron acquisition. The additional borrowings under the Term Loan Facilities and the Revolver, in ~~expected future cash flows, along with comparable fair value information, management concluded that~~addition to the ~~reporting unit carrying value exceeded its fair value, resulting in a goodwill impairment charge~~$375.0 of ~~$58.8~~senior unsecured notes issued during the quarter ended ~~March 31, 2018. Intangible asset impairment charges for trade names associated~~September 30, 2019, were used to pay a portion of the cash consideration in connection with the ~~same reporting unit were $4.6 pre-tax ($3.5 after tax) based on similar factors during~~acquisition of Milacron, fees and expenses related to the ~~quarter ended March 31, 2018.~~acquisition, and to repay certain indebtedness of Milacron and its subsidiaries upon closing the acquisition.


7.	~~Financing Agreements~~

June 30,
2019 September 30,
2018
$900 revolving credit facility (excluding outstanding letters of credit) $ 74.0
$ 95.7
$150 senior unsecured notes, net of discount (1) 149.5
149.3
$100 Series A Notes (2) 99.7
99.6
Other 1.2
—
Total debt 324.4
344.6
Less: current portion (3) 1.2
—
Total long-term debt $ 323.2
$ 344.6

(1) Includes debt issuance costs of $0.2 and $0.4 at June 30, 2019 and September 30, 2018.
(2) Includes debt issuance costs of $0.3 and $0.4 at June 30, 2019 and September 30, 2018.
(3) Included in Other current liabilities in the Consolidated Balance Sheets.

Our private shelf agreement expired in March 2019. We entered into this Private Shelf Agreement on December 6, 2012 (as amended, the “Shelf Agreement”), with Prudential Investment Management, Inc. (“Prudential”) and each Prudential Affiliate (as defined therein) that became a purchaser thereunder. On December 15, 2014, we issued $100.0 in 4.60% Series A unsecured notes (“Series A Notes”) pursuant thereto, which remain outstanding.

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With respect to the ~~revolving credit facility (the “Facility”),~~Revolver, the Company has made net repayments since the closing date of the acquisition of Milacron, resulting in 0 outstanding balance as of June 30, ~~2019, we~~2020. As of June 30, 2020, the Company had ~~$7.1~~$8.1 in outstanding letters of credit issued and ~~$818.9~~$891.9 of maximum borrowing ~~capacity. $768.8~~capacity under the Revolver. $642.4 of this borrowing capacity was immediately available based on ~~our leverage~~the Company’s most restrictive covenant at June 30, ~~2019, with additional amounts available in the event of a qualifying acquisition.~~2020. The weighted-average interest rates

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on borrowings under the ~~Facility~~Revolver were ~~2.89%~~2.59% and ~~2.66%~~2.78% for the three and nine months ended June 30, ~~2019,~~2020, respectively, and ~~1.70%~~2.89% and ~~1.77%~~2.66% for the same periods in the prior ~~year.~~year, respectively. The weighted average facility fee was ~~0.13%~~0.30% and ~~0.12%~~0.24% for the three and nine months ended June 30, ~~2019,~~2020, respectively, and 0.13% and ~~0.16%~~0.12% for the same periods in the prior ~~year.~~year, respectively.

Other credit arrangements

In the normal course of business, operating companies within the Process Equipment Group ~~provides~~and Milacron reportable segments provide to certain customers bank guarantees and other credit arrangements in support of performance, warranty, advance payment, and other contractual obligations. This form of trade finance is customary in the industry and, as a result, ~~we maintain~~the Company maintains adequate capacity to provide the guarantees. As of June 30, ~~2019, we~~2020, the Company had credit arrangements totaling ~~$317.6,~~$383.7, under which ~~$238.0~~$267.4 was ~~utilized,~~used for ~~this purpose.~~guarantees. These arrangements include ~~our €150.0~~the Company’s Syndicated Letter of Guarantee Facility (as amended, the ~~“LG Facility”~~“L/G Facility Agreement”) and other ancillary credit facilities. On January 10, 2020, the L/G Facility Agreement was amended to expand the size of the existing €150.0 facility by an additional €25.0.

Credit ratings update

The coupon rate on the Company’s $375.0 senior unsecured notes is impacted by public bond ratings from Moody’s and S&P Global. Downgrades from either rating agency will increase the coupon rate by 0.25% per downgrade level if the ratings are below investment grade. During the three months ended June 30, 2020, Moody’s and S&P Global each downgraded the Company’s senior unsecured credit rating by one level. As such, the original coupon rate of 4.5% on the $375.0 senior unsecured notes will increase to 5.0%, effective September 15, 2020.

Amendments to current financing agreements

On January 10, 2020, the Company amended the Credit Agreement, the L/G Facility Agreement, and the ~~LG Facility, and~~Private Shelf Agreement governing the Series A Notes, ~~require us~~dated as of December 6, 2012 (as amended, the “Shelf Agreement”) to, ~~meet certain conditions including compliance with covenants, absence of default,~~among other things, (i) increase the maximum permitted leverage ratio and ~~continued accuracy of certain representations~~(ii) add additional pricing levels to compensate for the increase in permitted leverage ratios.

On May 19, 2020, the Company further amended the Credit Agreement, the L/G Facility Agreement, and ~~warranties. Financial covenants include a~~the Shelf Agreement to, among other things, (i) increase the maximum permitted leverage ratio ~~of Indebtedness~~ to ~~EBITDA (as~~(A) 4.75 to 1.00 for the quarters ending June 30, 2020, September 30, 2020, December 31, 2020, and March 31, 2021, (B) 4.25 to 1.00 for the quarter ending June 30, 2021, (C) 4.00 to 1.00 for the quarter ending September 30, 2021, (D) 3.75 to 1.00 for the quarter ending December 31, 2021, and (E) 3.50 to 1.00 for the quarter ending March 31, 2022 and each quarter ending thereafter; (ii) increase the margin paid on various rates defined in the ~~agreements, “Leverage Ratio”) of 3.5~~Credit Agreement at certain pricing levels; (iii) add additional pricing levels to ~~1.0 including~~compensate for the ~~application~~increase in permitted leverage ratios; (iv) increase the interest rate floor for various rates defined in the Credit Agreement; (v) add as a condition to each borrowing under the Revolver that the amount of cash ~~as a reduction of Indebtedness (subject~~or cash equivalents on the Consolidated Balance Sheet not exceed $350.0, subject to certain ~~limitations);~~exceptions; and (vi) impose certain restrictions on the Company’s ability to make restricted payments, including limitations on share repurchases and the payment of dividends, and grant liens on the Company’s assets until January 1, 2022.

With respect to these amendments, the Company incurred deferred financing costs of $3.6 during the nine months ended June 30, 2020, which are being amortized to interest expense over the applicable terms of the various amendments.

Covenants related to current financing agreements

The Credit Agreement, the L/G Facility Agreement, and the Shelf Agreement contain the following financial covenants for the current quarter: a maximum ~~Leverage Ratio resulting from an acquisition~~leverage ratio (as described above and defined in ~~excess~~the agreements) of ~~$75.0 of 4.0~~4.75 to ~~1.0 for a period of three consecutive quarters following such acquisition;~~1.00 and a minimum ratio of EBITDA (as defined in the agreements) to interest expense of ~~3.0~~3.00 to ~~1.0.~~ 1.00.

As of June 30, ~~2019, we were~~2020, Hillenbrand was in compliance with all ~~covenants.~~covenants under these agreements. Additionally, the Credit Agreement, the L/G Facility Agreement, and the Shelf Agreement provide the Company with the ability to sell assets and to incur debt at its international subsidiaries under certain conditions.

~~The Facility,~~All obligations of the Company arising under the Credit Agreement, the $400.0, $375.0, and $150.0 senior unsecured notes, the Series A Notes, and LGthe L/G Facility Agreement are fully and unconditionally, and jointly and severally, guaranteed by certain of the Company’s domestic subsidiaries.

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8.	~~Retirement Benefits~~

The Credit Agreement, the L/G Facility Agreement, and the Shelf Agreement each contain certain other customary covenants, representations and warranties and events of default. The indentures governing the $400.0, $375.0 and $150.0 senior unsecured notes do not limit the Company’s ability to incur additional indebtedness. They do, however, contain certain covenants that restrict the Company’s ability to incur secured debt and to engage in certain sale and leaseback transactions. The indentures also contain customary events of default. The indentures provide holders of the senior unsecured notes with remedies if the Company fails to perform specific obligations. As of June 30, 2020, Hillenbrand was in compliance with all covenants and there were no events of default.

9.Retirement Benefits

Defined Benefit Plans

U.S. Pension Benefits Non-U.S. Pension Benefits
Three Months Ended June 30, Three Months Ended June 30,
2019 2018 2019 2018
Service costs $ 0.5
$ 0.7
$ 0.4
$ 0.5
Interest costs 2.4
2.2
0.3
0.3
Expected return on plan assets (3.3 ) (3.5 ) (0.1 ) (0.2 )
Amortization of unrecognized prior service costs, net —
—
—
0.1
Amortization of net loss 0.4
0.8
0.3
0.2
Net pension costs $ —
$ 0.2
$ 0.9
$ 0.9

U.S. Pension Benefits Non-U.S. Pension Benefits
Nine Months Ended June 30, Nine Months Ended June 30,
2019 2018 2019 2018
Service costs $ 1.7
$ 2.1
$ 1.1
$ 1.5
Interest costs 7.5
6.5
0.9
0.9
Expected return on plan assets (9.9 ) (10.5 ) (0.4 ) (0.5 )
Amortization of unrecognized prior service costs, net 0.1
0.1
—
0.1
Amortization of net loss 0.8
2.4
0.8
0.7
Net pension costs $ 0.2
$ 0.6
$ 2.4
$ 2.7

In connection with the Milacron acquisition, the Company acquired three noncontributory defined benefit plans for certain non-U.S. employees and retirees. One plan covers certain employees in the United Kingdom and the other two plans cover certain employees in Germany. The aggregate fair value of the liability assumed for these defined benefit plans was $30.7 at November 21, 2019. Contributions to these plans are expected to approximate benefit payments each year.

~~Postretirement Healthcare~~

Components of net periodic pension cost included in the Consolidated Statements of Operations were as follows:


	U.S. Pension Benefits						Non-U.S. Pension Benefits
	Three Months Ended June 30,						Three Months Ended June 30,
	2020		2019		2020		2019
Service costs	$	0.4	$	0.5	$	0.7	$	0.4
Interest costs	2.0		2.4		0.2		0.3
Expected return on plan assets	(3.3)		(3.3)		(0.3)		(0.1)

Amortization of net loss	1.2		0.4		0.5		0.3
Net periodic pension cost	$	0.3	$	—	$	1.1	$	0.9

	U.S. Pension Benefits						Non-U.S. Pension Benefits
	Nine Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
Service costs	$	1.1	$	1.7	$	1.8	$	1.1
Interest costs	6.0		7.5		0.5		0.9
Expected return on plan assets	(9.7)		(9.9)		(0.6)		(0.4)
Amortization of unrecognized prior service costs, net	—		0.1		—		—
Amortization of net loss	3.6		0.8		1.8		0.8
Net periodic pension cost	$	1.0	$	0.2	$	3.5	$	2.4

Defined Contribution Plans

In connection with the Milacron acquisition, the Company assumed a defined contribution plan (the “401(k) Plan”) for eligible U.S. employees and defined contribution plans for eligible employees at certain foreign subsidiaries. For the 401(k) Plan, eligible employees are permitted to contribute a percentage of their compensation and employees are immediately vested in their voluntary contributions. The Company’s contributions to the 401(k) Plan are based on matching a portion of the employee contributions and employees become vested in the Company contributions once they attain a year of credited service. For the assumed foreign plans, employees are immediately vested in both their voluntary and Company matching contributions.

~~— Net postretirement healthcare costs~~

Expenses related to the Company’s defined contribution plans were ~~insignificant~~$3.7 and $10.8 for the three and nine months ended June 30, ~~2019~~2020, respectively, and ~~2018.~~

~~Defined Contribution Plans —~~ ~~Expenses related to our defined contribution plans were~~ $3.0 and $8.7 ~~for the three and nine months ended June 30, 2019 and $3.0 and $8.6~~ for the same periods in the prior ~~year.~~year, respectively.

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10.Income Taxes


9.	~~Income Taxes~~

The effective tax rates for the three months ended June 30, 2020 and 2019 were 53.1% and ~~2018 were~~ 26.8% ~~and 29.6%.~~, respectively. The ~~decrease~~effective tax rate in the current quarter and the difference from the prior year ~~quarter’s effective tax rate~~ is ~~attributable~~primarily due to the ~~full implementation~~impact of Milacron carryforward tax attributes adversely impacting domestic taxes associated with the Tax ~~Cuts and Jobs~~ Act, ~~(“Tax Act”), partially offset by an~~ unfavorable geographic mix of ~~pretax~~ income, and ~~an increase in~~nondeductible acquisition expenses related to the ~~reserve for unrecognized tax benefits in the prior year quarter that did not recur in the current year quarter.~~Milacron acquisition.

The effective tax rates for the nine months ended June 30, 2020 and 2019 were (58.4)% and ~~2018 were~~ 28.5% ~~and 60.7%. The high~~, respectively. Due to the current year net loss position, the effective tax rate indecreased over the prior year primarily ~~resulted~~as a result of the discrete recognition of tax expense on the divestiture of Cimcool, the impact of Milacron carryforward tax attributes adversely impacting domestic taxes associated with the Tax Act, unfavorable geographic mix of income, and nondeductible acquisition expenses related to the Milacron acquisition, net of the tax benefit recognized in 2020 from the revaluation of current and deferred tax balances in connection with the enacted statutory tax rate reductions in certain foreign jurisdictions. The change in the effective tax rate compared to the prior year was also impacted by the prior year increase in the reserve for unrecognized tax benefits that did not recur in the current year.

The acquisition of Milacron was completed as a taxable acquisition of the outstanding common stock of Milacron. In connection with the acquisition, the Company recorded a net deferred tax liability of $138.0 associated with the difference between the financial accounting basis and the tax basis in the acquired assets and liabilities assumed. Included in the acquired deferred taxes were deferred tax assets for the carryforward of Milacron’s tax net operating losses from federal, state, and foreign tax jurisdictions of $65.1, which were partially offset by the recognition of preliminary valuation allowances of $25.6 related to the estimated realizability of these items. The utilization of the acquired U.S. federal and state net operating losses to reduce Hillenbrand’s taxable income will be limited annually under Section 382 of the Internal Revenue Code. The Section 382 limitation analysis is in process as part of purchase accounting finalization and was not completed as of June 30, 2020. Additionally, Hillenbrand incurred transaction costs of $43.3 during the nine months ended June 30, 2020 associated with the acquisition of Milacron. A preliminary estimate of the nondeductible portion of these costs has been determined to be approximately $20.3 and recognized as an adjustment to the ~~previously mentioned impairment charge recorded in~~forecasted tax rate for the ~~Process Equipment Group segment~~year. As the Company continues to analyze the tax attributes of the acquisition, it will revise these preliminary estimates and appropriately record the impact of the Tax Act, as driven by the items discussed below. Additionally, the current year effective tax rate is reflective of the full implementation of the Tax Act, partially offset by the effects of an unfavorable geographic mix of pretax income.

any changes in estimates.

~~he Tax Act was enacted on December 22, 2017. The majority of~~On July 20, 2020, the ~~provisions of~~US Treasury and the Tax Act were to be effective for tax years beginning after December 31, 2017 (which corresponds to Hillenbrand’s current fiscal year ending September 30, 2019). As a non-calendar year end company, certain of the provisions of the Tax Act were effective for us for the fiscal year ended September 30, 2018, while others became effective for our current fiscal year ending September 30, 2019. The Tax Act reduced the federal corporate tax rate from 35% to 21%, which became effective on January 1, 2018. TheInternal Revenue Service issued Final Regulations under Internal Revenue Code ~~provides that our fiscal year ended September~~ 30, 2018 had a blended U.S. corporate tax rate of 24.5%, which is based on a proration of the applicable tax rates before and after effective date of the Tax Act. The statutory tax rate of 21% applies to fiscal year ending September 30, 2019 and future years. Shortly after the Tax Act was enacted, the SEC staff issued Staff Accounting Bulletin No. 118, ~~Income Tax Accounting Implications of the Tax Cuts and Jobs Act~~ (“SAB 118”), which provides guidance on accounting for the Tax Act’s impact. SAB 118 provides a measurement period, which in no case should extend beyond one year from the Tax Act enactment date, during which a company acting in good faith may complete the accounting for the impacts of the Tax Act under Accounting Standards Codification Topic 740 (“ASC 740”). Per SAB 118, the Company must reflect the income tax effects of the Tax Act in the reporting period in which the accounting under ASC 740 is complete.

~~In accordance with SAB 118,~~Section 951A relating to the ~~extent~~treatment of income that a company’s accounting for certain income tax effects of the Tax Act is incomplete, the company can determine a reasonable estimate for those effects and record a provisional estimate in the financial statements in the first reporting period in which a reasonable estimate can be determined. If a company cannot determine a provisional estimate to be included in the financial statements, the company should continue to apply ASC 740 based on the provisions of the tax laws that were in effect immediately prior to the Tax Act being enacted.

~~The impact of the federal tax rate reduction under the Tax Actwas recognized in the rate applied to earnings for the fiscal year ended September 30, 2018. The reduction for this period was from~~ ~~35.0% to 24.5%.~~ ~~The further reduction of the federal tax rate to the statutory tax rate of 21% under the Tax Act is being recognized in the rate applied to earnings for the fiscal year ending September 30, 2019.~~

We recorded a provisional discrete net tax expense of $14.3 related to the Tax Act in the quarter ended December 31, 2017. This net expense includes a benefit of $14.9 due to the remeasurement of our deferred tax items to reflect the impact of the federal tax rate reduction on our net deferred tax liabilities.

~~Furthermore, Hillenbrand~~ is subject to a ~~one-time transition~~high rate of tax under the GILTI regime. Additionally, on ~~certain unrepatriated earnings of foreign subsidiaries (the “Transition Tax”) as enacted pursuant~~July 28, 2020, the IRS issued Final and Proposed Regulations under Internal Revenue Code Section 163(j) relating to the ~~Tax Act. This Transition Tax was imposed~~business interest expense limitation. The Company is in the process of reviewing and estimating the impact of theseregulations and the potential impact on the deferred accumulated earnings of foreign subsidiaries at an effective rate of 15.5% of foreign earnings attributable to cash and cash equivalents, and 8% of the residual foreign earnings. During the fiscal year ended September 30, 2018, weConsolidated Financial Statements, if any, will be recorded a provisional net expense for the Transition Tax of $24.6. During the quarter ended December 31, 2018, we completed our determination of the effect of the Transition Tax and, pursuant to SAB 118, we recognized a $0.5 increase to the Transition Tax liability, resulting in a Transition Tax liability of $25.1. Hillenbrand elected to pay the Transition Tax over eight years and made the first installment payment of $2.0 during the quarter ended December 31, 2018. The remaining Transition Tax liability is included in Other current liabilities ($2.0) and Other long-term liabilities ($21.1) in the Consolidated Balance Sheet at June 30, 2019.subsequent periods.

In connection with the Tax Act, we evaluated our future cash deployment needs and revised our permanent reinvestment assertions. While we continue to assert permanent reinvestment for the earnings of certain of our foreign subsidiaries, we recognized an additional $1.3 of deferred tax liability during the quarter ended December 31, 2018, associated with those foreign subsidiaries where we no longer maintain a permanent reinvestment assertion.

11.Earnings per share

As noted above, the enactment dates for many of the provisions within the Tax Act were for tax years beginning after December 31, 2017, and as a result, certain provisions were not effective until our current fiscal year ending September 30, 2019. These

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provisions have been incorporated into the current period tax provision, and include recognizing global intangible low-taxed income and foreign derived intangible income, eliminating U.S. federal income taxes on dividends from foreign subsidiaries, eliminating the domestic production activity deduction, limiting the amount of deductible interest expense, limiting the use of foreign tax credits to reduce the U.S. income tax liability, and limiting the deduction of executive compensation, as well as other provisions.


~~10.~~	~~Earnings per share~~

The dilutive effects of performance-based stock awards were included in the computation of diluted earnings per share at the level the related performance criteria were met through the respective balance sheet date. ~~At June 30, 2019 and 2018, potential~~Potential dilutive effects, representing approximately 400,000 shares at ~~each period,~~both June 30, 2020 and 2019, were excluded from the computation of diluted earnings per share as the related performance criteria were not yet met, although ~~we expect~~the Company expects to meet various levels of criteria in the future.

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Three Months Ended
June 30, Nine Months Ended
June 30,
2019 2018 2019 2018
Net income (1) $ 30.4
$ 35.9
$ 96.7
$ 32.1
Weighted average shares outstanding (basic - in millions) 63.0
62.8
62.9
63.2
Effect of dilutive stock options and other unvested equity awards (in millions) 0.4
0.7
0.5
0.7
Weighted average shares outstanding (diluted - in millions) 63.4
63.5
63.4
63.9

Basic earnings per share $ 0.48
$ 0.57
$ 1.54
$ 0.51
Diluted earnings per share $ 0.48
$ 0.56
$ 1.52
$ 0.50

Shares with anti-dilutive effect excluded from the computation of diluted earnings per share (in millions) 1.1
0.5
0.9
0.4


	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
Net income (loss) attributable to Hillenbrand	$	24.0	$	30.4	$	(53.1)	$	96.7
Weighted-average shares outstanding (basic - in millions) ⁽¹⁾	75.1		63.0		72.8		62.9
Effect of dilutive stock options and other unvested equity awards (in millions) ⁽²⁾	—		0.4		—		0.5
Weighted-average shares outstanding (diluted - in millions)	75.1		63.4		72.8		63.4

Basic earnings (loss) per share	$	0.32	$	0.48	$	(0.73)	$	1.54
Diluted earnings (loss) per share	$	0.32	$	0.48	$	(0.73)	$	1.52

Shares with anti-dilutive effect excluded from the computation of diluted earnings per share (in millions)	2.8		1.1		2.9		0.9

~~(1) Net income attributable to Hillenbrand~~


~~11.~~			~~Other Comprehensive Income (Loss)~~

⁽¹⁾The increase in weighted-average shares outstanding during the nine months ended June 30, 2020 was due to 11.9 million of additional shares issued on November 21, 2019 in connection with the acquisition of Milacron. See Note 4 for further information.

⁽²⁾As a result of the net loss attributable to Hillenbrand during the nine months ended June 30, 2020, the effect of stock options and other unvested equity awards would be antidilutive. In accordance with GAAP, they have been excluded from the diluted earnings per share calculation.

12.Accumulated Other Comprehensive Loss

Pension and
Postretirement

Currency
Translation

Net
Unrealized
Gain (Loss)
on Derivative
Instruments

Total
Attributable
to
Hillenbrand,
Inc.

Noncontrolling
Interests
Total
Balance at September 30, 2018 $ (41.0 ) $ (44.1 ) $ 0.9
$ (84.2 )

Other comprehensive income before reclassifications

Before tax amount 1.5
(3.6 ) (16.2 ) (18.3 ) $ 0.2
$ (18.1 )
Tax expense (0.4 ) —
3.8
3.4
—
3.4
After tax amount 1.1
(3.6 ) (12.4 ) (14.9 ) 0.2
(14.7 )
Amounts reclassified from accumulated other comprehensive income(1) 0.9
—
(0.3 ) 0.6
—
0.6
Net current period other comprehensive income (loss) 2.0
(3.6 ) (12.7 ) (14.3 ) $ 0.2
$ (14.1 )
Balance at June 30, 2019 $ (39.0 ) $ (47.7 ) $ (11.8 ) $ (98.5 )

The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive loss:


	Pension and Postretirement		Currency Translation		Net Unrealized Gain (Loss) on Derivative Instruments		Total Attributable to Hillenbrand, Inc.		Noncontrolling Interests		Total
Balance at September 30, 2019	$	(62.3)	$	(64.7)	$	(13.6)	$	(140.6)
Other comprehensive loss before reclassifications:
Before tax amount	—		(0.3)		(1.6)		(1.9)		$	(0.7)	$	(2.6)
Tax benefit	—		—		0.3		0.3		—		0.3
After tax amount	—		(0.3)		(1.3)		(1.6)		(0.7)		(2.3)
Amounts reclassified from accumulated other comprehensive loss ⁽¹⁾	3.8		—		1.8		5.6		—		5.6
Net current period other comprehensive income (loss)	3.8		(0.3)		0.5		4.0		$	(0.7)	$	3.3
Reclassification of certain income tax effects ⁽²⁾	(6.0)		—		—		(6.0)
Balance at June 30, 2020	$	(64.5)	$	(65.0)	$	(13.1)	$	(142.6)

⁽¹⁾Amounts are net of tax.

⁽²⁾Income tax effects of the Tax Act were reclassified from accumulated other comprehensive loss to retained earnings due to the adoption of ASU 2018-02. See Note 2 for more information.

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	Pension and Postretirement		Currency Translation		Net Unrealized Gain (Loss) on Derivative Instruments		Total Attributable to Hillenbrand, Inc.		Noncontrolling Interests		Total
Balance at September 30, 2018	$	(41.0)	$	(44.1)	$	0.9	$	(84.2)
Other comprehensive income (loss) before reclassifications:
Before tax amount	1.5		(3.6)		(16.2)		(18.3)		$	0.2	$	(18.1)
Tax (expense) benefit	(0.4)		—		3.8		3.4		—		3.4
After tax amount	1.1		(3.6)		(12.4)		(14.9)		0.2		(14.7)
Amounts reclassified from accumulated other comprehensive loss ⁽¹⁾	0.9		—		(0.3)		0.6		—		0.6
Net current period other comprehensive income (loss)	2.0		(3.6)		(12.7)		(14.3)		$	0.2	$	(14.1)
Balance at June 30, 2019	$	(39.0)	$	(47.7)	$	(11.8)	$	(98.5)

Pension and
Postretirement

Currency
Translation

Net
Unrealized
Gain (Loss)
on Derivative
Instruments

Total
Attributable
to
Hillenbrand,
Inc.

Noncontrolling
Interests
Total
Balance at September 30, 2017 $ (45.3 ) $ (36.9 ) $ 1.0
$ (81.2 )

Other comprehensive income before reclassifications

Before tax amount —
(4.8 ) (0.2 ) (5.0 ) $ (0.3 ) $ (5.3 )
Tax expense —
—
—
—
—
—
After tax amount —
(4.8 ) (0.2 ) (5.0 ) (0.3 ) (5.3 )
Amounts reclassified from accumulated other comprehensive income(1) 2.1
—
0.4
2.5
—
2.5
Net current period other comprehensive income (loss) 2.1
(4.8 ) 0.2
(2.5 ) $ (0.3 ) $ (2.8 )
Balance at June 30, 2018 $ (43.2 ) $ (41.7 ) $ 1.2
$ (83.7 )

⁽¹⁾Amounts are net of tax.

Reclassifications out of ~~Accumulated Other Comprehensive Income~~accumulated other comprehensive loss include:


	Three Months Ended June 30, 2020
	Amortization of Pension and Postretirement ⁽¹⁾						(Gain) Loss on
	Net Loss Recognized		Prior Service Costs Recognized		Derivative Instruments		Total
Affected Line in the Consolidated Statement of Operations:
Net revenue	$	—	$	—	$	—	$	—
Cost of goods sold	—		—		0.9		0.9

Other income (expense), net	1.7		—		0.5		2.2
Total before tax	$	1.7	$	—	$	1.4	$	3.1
Tax benefit							(0.5)
Total reclassifications for the period, net of tax							$	2.6

	Nine Months Ended June 30, 2020
	Amortization of Pension and Postretirement ⁽¹⁾						(Gain) Loss on
	Net Loss Recognized		Prior Service Costs Recognized		Derivative Instruments		Total
Affected Line in the Consolidated Statement of Operations:
Net revenue	$	—	$	—	$	(0.2)	$	(0.2)
Cost of goods sold	—		—		0.5		0.5

Other income (expense), net	5.2		(0.1)		1.5		6.6
Total before tax	$	5.2	$	(0.1)	$	1.8	$	6.9
Tax benefit							(1.3)
Total reclassifications for the period, net of tax							$	5.6

Three Months Ended June 30, 2019
Amortization of Pension and
Postretirement (1) (Gain)/Loss on
Net Loss
Recognized Prior Service Costs
Recognized Derivative
Instruments Total
Affected Line in the Consolidated Statement of Operations:

Net revenue $ —
$ —
$ (0.1 ) $ (0.1 )
Cost of goods sold —
—
(0.4 ) (0.4 )
Other income (expense), net 0.6
—
—
0.6
Total before tax $ 0.6
$ —
$ (0.5 ) $ 0.1
Tax expense —
Total reclassifications for the period, net of tax $ 0.1

Nine Months Ended June 30, 2019
Amortization of Pension and
Postretirement (1) (Gain)/Loss on
Net Loss
Recognized Prior Service Costs
Recognized Derivative
Instruments Total
Affected Line in the Consolidated Statement of Operations:

Net revenue $ —
$ —
$ 0.1
$ 0.1
Cost of goods sold —
—
(0.6 ) (0.6 )
Other income (expense), net 1.3
—
—
1.3
Total before tax $ 1.3
$ —
$ (0.5 ) $ 0.8
Tax expense (0.2 )
Total reclassifications for the period, net of tax $ 0.6

⁽¹⁾These accumulated other comprehensive ~~income~~loss components are included in the computation of net periodic pension cost (see Note 8)9).

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	Three Months Ended June 30, 2019
	Amortization of Pension and Postretirement ⁽¹⁾						Gain (Loss) on
	Net Loss Recognized		Prior Service Costs Recognized		Derivative Instruments		Total
Affected Line in the Consolidated Statement of Operations:
Net revenue	$	—	$	—	$	(0.1)	$	(0.1)
Cost of goods sold	—		—		(0.4)		(0.4)

Other income (expense), net	0.6		—		—		0.6
Total before tax	$	0.6	$	—	$	(0.5)	$	0.1
Tax benefit							—
Total reclassifications for the period, net of tax							$	0.1

	Nine Months Ended June 30, 2019
	Amortization of Pension and Postretirement ⁽¹⁾						Loss (Gain) on
	Net Loss Recognized		Prior Service Costs Recognized		Derivative Instruments		Total
Affected Line in the Consolidated Statement of Operations:
Net revenue	$	—	$	—	$	0.1	$	0.1
Cost of goods sold	—		—		(0.6)		(0.6)

Other income (expense), net	1.3		—		—		1.3
Total before tax	$	1.3	$	—	$	(0.5)	$	0.8
Tax benefit							(0.2)
Total reclassifications for the period, net of tax							$	0.6

Three Months Ended June 30, 2018

Amortization of Pension and
Postretirement (1)
(Gain)/Loss on

Net Loss
Recognized

Prior Service Costs
Recognized

Derivative
Instruments
Total
Affected Line in the Consolidated Statement of Operations:

Net revenue $ —
$ —
$ 0.9
$ 0.9
Other income (expense), net 0.9
0.1
—
1.0
Total before tax $ 0.9
$ 0.1
$ 0.9
$ 1.9
Tax expense

(0.5 )
Total reclassifications for the period, net of tax

$ 1.4

Nine Months Ended June 30, 2018

Amortization of Pension and
Postretirement (1)
(Gain)/Loss on

Net Loss
Recognized

Prior Service Costs
Recognized

Derivative
Instruments
Total
Affected Line in the Consolidated Statement of Operations:

Net revenue $ —
$ —
$ 0.5
$ 0.5
Other income (expense), net 2.9
0.1
—
3.0
Total before tax $ 2.9
$ 0.1
$ 0.5
$ 3.5
Tax expense (1.0 )
Total reclassifications for the period, net of tax $ 2.5

⁽¹⁾These accumulated other comprehensive ~~income~~loss components are included in the computation of net periodic pension cost (see Note 8)9).


~~12.~~	~~Share-Based Compensation~~

13.

Three Months Ended
June 30, Nine Months Ended
June 30,
2019 2018 2019 2018
Share-based compensation costs $ 2.9
$ 2.6
$ 8.7
$ 8.8
Less impact of income tax benefit 0.7
0.7
2.0
2.3
Share-based compensation costs, net of tax $ 2.2
$ 1.9
$ 6.7
$ 6.5
Share-Based Compensation

~~We have~~


	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
Share-based compensation costs	$	3.7	$	2.9	$	9.4	$	8.7
Less impact of income tax benefit	0.9		0.7		2.2		2.0
Share-based compensation costs, net of tax	$	2.8	$	2.2	$	7.2	$	6.7

The Company has share-based compensation with long-term performance-based metrics that are contingent upon ~~our~~the Company’s relative total shareholder return and the creation of shareholder value. Relative total shareholder return is determined by comparing ~~our~~the Company’s total shareholder return during a three-year period to the respective total shareholder returns of companies in a designated performance peer ~~group.~~group or stock index, as applicable. Creation of shareholder value is measured by the cumulative cash returns and final period net operating profit after tax compared to the established hurdle rate over a three-year period. For the performance-based awards contingent upon the creation of shareholder value, compensation expense is adjusted each quarter based upon actual results to date and any changes to forecasted information on each of the separate grants.

During the nine months ended June 30, ~~2019, we~~2020, the Company made the following grants:

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			Number of Units
Stock options			~~431,726~~454,929
Time-based stock awards			~~29,262~~369,193
Performance-based stock awards (maximum that can be earned)			~~336,273~~428,026

~~Table of Contents~~

Stock options granted during ~~fiscal 2019~~2020 had a weighted-average exercise price of ~~$41.31~~$31.94 and a weighted-average grant date fair value of ~~$10.15. Our~~$6.63. The Company’s time-based stock awards and performance-based stock awards granted during ~~fiscal 2019~~the nine months ended June 30, 2020 had weighted-average grant date fair values of ~~$41.09~~$31.31 and ~~$41.77.~~$32.73, respectively. Included in the performance-based stock awards granted during ~~fiscal 2019~~the nine months ended June 30, 2020 are ~~181,994~~252,406 units whose payout level is based upon the Company’s relative total shareholder return over the three-year measurement period, as described above. These units will be expensed on a straight-line basis over the measurement period and are not subsequently adjusted after the grant date.


~~13.~~	~~Other Income (Expense), Net~~

14.Other Income (Expense), Net

Three Months Ended
June 30, Nine Months Ended
June 30,
2019 2018 2019 2018
Equity in net income (loss) of affiliates $ 0.1
$ (0.1 ) $ —
$ (0.1 )
Foreign currency exchange gain (loss), net (0.5 ) (0.1 ) —
(0.9 )
Other, net (0.1 ) (0.5 ) 0.1
(1.2 )
Other income (expense), net $ (0.5 ) $ (0.7 ) $ 0.1
$ (2.2 )


	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
Net loss on divestiture	$	—	$	—	$	(3.0)	$	—
Interest income	0.6		0.3		2.5		0.7
Foreign currency exchange gain (loss) , net	0.3		(0.5)		2.2		—
Other, net	(0.3)		(0.3)		0.1		(0.6)
Other income (expense), net	$	0.6	$	(0.5)	$	1.8	$	0.1

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The following tables present financial information for the Company’s reportable segments and significant geographical locations:


	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
Net revenue
Process Equipment Group	$	281.3	$	315.3	$	899.0	$	924.2
Milacron	186.3		—		518.6		—
Batesville	139.9		131.3		405.7		397.3
Total	$	607.5	$	446.6	$	1,823.3	$	1,321.5

Adjusted EBITDA ⁽¹⁾
Process Equipment Group	$	57.6	$	54.9	$	166.6	$	156.6
Milacron	38.1		—		96.4		—
Batesville	36.4		25.3		91.4		83.6
Corporate	(11.1)		(10.7)		(30.9)		(31.7)

Net revenue ⁽²⁾
United States	$	292.1	$	222.1	$	853.0	$	669.3
Germany	151.2		145.4		495.2		398.3


All other foreign business units	164.2		79.1		475.1		253.9
Total	$	607.5	$	446.6	$	1,823.3	$	1,321.5


~~16.~~			~~Segment and Geographical Information~~

Three Months Ended June 30, Nine Months Ended June 30,
2019 2018 2019 2018
Net revenue

Process Equipment Group $ 315.3
$ 316.7
$ 924.2
$ 880.8
Batesville 131.3
129.3
397.3
414.6
Total $ 446.6
$ 446.0
$ 1,321.5
$ 1,295.4

Adjusted EBITDA

Process Equipment Group $ 54.9
$ 58.2
$ 156.6
$ 153.7
Batesville 25.3
25.6
83.6
92.1
Corporate (10.7 ) (12.4 ) (31.7 ) (32.9 )

Net revenue (1)

United States $ 222.1
$ 226.7
$ 669.3
$ 691.7
Germany 145.4
130.7
398.3
370.9
All other foreign business units 79.1
88.6
253.9
232.8
Total $ 446.6
$ 446.0
$ 1,321.5
$ 1,295.4

⁽¹⁾Adjusted EBITDA is a non-GAAP measure used by management to measure segment performance and make operating decisions. See the Operating Performance Measures section of Management’s Discussion and Analysis for further information on adjusted EBITDA, which is reconciled to consolidated net income (loss) below.

⁽²⁾~~(1)~~ ~~We attribute~~The Company attributes net revenue to a geography based upon the location of the business ~~unit~~ that consummates the external sale.


	June 30, 2020		September 30, 2019
Total assets assigned
Process Equipment Group	$	1,710.4	$	1,729.1
Milacron	1,988.0		—
Batesville	228.7		186.1
Corporate	102.8		313.4
Total	$	4,029.9	$	2,228.6

Tangible long-lived assets, net⁽¹⁾
United States	$	208.0	$	75.8
Germany	103.2		40.2
China	51.4		4.4

All other foreign business units	130.4		19.9
Total	$	493.0	$	140.3

June 30,
2019 September 30,
2018
Total assets assigned

Process Equipment Group $ 1,682.7
$ 1,638.8
Batesville 175.9
191.8
Corporate 32.0
34.0
Total $ 1,890.6
$ 1,864.6

Tangible long-lived assets, net

United States $ 73.5
$ 76.6
Germany 38.6
40.7
All other foreign business units 24.5
24.7
Total $ 136.6
$ 142.0
⁽¹⁾Tangible long-lived assets, net includes operating lease right-of-use assets as of June 30, 2020 due to the adoption of ASU 2016-02 in the current year.

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The following schedule reconciles reportable segment adjusted EBITDA to consolidated net income (loss).:

Three Months Ended
June 30, Nine Months Ended
June 30,
2019 2018 2019 2018
Adjusted EBITDA:
Process Equipment Group $ 54.9
$ 58.2
$ 156.6
$ 153.7
Batesville 25.3
25.6
83.6
92.1
Corporate (10.7 ) (12.4 ) (31.7 ) (32.9 )
Less:

Interest income (0.3 ) (0.3 ) (0.7 ) (1.1 )
Interest expense 5.2
5.5
16.1
17.8
Income tax expense 11.6
15.2
39.9
52.5
Depreciation and amortization 15.1
14.2
44.3
42.0
Impairment charge —
—
—
63.4
Business acquisition, development, and integration 3.8
0.1
4.9
2.6
Restructuring and restructuring related 2.4
0.5
3.6
1.7
Inventory step-up —
—
0.2
—
Consolidated net income $ 31.7
$ 36.2
$ 100.2
$ 34.0

~~Table of Contents~~


~~17.~~	~~Condensed Consolidating Information~~

Certain 100% owned domestic subsidiaries of Hillenbrand fully and unconditionally, jointly and severally, agreed to guarantee all of the indebtedness and guarantee obligations relating to our obligations under our senior unsecured notes. The following are the condensed consolidating financial statements, including the guarantors, which present the statements of income, balance sheets, and cash flows of (i) the parent holding company, (ii) the guarantor subsidiaries, (iii) the non-guarantor subsidiaries, and (iv) eliminations necessary to present the information for Hillenbrand on a consolidated basis.

~~Table of Contents~~

~~Condensed Consolidating Statements of Income~~

Three Months Ended June 30, 2019 Three Months Ended June 30, 2018
Parent Guarantors
Non-
Guarantors
Eliminations Consolidated Parent Guarantors
Non-
Guarantors
Eliminations Consolidated
Net revenue $ —
$ 220.4
$ 284.2
$ (58.0 ) $ 446.6
$ —
$ 232.7
$ 273.2
$ (59.9 ) $ 446.0
Cost of goods sold —
125.0
204.7
(31.5 ) 298.2
—
126.4
189.6
(33.5 ) 282.5
Gross profit —
95.4
79.5
(26.5 ) 148.4
—
106.3
83.6
(26.4 ) 163.5
Operating expenses 15.1
59.8
42.4
(26.5 ) 90.8
13.4
63.1
48.2
(26.4 ) 98.3
Amortization expense —
3.3
5.3
—
8.6
—
3.3
4.3
—
7.6
Interest expense 4.4
0.1
0.7
—
5.2
4.6
—
0.9
—
5.5
Other (expense) income, net (0.1 ) (0.3 ) (0.1 ) —
(0.5 ) (0.2 ) (0.4 ) (0.1 ) —
(0.7 )
Equity in net income of subsidiaries 44.8
2.4
—
(47.2 ) —
34.8
3.6
—
(38.4 ) —
Income before income taxes 25.2
34.3
31.0
(47.2 ) 43.3
16.6
43.1
30.1
(38.4 ) 51.4
Income tax expense (5.2 ) 9.3
7.5
—
11.6
(19.3 ) 9.9
24.6
—
15.2
Consolidated net income 30.4
25.0
23.5
(47.2 ) 31.7
35.9
33.2
5.5
(38.4 ) 36.2
Less: Net income attributable to
noncontrolling interests —
—
1.3
—
1.3
—
—
0.3
—
0.3
Net income (1) $ 30.4
$ 25.0
$ 22.2
$ (47.2 ) $ 30.4
$ 35.9
$ 33.2
$ 5.2
$ (38.4 ) $ 35.9
Consolidated comprehensive income $ 33.7
$ 26.2
$ 30.2
$ (55.1 ) $ 35.0
$ 10.7
$ 33.8
$ (20.4 ) $ (13.4 ) $ 10.7
Less: Comprehensive income attributable
to noncontrolling interests —
—
1.3
—
1.3
—
—
—
—
—
Comprehensive income (2) $ 33.7
$ 26.2
$ 28.9
$ (55.1 ) $ 33.7
$ 10.7
$ 33.8
$ (20.4 ) $ (13.4 ) $ 10.7

~~Table of Contents~~

Nine Months Ended June 30, 2019 Nine Months Ended June 30, 2018
Parent Guarantors
Non-
Guarantors
Eliminations Consolidated Parent Guarantors
Non-
Guarantors
Eliminations Consolidated
Net revenue $ —
$ 667.1
$ 826.1
$ (171.7 ) $ 1,321.5
$ —
$ 701.8
$ 758.7
$ (165.1 ) $ 1,295.4
Cost of goods sold —
367.6
589.1
(91.5 ) 865.2
—
371.2
530.7
(84.8 ) 817.1
Gross profit —
299.5
237.0
(80.2 ) 456.3
—
330.6
228.0
(80.3 ) 478.3
Operating expenses 39.0
182.1
134.3
(80.2 ) 275.2
37.9
189.5
138.6
(80.3 ) 285.7
Amortization expense —
10.0
15.0
—
25.0
—
10.0
12.7
—
22.7
Impairment charge —

—

—

—

—
—
63.4
—
—
63.4
Interest expense 13.6
0.2
2.3
—
16.1
15.7
—
2.1
—
17.8
Other (expense) income, net (0.6 ) (0.4 ) 1.1
—
0.1
(0.6 ) (0.1 ) (1.5 ) —
(2.2 )
Equity in net income of subsidiaries 138.2
8.1
—
(146.3 ) —
67.1
6.8
—
(73.9 ) —
Income before income taxes 85.0
114.9
86.5
(146.3 ) 140.1
12.9
74.4
73.1
(73.9 ) 86.5
Income tax expense (11.7 ) 29.8
21.8
—
39.9
(19.2 ) 34.8
36.9
—
52.5
Consolidated net income 96.7
85.1
64.7
(146.3 ) 100.2
32.1
39.6
36.2
(73.9 ) 34.0
Less: Net income attributable to
noncontrolling interests —
—
3.5
—
3.5
—
—
1.9
—
1.9
Net income (1) $ 96.7
$ 85.1
$ 61.2
$ (146.3 ) $ 96.7
$ 32.1
$ 39.6
$ 34.3
$ (73.9 ) $ 32.1
Consolidated comprehensive income $ 82.4
$ 86.4
$ 61.6
$ (144.3 ) $ 86.1
$ 29.6
$ 41.1
$ 31.0
$ (70.5 ) $ 31.2
Less: Comprehensive income attributable
to noncontrolling interests —
—
3.7
—
3.7
—
—
1.6
—
1.6
Comprehensive income (2) $ 82.4
$ 86.4
$ 57.9
$ (144.3 ) $ 82.4
$ 29.6
$ 41.1
$ 29.4
$ (70.5 ) $ 29.6

~~(1) Net income attributable to Hillenbrand~~

~~(2) Comprehensive income attributable to Hillenbrand~~

~~Table of Contents~~

~~Condensed Consolidating Balance Sheets~~

June 30, 2019 September 30, 2018
Parent Guarantors
Non-
Guarantors
Eliminations Consolidated Parent Guarantors
Non-
Guarantors
Eliminations Consolidated
Cash and cash equivalents $ 0.1
$ 5.5
$ 58.8
$ —
$ 64.4
$ 1.1
$ 5.8
$ 49.1
$ —
$ 56.0
Trade receivables, net —
99.2
99.6
—
198.8
—
124.5
94.0
—
218.5
Receivables from long-term manufacturing contracts —
9.8
148.8
—
158.6
—
5.3
115.0
—
120.3
Inventories —
81.1
108.4
(2.8 ) 186.7
—
76.7
98.6
(2.8 ) 172.5
Prepaid expense 3.0
6.6
19.4
—
29.0
2.7
7.0
15.5
—
25.2
Intercompany receivables —
1,169.2
51.3
(1,220.5 ) —
—
1,131.1
79.1
(1,210.2 ) —
Other current assets —
2.6
17.6
0.5
20.7
—
3.2
14.6
0.3
18.1
Total current assets 3.1
1,374.0
503.9
(1,222.8 ) 658.2
3.8
1,353.6
465.9
(1,212.7 ) 610.6
Property, plant and equipment, net 3.5
58.6
74.5
—
136.6
3.8
60.2
78.0
—
142.0
Intangible assets, net 2.5
185.0
283.6
—
471.1
3.2
196.0
288.1
—
487.3
Goodwill —
225.0
361.8
—
586.8
—
225.0
356.9
—
581.9
Investment in consolidated subsidiaries 2,347.3
667.8
—
(3,015.1 ) —
2,263.1
653.9
—
(2,917.0 ) —
Other assets 31.2
27.6
3.0
(23.9 ) 37.9
15.7
28.2
5.9
(7.0 ) 42.8
Total Assets $ 2,387.6
$ 2,538.0
$ 1,226.8
$ (4,261.8 ) $ 1,890.6
$ 2,289.6
$ 2,516.9
$ 1,194.8
$ (4,136.7 ) $ 1,864.6

Trade accounts payable $ 0.2
$ 62.5
$ 161.8
$ —
$ 224.5
$ —
$ 62.4
$ 134.4
$ —
$ 196.8
Liabilities from long-term manufacturing contracts and advances —
20.0
89.2
—
109.2
—
26.6
99.3
—
125.9
Accrued compensation 5.2
19.1
44.6
—
68.9
7.2
20.1
44.6
—
71.9
Intercompany payables 1,214.5
8.8
—
(1,223.3 ) —
1,206.2
6.1
—
(1,212.3 ) —
Other current liabilities 24.1
42.6
67.0
(10.0 ) 123.7
19.4
38.9
78.1
0.7
137.1
Total current liabilities 1,244.0
153.0
362.6
(1,233.3 ) 526.3
1,232.8
154.1
356.4
(1,211.6 ) 531.7
Long-term debt 323.2
—
—
—
323.2
300.2
—
44.4
—
344.6
Accrued pension and postretirement healthcare 0.7
28.8
84.7
—
114.2
0.7
29.8
90.0
—
120.5
Deferred income taxes —
23.1
61.1
(13.4 ) 70.8
0.7
22.9
60.9
(8.1 ) 76.4
Other long-term liabilities 38.5
12.9
8.9
—
60.3
24.1
14.3
8.9
—
47.3
Total Liabilities 1,606.4
217.8
517.3
(1,246.7 ) 1,094.8
1,558.5
221.1
560.6
(1,219.7 ) 1,120.5
Total Hillenbrand Shareholders’ Equity 781.2
2,320.2
694.9
(3,015.1 ) 781.2
731.1
2,295.8
621.2
(2,917.0 ) 731.1
Noncontrolling interests —
—
14.6
—
14.6
—
—
13.0
—
13.0
Total Equity 781.2
2,320.2
709.5
(3,015.1 ) 795.8
731.1
2,295.8
634.2
(2,917.0 ) 744.1
Total Liabilities and Equity $ 2,387.6
$ 2,538.0
$ 1,226.8
$ (4,261.8 ) $ 1,890.6
$ 2,289.6
$ 2,516.9
$ 1,194.8
$ (4,136.7 ) $ 1,864.6

~~Table of Contents~~

~~Condensed Consolidating Statements of Cash Flows~~


	Three Months Ended June 30,						Nine Months Ended June 30,
	2020		2019		2020		2019
Adjusted EBITDA:
Process Equipment Group	$	57.6	$	54.9	$	166.6	$	156.6
Milacron	38.1		—		96.4		—
Batesville	36.4		25.3		91.4		83.6
Corporate	(11.1)		(10.7)		(30.9)		(31.7)
Less:
Interest income	(0.6)		(0.3)		(2.5)		(0.7)
Interest expense	19.7		5.2		55.3		16.1
Income tax expense	28.3		11.6		17.7		39.9
Depreciation and amortization	33.9		15.1		98.4		44.3
Impairment charges	—		—		82.5		—
Business acquisition, disposition, and integration costs	5.5		3.8		67.3		4.9
Restructuring and restructuring-related charges	3.6		2.4		6.7		3.6
Inventory step-up	3.6		—		40.7		0.2
Net loss on divestiture	—		—		3.0		—
Other	2.0		—		2.4		—
Consolidated net income (loss)	$	25.0	$	31.7	$	(48.0)	$	100.2

Nine Months Ended June 30, 2019 Nine Months Ended June 30, 2018
Parent Guarantors
Non-
Guarantors
Eliminations Consolidated Parent Guarantors
Non-
Guarantors
Eliminations Consolidated
Net cash provided by (used in)
     operating activities
$ 18.2
$ 105.2
$ 92.6
$ (106.4 ) $ 109.6
$ 186.0
$ 126.6
$ (32.0 ) $ (124.3 ) $ 156.3

Investing activities:

Capital expenditures (0.7 ) (5.6 ) (6.3 ) —
(12.6 ) (1.5 ) (7.5 ) (7.3 ) —
(16.3 )
Acquisition of business, net of cash
     acquired
—
—
(25.9 ) —
(25.9 ) —
—
—
—
—
Other, net —
0.1
—
—
0.1
—
—
0.4
—
0.4
Net cash used in investing activities (0.7 ) (5.5 ) (32.2 ) —
(38.4 ) (1.5 ) (7.5 ) (6.9 ) —
(15.9 )

Financing activities:

Repayments on term loan —
—
—
—
—
(148.5 ) —
—
—
(148.5 )
Proceeds from revolving credit facilities,
     net of financing costs
215.0
—
234.7
—
449.7
530.6
—
415.9
—
946.5
Repayments on revolving credit facilities (192.3 ) —
(277.8 ) —
(470.1 ) (472.9 ) —
(364.3 ) —
(837.2 )
Payment of dividends - intercompany —
(100.0 ) (6.4 ) 106.4
—
—
(118.3 ) (6.0 ) 124.3
—
Payment of dividends on common stock (39.4 ) —
—
—
(39.4 ) (39.1 ) —
—
—
(39.1 )
Repurchases of common stock —
—
—
—
—
(60.6 ) —
—
—
(60.6 )
Proceeds from stock option exercises and
     other
2.4
—
—
—
2.4
10.3
—
—
—
10.3
Payments for employee taxes on net
     settlement equity awards
(4.2 )

(4.2 ) (4.1 ) —
—
—
(4.1 )
Other, net —
—
(0.9 ) —
(0.9 ) —
—
(1.8 ) —
(1.8 )
Net cash (used in) provided by
     financing activities
(18.5 ) (100.0 ) (50.4 ) 106.4
(62.5 ) (184.3 ) (118.3 ) 43.8
124.3
(134.5 )

Effect of exchange rates on cash and
     cash equivalents
—
—
(0.2 ) —
(0.2 ) —
—
(1.0 ) —
(1.0 )

Net cash flow (1.0 ) (0.3 ) 9.8
—
8.5
0.2
0.8
3.9
—
4.9
Cash, cash equivalents and restricted cash at
     beginning of period
1.1
5.8
49.6
—
56.5
0.1
5.0
61.6
—
66.7
Cash, cash equivalents and restricted cash at
     end of period
$ 0.1
$ 5.5
$ 59.4
$ —
$ 65.0
$ 0.3
$ 5.8
$ 65.5
$ —
$ 71.6

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18.Restructuring


~~18.~~	~~Restructuring~~

The following schedule details the restructuring charges by reportable segment and the classification of those charges onin the ~~income statement.~~Consolidated Statements of Operations.


	Three Months Ended June 30, 2020										Three Months Ended June 30, 2019
	Cost of goods sold		Operating expenses		Total		Cost of goods sold		Operating expenses		Total
Process Equipment Group	$	0.2	$	1.9	$	2.1	$	0.2	$	0.4	$	0.6
Milacron	0.8		0.1		0.9		—		—		—
Batesville	(0.1)		0.1		—		0.3		1.4		1.7
Corporate	—		0.4		0.4		—		—		—
Total	$	0.9	$	2.5	$	3.4	$	0.5	$	1.8	$	2.3

	Nine Months Ended June 30, 2020										Nine Months Ended June 30, 2019
	Cost of goods sold		Operating expenses		Total		Cost of goods sold		Operating expenses		Total
Process Equipment Group	$	0.9	$	3.1	$	4.0	$	0.6	$	0.5	$	1.1
Milacron	0.6		1.3		1.9		—		—		—
Batesville	—		0.5		0.5		0.5		1.9		2.4
Corporate	—		1.4		1.4		—		—		—
Total	$	1.5	$	6.3	$	7.8	$	1.1	$	2.4	$	3.5

Three Months Ended June 30, 2019 Three Months Ended June 30, 2018
Cost of goods sold Operating expenses Total Cost of goods sold Operating expenses Total
Process Equipment Group $ 0.2
$ 0.4
$ 0.6
$ 0.3
$ 0.2
$ 0.5
Batesville 0.3
1.4
1.7
—
—
—
Corporate —
—
—
—
(0.1 ) (0.1 )
Total $ 0.5
$ 1.8
$ 2.3
$ 0.3
$ 0.1
$ 0.4

Nine Months Ended June 30, 2019 Nine Months Ended June 30, 2018
Cost of goods sold Operating expenses Total Cost of goods sold Operating expenses Total
Process Equipment Group $ 0.6
$ 0.5
$ 1.1
$ 0.2
$ 0.4
$ 0.6
Batesville 0.5
1.9
2.4
—
0.2
0.2
Corporate —
—
—
—
0.5
0.5
Total $ 1.1
$ 2.4
$ 3.5
$ 0.2
$ 1.1
$ 1.3

The restructuring charges during the three and nine months ended June 30, 2020 and 2019 related primarily to severance costs. The severance costs within the Milacron and Corporate reportable segments were primarily related to the ongoing integration of Milacron. At June 30, ~~2019, $2.7~~2020, $4.0 of restructuring costs were accrued and expected to be paid over the next twelve months.


~~19.~~	~~Subsequent Events~~

~~Proposed Acquisition of Milacron~~

We entered into a definitive agreement on July 12, 2019 to acquire Milacron Holdings Corp. (“Milacron”) in a cash and stock transaction valued at approximately $2 billion, including debt, net of cash on hand, of $686 as of March 31, 2019. The transaction, which is expected to close in the first calendar quarter of 2020, is subject to customary closing conditions and regulatory approvals, including the approval of stockholders of Milacron.

Under the terms of the agreement, Milacron stockholders will receive $11.80 in cash and a fixed exchange ratio of 0.1612 shares of Hillenbrand common stock for each share of Milacron common stock they own. Upon closing, Hillenbrand shareholders will own approximately 84% of the combined company, and Milacron stockholders will own approximately 16%.

In connection with the proposed transaction, we entered into a commitment letter on July 12, 2019 pursuant to which JPMorgan Chase Bank, N.A. committed to provide a 364-day senior unsecured bridge facility in an aggregate principal amount of $1.1 billion.

~~Table of Contents~~

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

(financial amounts in millions, except share and per share data, throughout Management’s Discussion and Analysis)

FORWARD-LOOKING STATEMENTS AND FACTORS THAT MAY AFFECT FUTURE RESULTS

Throughout this Form 10-Q, we make a number of “forward-looking statements” that are within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of ~~1995.~~1995, and that are intended to be covered by the safe harbor provided under these sections. As the words imply, these are statements about future sales, earnings, cash flow, results of operations, uses of cash, financings, share repurchases, ability to meet deleveraging goals, and other measures of financial performance or potential future plans or events, strategies, objectives, beliefs, prospects, assumptions, expectations, and ~~expectations~~projected costs or savings or transactions of the Company that might or might not happen in the future, as contrasted with historical information. Forward-looking statements are based on assumptions that we believe are reasonable, but by their very nature are subject to a wide range of risks. If our assumptions prove inaccurate or unknown risks and uncertainties materialize, actual results could vary materially from Hillenbrand’s expectations and projections.

Accordingly, in this Form 10-Q, we may say something like:

“We expect that future revenue associated with the Process Equipment Group will be influenced by order backlog.”

That is a forward-looking statement, as indicated by the word “expect” and by the clear meaning of the sentence.

Other words that could indicate we are making forward-looking statements include:

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intend

believe

plan

expect

may

goal

would

project

become

pursue

estimate

will

forecast

continue

could

anticipate

target

~~encourage~~impact

promise

improve

progress

potential

should

This is not an exhaustive list, but is intended to give you an idea of how we try to identify forward-looking statements. The absence of any of these words, however, does not mean that the statement is not forward-looking.

Here is the key point: Forward-looking statements are not guarantees of future performance, and our actual results could differ materially from those set forth in any forward-looking statements.

Any number of factors, many of which are beyond our control, could cause our performance to differ significantly from what is described in the forward-looking statements. This includes risks related to the ~~impact~~ongoing COVID-19 pandemic and the societal, governmental, and individual responses thereto, including supply chain disruptions; loss of contracts and/or customers; erosion of some customers’ credit quality; downgrades of the ~~Tax Act on~~Company’s credit quality; closure or temporary interruption of the Company’s ~~financial position, results~~or suppliers’ manufacturing facilities; travel, shipping and logistical disruptions; loss of ~~operations,~~human capital or personnel, and ~~cash flows, as well as~~general economic calamities, in addition to a variety of risks related to our ~~proposed~~ acquisition and integration of Milacron. For a discussion of factors that could cause actual results to differ from those contained in forward-looking statements, see the discussions under the heading “Risk Factors” in Item 1A of Part I of the Company’s Form 10-K filed with the SEC on November 13, ~~2018,~~2019, and in Item 1A of Part II of this Form 10-Q, as well as other risks and uncertainties detailed in our other filings with the SEC from time to time. WeThe forward-looking information in this Form 10-Q speaks only as of the date covered by this report, and we assume no obligation to update or revise any forward-looking statements.

EXECUTIVE OVERVIEW

Hillenbrand is a global diversified industrial company with multiple leading brands that serve a wide variety of industries around the world. Hillenbrand’s portfolio is composed of three reportable operating segments: the Process Equipment Group, Milacron®, and Batesville®. The Process Equipment Group businesses design, develop, manufacture, and service highly engineered industrial equipment around the world. Milacron is a global leader in highly engineered and customized systems in plastic technology and processing. Batesville is a recognized leader in the death care industry in North America.

We strive to provide superior return for our shareholders, exceptional value for our customers, great professional opportunities for our employees, and to be responsible to our communities through deployment of the HOM. The HOM is a consistent and repeatable framework designed to produce sustainable and predictable results. The HOM describes our mission, vision, values, and mindset as leaders; applies our management practices in Strategy Management, Segmentation, Lean, Talent Development, and Acquisitions; and prescribes three steps (Understand, Focus, and Grow) designed to make our businesses both bigger and better. Our goal is to continue developing Hillenbrand as a world-class global diversified industrial company through the deployment of the HOM.

Our strategy is to leverage our historically strong financial foundation and the implementation of the HOM to deliver sustainable profit growth, revenue expansion, and substantial free cash flow and then reinvest available cash in new growth initiatives that are focused on building platforms with leadership positions in our core markets and near adjacencies, both organically and inorganically, in order to create shareholder value.

During the three and nine months ended June 30, 2020, the following operational decisions and economic developments had an impact on our current and future cash flows, results of operations, and financial position.

COVID-19 Impact

On March 11, 2020, the World Health Organization categorized the outbreak of the novel coronavirus (“COVID-19”) as a pandemic, and the virus continues to spread throughout the United States and other countries across the world. To limit the spread of COVID-19, national and local governments around the world have instituted certain measures, including travel restrictions, business curtailments, shelter-in-place orders and social distancing guidelines.

COVID-19 is impacting Hillenbrand very differently by business, geography, and function. The scope and nature of these impacts continue to evolve each day. We have experienced an adverse impact on our sales, consolidated results of operations, and cash flows during the three and nine months ended June 30, 2020. It is too early to quantify the impact for the remainder of our fiscal year ended September 30, 2020 or beyond, but the actions being undertaken to reduce the spread of COVID-19 are currently creating disruptions, and are likely to continue to create significant disruptions, with respect to consumer demand, our

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ability to continue to manufacture products, and the reliability of our supply chain. Accordingly, management is continually evaluating the Company’s liquidity position, communicating with and monitoring the actions of our customers and suppliers, and reviewing our near- and longer-term financial performance as we manage the Company through the uncertainty related to COVID-19.

We cannot reasonably estimate the duration, spread or severity of this pandemic; however, as a result of the current circumstances, we expect to continue to experience an adverse impact during the remainder of fiscal 2020, including the potential for impairment of certain intangible and other long-lived assets, in addition to the impairment charges that were recorded in the second quarter of 2020. Should these conditions continue into fiscal 2021, the Company would similarly expect an adverse impact on its net revenue, consolidated results of operations, and cash flows in such year, depending upon the severity and length of time such conditions persist.

We continue to take actions intended to help minimize the risk to our company, employees, customers, and the communities in which we operate, as well as lessen the financial impact on the business while protecting our ability to continue to generate profitable growth over the long term. Among these are proactive measures aimed at mitigating the financial impact of COVID-19 and preserving liquidity, including:

•Voluntary reduction in CEO base salary by 30% through at least the end of the fiscal year;

•Voluntary waiver by the Board of Directors of its scheduled cash compensation increase for 2020;

•Cancellation of all regularly scheduled merit-based salary increases for salaried US- and Canada-based employees for 2020;

•Suspension of all hiring for exempt and nonexempt positions, except for critical positions;

•Reduction in capital spend while continuing to invest in high-return projects and prioritizing critical maintenance, safety, and regulatory projects;

•Employee furloughs and reduced work arrangements at several Company locations due to lower demand, which impacted approximately 15% of employees; and

•The Company’s share repurchase program remains suspended.

While we anticipate that the foregoing measures are temporary, we cannot predict the specific duration for which these precautionary measures will stay in effect, and we may elect or need to take additional measures as the information available to us continues to develop, including with respect to our employees, customers, and our relationships with our third-party vendors.

In addition, we have taken proactive measures to maintain financial flexibility within the landscape of the COVID-19 pandemic. We believe the Company has sufficient liquidity to operate in the current business environment as a result of these actions. Hillenbrand increased cash holdings over the past two quarters (from December 31, 2019 to June 30, 2020) by $120.7, primarily with a portion of the cash proceeds from the issuance of $400.0 in senior unsecured notes in June 2020 and the sale of the Cimcool business in March 2020. Additionally, we amended the Credit Agreement on May 19, 2020 to, among other things, increase the maximum permitted leverage ratio for current and future quarters. As of June 30, 2020, Hillenbrand was in full compliance with all covenants under the Credit Agreement, and as of that date, it had liquidity of approximately $905.5, including $263.1 in cash on hand and $642.4 of borrowing capacity immediately available under the Revolver. We continue to evaluate additional measures to maintain financial flexibility and support general working capital requirements as a result of the COVID-19 pandemic. See Note 8 included in Part 1, Item 1 of this Form 10-Q for further details on all financing activity that occurred during the quarter ended June 30, 2020.

Employee Safety and Health

We have implemented a number of employee safety measures across our plants and other locations in an attempt to contain the spread of COVID-19. Such actions have included:

•Initiated regular communication regarding impacts of the COVID-19 pandemic, including health and safety protocols and procedures;

•Required telework for those employees who can conduct their work remotely;

•Implemented temperature screening of employees at the majority of manufacturing facilities;

•Instituted additional sanitization protocols, including increased frequency of disinfecting high-traffic areas;

•Established new physical distancing procedures for employees who need to be onsite;

•Provided additional personal protective equipment and cleaning supplies;

•Modified work spaces with plexiglass and touchless faucets;

•Implemented protocols to address actual and suspected COVID-19 cases and exposure; and

•Prohibited all domestic and international non-essential travel for all employees.

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Customer Focus

Our customer service, sales, and engineering teams are working closely with customers to meet current demand. Sales and engineering teams are meeting with customers remotely via video calls to continue the design and specification process that would have previously been held in-person. Call centers remain operational through remote call-in.

Business Continuity

While a number of our plants are operating as essential businesses, as determined by the jurisdictions in which we operate, we have experienced disruptions at some smaller facilities in locations such as India as we take actions to comply with the temporary government restrictions related to the COVID-19 pandemic. We expect that these impacted facilities will account for approximately 5% of the Company’s projected annual consolidated revenue. These facilities were closed or operating at reduced capacity at various times during the quarter ended June 30, 2020, but all significant facilities were operating at or near normal production levels as of the date of this filing. While the Company’s manufacturing plants in China were closed for part of the quarter ended March 31, 2020, they were running at or near full capacity by late March. Many of the Company’s non-production employees were working remotely as of the date of this filing.

We are closely monitoring the supply chain and taking actions as needed to mitigate disruptions. We continue to work closely with our suppliers and customers to preserve business continuity and meet current demand. We are capitalizing on our global manufacturing footprint and flexible supply chains to move production to different regions of the world as needed. As of the date of this filing the Company has not experienced any major shortages in our supply chain. For the quarter ended June 30, 2020, order intake at the Process Equipment Group and Milacron segments was negatively impacted by the COVID-19 pandemic and decreased sequentially from the quarter ended March 31, 2020, primarily due to softening in the markets as customers are delaying their decision-making process; however, we have not seen significant order cancellations as of the date of this filing. Batesville experienced higher demand for burial caskets in certain geographical areas starting in late March, and that higher demand continued throughout the quarter ended June 30, 2020. That higher demand resulted in a strong year-over-year sales increase at Batesville for the quarter ended June 30, 2020, partially offset by an estimated increased rate at which families opted for cremation. Given the uncertainty related to COVID-19, we cannot predict the potential further magnitude or duration of these developments and the impact they will have on our financial results and cash flows for the remainder of fiscal 2020 and at least the first half of fiscal 2021. In addition to the actions taken as of the date of this filing as discussed above, further actions may be taken in certain businesses in response to continued lower customer demand, including temporary reductions in work hours, furloughs, or layoffs, if required.

Government Updates

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property, as well as loans to certain qualifying businesses. We continue to examine the impacts that the CARES Act may have on our business. While we may take advantage of certain of the CARES Act’s cash deferral provisions, many of the provisions are not applicable to us. As of the date of this filing, we have not participated in CARES Act loans.

Additionally, we continue to monitor the COVID-19 legislative activity of many of the other countries in which we operate. As is the case in the United States, many provisions of the legislation enacted outside the United States are not applicable to us at this time.

Except as specifically identified in this report, events and changes in circumstances arising after the quarter ended June 30, 2020, including those resulting from the impact of COVID-19, will be reflected in management’s estimates for future periods in subsequent periodic filings. For further discussion of management’s estimates, refer to Note 1 in Part 1, Item 1 of this report. For further discussion of the COVID-19 pandemic, refer to “Item 1A. Risk Factors” in Part II of this report.

Acquisition of Milacron

As discussed in Note 4 of Part I, Item 1 of this Form 10-Q, on November 21, 2019, we completed the acquisition of Milacron for a total purchase price of approximately $2.0 billion through a merger of our wholly-owned subsidiary with and into Milacron, resulting in ownership of 100% of Milacron common stock. Milacron is a global leader in highly engineered and customized systems in plastic technology and processing. The acquisition provides Hillenbrand with increased scale and

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meaningful product diversification, enhancing its ability to serve customers with expanded capabilities across the plastics value chain. The results of Milacron are currently reported separately in its own reportable segment. The Consolidated Financial Statements include the financial results of Milacron from the date of acquisition.

As a result of the acquisition, Milacron stockholders received $11.80 in cash per share and a fixed exchange ratio of 0.1612 shares of Hillenbrand common stock for each share of Milacron common stock they owned, with cash paid in lieu of fractional shares. In addition, concurrent with the closing of the acquisition, we made a cash payment of $772.9 to repay outstanding Milacron debt, including accrued interest. The Company funded the acquisition through a combination of cash on hand, new debt financing, and the issuance of common stock. See Note 8 of Part I, Item 1 of this Form 10-Q for a discussion of the debt financing.

The Company’s results for the period since the acquisition were significantly impacted by the non-recurring effects of the fair value adjustments to inventories and backlog required by acquisition accounting. These fair value adjustments are being charged to the Consolidated Statements of Operations over the respective periods that inventory is expected to be consumed and backlog is expected to be realized as revenue. The preliminary fair value assigned to Milacron’s backlog was $10.0, which was fully amortized as expense during the nine months ended June 30, 2020. The preliminary step-up adjustment to inventories was $40.7, which was fully charged as expense during the nine months ended June 30, 2020 ($3.6 of expense during the three months ended June 30, 2020).

The preliminary fair value assigned to Milacron’s customer relationships, trade names, and technology totaled $805.0, of which $125.0 was related to the Cimcool business that was divested in the second quarter of 2020. The trade names were designated as indefinite-lived intangible assets while the customer relationships and technology are amortized over their respective estimated useful lives on a straight-line basis, which will result in approximately $9.0 of amortization expense during the remaining three months of 2020. The acquisition resulted in preliminary goodwill of $707.6.

Divestiture of Cimcool

On March 30, 2020, we completed the sale of the Company’s Cimcool (“Cimcool”) business, which represented the former Fluids Technologies reportable segment of Milacron before its acquisition by the Company, to DuBois Chemicals, Inc. The sale resulted in cash proceeds received at closing of $222.4, net of cash divested. Consistent with our current capital allocation priorities, we used a portion of the cash proceeds from the sale for repayments on the Revolver during the quarter ended March 31, 2020, and intend to use the remainder for general working capital purposes.

In addition, we may receive contingent consideration of up to an aggregate of $26.0 based on multiple earn-out provisions. As of the transaction date (and at June 30, 2020), we were unable to determine that it was probable that any of the contingent consideration would be received, and accordingly no asset was recorded for contingent consideration.

As a result of the sale, we recorded a pre-tax loss of $3.0 within other income (expense), net in the Consolidated Statement of Operations during the nine months ended June 30, 2020. The related tax effect resulted in tax expense of $13.0 and was included within income tax expense in the Consolidated Statement of Operations during the nine months ended June 30, 2020. We incurred $0.4 and $4.2 of transaction costs associated with the sale during the three and nine months ended June 30, 2020, respectively, which were recorded within operating expenses in the Consolidated Statements of Operations.

We determined that the sale of Cimcool did not represent a strategic shift that had or will have a major effect on our consolidated results of operations, and therefore, Cimcool was not classified as a discontinued operation. Cimcool’s results of operations were included within the Milacron reportable segment until the completion of the sale on March 30, 2020.

~~OPERATING PERFORMANCE MEASURES~~EXECUTIVE OVERVIEW

Hillenbrand is a global diversified industrial company with multiple leading brands that serve a wide variety of industries around the world. Hillenbrand’s portfolio is composed of three reportable operating segments: the Process Equipment Group, Milacron®, and Batesville®. The ~~following discussion compares~~Process Equipment Group businesses design, develop, manufacture, and service highly engineered industrial equipment around the world. Milacron is a global leader in highly engineered and customized systems in plastic technology and processing. Batesville is a recognized leader in the death care industry in North America.

We strive to provide superior return for our ~~results~~shareholders, exceptional value for our customers, great professional opportunities for our employees, and to be responsible to our communities through deployment of the HOM. The HOM is a consistent and repeatable framework designed to produce sustainable and predictable results. The HOM describes our mission, vision, values, and mindset as leaders; applies our management practices in Strategy Management, Segmentation, Lean, Talent Development, and Acquisitions; and prescribes three steps (Understand, Focus, and Grow) designed to make our businesses both bigger and better. Our goal is to continue developing Hillenbrand as a world-class global diversified industrial company through the deployment of the HOM.

During the three and nine months ended June 30, ~~2019,~~2020, the following operational decisions and economic developments had an impact on our current and future cash flows, results of operations, and financial position.

COVID-19 Impact

On March 11, 2020, the World Health Organization categorized the outbreak of the novel coronavirus (“COVID-19”) as a pandemic, and the virus continues to spread throughout the ~~same periods in fiscal year 2018.~~United States and other countries across the world. To limit the spread of COVID-19, national and local governments around the world have instituted certain measures, including travel restrictions, business curtailments, shelter-in-place orders and social distancing guidelines.

COVID-19 is impacting Hillenbrand very differently by business, geography, and function. The ~~Company’s fiscal year ends on September 30. Unless otherwise stated, references to years relate to fiscal years. We begin the discussion at a consolidated level~~scope and then provide separate detail about the Process Equipment Group, Batesville, and Corporate. These financial results are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”).

We also provide certain non-GAAP operating performance measures. These non-GAAP measures are referred to as “adjusted” measures and exclude impairment charges, expenses associated with business acquisition, development, and integration, restructuring and restructuring related charges, and inventory step-up. The related income tax for allnature of these ~~items is also excluded. The measures also exclude the non-recurring tax benefits and expenses related~~impacts continue to ~~the Tax Act. Non-GAAP information is provided as a supplement, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.~~

evolve each day. We use this non-GAAP information internally to make operating decisions and believe it is helpful to investors because it allows more meaningful period-to-period comparisons of our ongoing operating results. The information can also be used to perform trend analysis and to better identify operating trends that may otherwise be masked or distorted by these types of items. We believe this information provides a higher degree of transparency.

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~~An important non-GAAP measure that we use is adjusted earnings before interest, income tax, depreciation, and amortization~~

(“adjusted EBITDA”). A part of Hillenbrand’s strategy is to selectively acquire companies that we believe can benefit from the Hillenbrand Operating Model (“HOM”) to spur faster and more profitable growth. Given that strategy, it is a natural consequence to incur related expenses, such as amortization from acquired intangible assets and additional interest expense from debt-funded acquisitions. Accordingly, we use adjusted EBITDA, among other measures, to monitor our business performance.

Another important non-GAAP operational measure used is backlog. Backlog is not a term recognized under GAAP; however, it is a common measurement used in industries with extended lead times for order fulfillment (long-term contracts), like those in which our Process Equipment Group competes. Backlog represents the amount of consolidated revenue that we expect to realize on contracts awarded related to the Process Equipment Group. For purposes of calculating backlog, 100% of estimated revenue attributable to consolidated subsidiaries is included. Backlog includes expected revenue from large systems and equipment, as well as replacement parts, components, and service. The length of time that projects remain in backlog can span from days for replacement parts or service to approximately 18 to 36 months for larger system sales. Backlog includes expected revenue from the remaining portion of firm orders not yet completed, as well as revenue from change orders to the extent that they are reasonably expected to be realized. We include in backlog the full contract award, including awards subject to further customer approvals, which we expect to result in revenue in future periods. In accordance with industry practice, our contracts may include provisions for cancellation, termination or suspension at the discretion of the customer.

We expect that future revenue associated with the Process Equipment Group will be influenced by backlog because of the lead time involved in fulfilling engineered-to-order equipment for customers. Although backlog can behave experienced an indicator of future revenue, it does not include projects and parts orders that are booked and shipped within the same quarter. The timing of order placement, size, extent of customization, and customer delivery dates can create fluctuations in backlog and revenue. Revenue attributable to backlog may also be affected by foreign exchange fluctuations for orders denominated in currencies other than U.S. dollars.

~~We calculate the foreign currency~~adverse impact on ~~net revenue, gross profit, operating expenses, backlog,~~our sales, consolidated ~~net income,~~results of operations, and adjusted EBITDA in order to better measure the comparability of results between periods. We calculate the foreign currency impact by translating current year results at prior year foreign exchange rates. This information is provided because exchange rates can distort the underlying change in these metrics, either positively or negatively. The cost structures for Corporate and Batesville are generally not significantly impacted by the fluctuation in foreign exchange rates, and we do not disclose the foreign currency impact in the Operations Review below where the impact is not significant.

See page 39 for reconciliation of adjusted EBITDA to consolidated net income, the most directly comparable GAAP measure. We use other non-GAAP measures in certain other instances and include information reconciling such non-GAAP measures to the respective most directly comparable GAAP measures. Given that there is no GAAP financial measure comparable to backlog, a quantitative reconciliation is not provided.

~~CRITICAL ACCOUNTING ESTIMATES~~

~~For~~cash flows during the three and nine months ended June 30, ~~2019, there were no significant changes~~2020. It is too early to ~~our critical accounting estimates, as outlined in our Annual Report on Form 10-K for 2018, except as described below.~~

~~2017 Tax Cuts and Jobs Act~~ ~~— On December 22, 2017,~~quantify the Tax Act was enacted. The majority of the provisions of the Tax Act were to be effective for tax years beginning after December 31, 2017 (which corresponds to Hillenbrand’s current fiscal year ending September 30, 2019). The Tax Act reduced the federal corporate tax rate from 35% to 21% and became effective on January 1, 2018. As a non-calendar year end company, certain of the provisions of the Tax Act were effectiveimpact for the ~~fiscal year ended September 30, 2018, while others became effective for us for our current fiscal year ending September 30, 2019. The Internal Revenue Code provides that~~remainder of our fiscal year ended September 30, ~~2018 had~~2020 or beyond, but the actions being undertaken to reduce the spread of COVID-19 are currently creating disruptions, and are likely to continue to create significant disruptions, with respect to consumer demand, our

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We cannot reasonably estimate the duration, spread or severity of this pandemic; however, as a ~~blended U.S. corporate tax rate of 24.5%, which is based on a proration~~result of the ~~applicable tax rates before~~current circumstances, we expect to continue to experience an adverse impact during the remainder of fiscal 2020, including the potential for impairment of certain intangible and ~~after effective date~~other long-lived assets, in addition to the impairment charges that were recorded in the second quarter of 2020. Should these conditions continue into fiscal 2021, the Company would similarly expect an adverse impact on its net revenue, consolidated results of operations, and cash flows in such year, depending upon the severity and length of time such conditions persist.

•Voluntary reduction in CEO base salary by 30% through at least the end of the ~~Tax Act.~~ fiscal year;

•Voluntary waiver by the Board of Directors of its scheduled cash compensation increase for 2020;

•Cancellation of all regularly scheduled merit-based salary increases for salaried US- and Canada-based employees for 2020;

•Suspension of all hiring for exempt and nonexempt positions, except for critical positions;

•Reduction in capital spend while continuing to invest in high-return projects and prioritizing critical maintenance, safety, and regulatory projects;

•Employee furloughs and reduced work arrangements at several Company locations due to lower demand, which impacted approximately 15% of employees; and

•The ~~statutory tax rate~~Company’s share repurchase program remains suspended.

In addition, we have taken proactive measures to maintain financial flexibility within the landscape of ~~21% applies~~the COVID-19 pandemic. We believe the Company has sufficient liquidity to ~~fiscal year ending September~~operate in the current business environment as a result of these actions. Hillenbrand increased cash holdings over the past two quarters (from December 31, 2019 to June 30, ~~2019~~2020) by $120.7, primarily with a portion of the cash proceeds from the issuance of $400.0 in senior unsecured notes in June 2020 and the sale of the Cimcool business in March 2020. Additionally, we amended the Credit Agreement on May 19, 2020 to, among other things, increase the maximum permitted leverage ratio for current and future ~~years.~~

~~Furthermore,~~quarters. As of June 30, 2020, Hillenbrand ~~is subject~~was in full compliance with all covenants under the Credit Agreement, and as of that date, it had liquidity of approximately $905.5, including $263.1 in cash on hand and $642.4 of borrowing capacity immediately available under the Revolver. We continue to ~~the Transition Tax. This Transition Tax is imposed on the deferred accumulated earnings of foreign subsidiaries at an effective rate of 15.5% of foreign earnings attributable~~evaluate additional measures to ~~cash~~maintain financial flexibility and ~~cash equivalents, and 8%~~support general working capital requirements as a result of the ~~residual foreign earnings. During the fiscal year ended September 30, 2018, we recorded a provisional net expense~~COVID-19 pandemic. See Note 8 included in Part 1, Item 1 of this Form 10-Q for the Transition Tax of $24.6. During the quarter ended December 31, 2018, we completed our determination of the Transition Tax and, pursuant to SAB 118, we recognized a $0.5 increase to the Transition Tax liability, resulting in a final Transition tax liability of $25.1. Hillenbrand elected to pay the Transition Tax over eight years and made the first installment payment of $2.0further details on all financing activity that occurred during the quarter ended ~~December 31, 2018. In connection~~June 30, 2020.