Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Sep. 30, 2015 | Nov. 12, 2015 | Mar. 31, 2015 | |
Document And Entity Information Abstract | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Sep. 30, 2015 | ||
Entity Registrant Name | Hill-Rom Holdings, Inc. | ||
Entity Central Index Key | 47,518 | ||
Current Fiscal Year End Date | --09-30 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 65,169,068 | ||
Entity Current Reporting Status | Yes | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 2.8 | ||
Trading Symbol | HRC |
STATEMENTS OF CONSOLIDATED INCO
STATEMENTS OF CONSOLIDATED INCOME - USD ($) shares in Thousands, $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Net Revenue | |||
Capital sales | $ 1,604.5 | $ 1,301.4 | $ 1,308.3 |
Rental revenue | 383.7 | 384.7 | 407.9 |
Total revenue | 1,988.2 | 1,686.1 | 1,716.2 |
Cost of Revenue | |||
Cost of goods sold | 921.2 | 730.2 | 747.8 |
Rental expenses | 186.7 | 176 | 188.1 |
Total cost of revenue | 1,107.9 | 906.2 | 935.9 |
Gross Profit | 880.3 | 779.9 | 780.3 |
Research and development expenses | 91.8 | 71.9 | 70.2 |
Selling and administrative expenses | 664.2 | 548.3 | 549.5 |
Special charges (Note 8) | 41.2 | 37.1 | 5.7 |
Operating Profit | 83.1 | 122.6 | 154.9 |
Interest expense | (18.4) | (9.8) | (9.5) |
Investment income and other, net | 0.4 | 2.4 | (1.4) |
Income Before Income Taxes | 65.1 | 115.2 | 144 |
Income tax expense (Note 9) | 18.3 | 54.6 | 39 |
Net Income | 46.8 | $ 60.6 | $ 105 |
Less: Net loss attributable to noncontrolling interests | (0.9) | ||
Net Income Attributable to Common Shareholders | $ 47.7 | $ 60.6 | $ 105 |
Net Income Attributable to Common Shareholders per Common Share - Basic | $ 0.83 | $ 1.05 | $ 1.75 |
Net Income Attributable to Common Shareholders per Common Share - Diluted | 0.82 | 1.04 | 1.74 |
Dividends per Common Share | $ 0.6325 | $ 0.5950 | $ 0.5250 |
Average Common Shares Outstanding - Basic (thousands) (Note 10) | 57,249 | 57,555 | 59,910 |
Average Common Shares Outstanding - Diluted (thousands) (Note 10) | 58,536 | 58,523 | 60,250 |
STATEMENTS OF CONSOLIDATED COMP
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) [Abstract] | |||
Net Income | $ 46.8 | $ 60.6 | $ 105 |
Other Comprehensive Income (Loss), Net of Tax: | |||
Available-for-sale securities and currency hedges | 0.3 | 0.1 | |
Foreign currency translation adjustment | $ (58.6) | (29.6) | 12.6 |
Change in pension and postretirement defined benefit plans | (8.1) | (9.1) | 29.6 |
Total Other Comprehensive Income (Loss), Net of Tax | (66.7) | (38.4) | 42.3 |
Total Comprehensive Income (Loss) | (19.9) | $ 22.2 | $ 147.3 |
Less: Comprehensive loss attributable to noncontrolling interests | (0.9) | ||
Total Comprehensive Income (Loss) Attributable to Common Shareholders | $ (19) | $ 22.2 | $ 147.3 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2015 | Sep. 30, 2014 |
Current Assets | ||
Cash and cash equivalents | $ 192.8 | $ 99.3 |
Trade accounts receivable, less allowances of $26.0 in 2015 and $31.4 in 2014 (Note 1) | 494.7 | 411 |
Inventories (Note 1) | 267.4 | 176.2 |
Deferred income taxes (Notes 1 and 9) | 77 | 40.9 |
Other current assets | 109.1 | 51.9 |
Total current assets | 1,141 | 779.3 |
Property, plant, and equipment (Note 1) | 976.4 | 849.6 |
Less accumulated depreciation | (598) | (588.1) |
Property, plant, and equipment, net | 378.4 | 261.5 |
Intangible assets: | ||
Goodwill (Notes 1, 2 and 3) | 1,610.5 | 399.8 |
Software and other, net (Notes 1 and 2) | 1,247.7 | 261.1 |
Deferred income taxes (Notes 1 and 9) | 21.6 | 23 |
Other assets | 58.4 | 26.6 |
Total Assets | 4,457.6 | 1,751.3 |
Current Liabilities | ||
Trade accounts payable | 136.3 | 112.7 |
Short-term borrowings (Note 4) | 58 | 126.9 |
Accrued compensation | 171.8 | 89.2 |
Accrued product warranties (Note 1) | 32.1 | 28.4 |
Accrued rebates | 33.7 | 7.1 |
Other current liabilities | 146.9 | 78 |
Total current liabilities | 578.8 | 442.3 |
Long-term debt (Note 4) | 2,175.2 | 364.1 |
Accrued pension and postretirement benefits (Note 6) | 118.8 | 76.9 |
Deferred income taxes (Notes 1 and 9) | 380.6 | 31 |
Other long-term liabilities | 47.3 | 30.5 |
Total Liabilities | $ 3,300.7 | $ 944.8 |
Commitments and Contingencies (Note 13) | ||
SHAREHOLDERS' EQUITY (Note 7) | ||
Preferred stock - without par value: Authorized - 1,000,000 shares; none issued or outstanding | ||
Common stock - without par value: Authorized - 199,000,000 Issued - 88,457,634 shares in 2015 and 80,323,912 shares in 2014 | $ 4.4 | $ 4.4 |
Additional paid-in-capital | 562 | 134.1 |
Retained earnings | 1,509.9 | 1,499.8 |
Accumulated other comprehensive loss (Note 1) | (140.8) | (74.1) |
Treasury stock, common shares at cost: 2015 - 23,291,738 and 2014 - 22,884,001 | (788.6) | (757.7) |
Total Shareholders' Equity Attributable to Common Shareholders | 1,146.9 | $ 806.5 |
Noncontrolling interests | 10 | |
Total Shareholders' Equity | 1,156.9 | $ 806.5 |
Total Liabilities and Shareholders' Equity | $ 4,457.6 | $ 1,751.3 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2015 | Sep. 30, 2014 |
CONSOLIDATED BALANCE SHEETS [Abstract] | ||
Trade accounts receivable, allowances | $ 26 | $ 31.4 |
Preferred stock, no par value | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, no par value | ||
Common stock, shares authorized | 199,000,000 | 199,000,000 |
Common stock, shares issued | 88,457,634 | 80,323,912 |
Treasury stock, shares | 23,291,738 | 22,884,001 |
STATEMENTS OF CONSOLIDATED CASH
STATEMENTS OF CONSOLIDATED CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Operating Activities | |||
Net income | $ 46.8 | $ 60.6 | $ 105 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation | 73.6 | 65.4 | 71.2 |
Amortization | 10.5 | 12.2 | 17.9 |
Acquisition-related intangible asset amortization | 34.1 | 28.8 | 27.7 |
Provision for deferred income taxes | (22.3) | 3.9 | (14.8) |
Loss on disposal of property, equipment leased to others, intangible assets and impairments | 0.5 | $ 7.2 | $ 1.5 |
Pension settlement charge | 9.6 | ||
Stock compensation | 25 | $ 18 | $ 13.5 |
Excess tax benefits from employee stock plans | (3.6) | 0.3 | (0.3) |
Change in working capital excluding cash, current debt, acquisitions and dispositions: | |||
Trade accounts receivable | (39.7) | 17.1 | 30.8 |
Inventories | 11 | 9.1 | 8.4 |
Other current assets | (7.7) | (2.6) | (6.5) |
Trade accounts payable | 0.7 | 7 | 0.1 |
Accrued expenses and other liabilities | 53.8 | (12.5) | (0.2) |
Other, net | 21.5 | (4.2) | 8.9 |
Net cash provided by operating activities | 213.8 | 210.3 | 263.2 |
Investing Activities | |||
Capital expenditures and purchases of intangible assets | (121.3) | (62.7) | (65.3) |
Proceeds on sale of property and equipment leased to others | 1.5 | 2.4 | $ 5.9 |
Payment for acquisition of businesses, net of cash acquired | $ (1,638.7) | (239.5) | |
Refund on acquisition of businesses | 4.6 | $ 0.8 | |
Other | $ 2.1 | 0.7 | |
Net cash used in investing activities | (1,756.4) | (294.5) | $ (58.6) |
Financing Activities | |||
Net change in short-term debt | (0.7) | (0.2) | |
Borrowings on revolving credit facility | 95 | 252 | |
Payments on revolving credit facility | (135) | (57) | $ (35) |
Proceeds from long-term debt | 2,225 | 0.8 | |
Payment of long-term debt | $ (401.6) | (11.4) | $ (10.1) |
Payment of acquired debt | $ (26.8) | ||
Repurchase of registered debentures | $ (5.9) | ||
Debt issuance costs | (50.3) | ||
Purchase of noncontrolling interest of former joint venture | (1.9) | $ (1.3) | $ (1.6) |
Payment of cash dividends | (37.1) | (34.2) | (31.2) |
Proceeds from exercise of stock options | 12.1 | 11.5 | 7.6 |
Proceeds from stock issuance | 2.8 | 2.5 | 2.5 |
Excess tax benefits from employee stock plans | 3.6 | (0.3) | 0.3 |
Treasury stock acquired | (63.3) | (71.8) | (94) |
Net cash provided by (used in) financing activities | 1,642.7 | 63.8 | (161.5) |
Effect of exchange rate changes on cash | (6.6) | (7.7) | |
Net Cash Flows | 93.5 | (28.1) | 43.1 |
Cash and Cash Equivalents | |||
At beginning of period | 99.3 | 127.4 | 84.3 |
At end of period | 192.8 | 99.3 | 127.4 |
Supplemental cash flow information: | |||
Cash paid for income taxes | 49.1 | 44.4 | 68.1 |
Cash paid for interest | 6.3 | 7.8 | 7.5 |
Non-cash investing and financing activities: | |||
Treasury stock issued under stock compensation plans | 32.4 | $ 20.6 | $ 18.4 |
Common stock issued for acquisition of businesses | $ 416.3 |
STATEMENTS OF CONSOLIDATED SHAR
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY - USD ($) $ in Millions | Total | Common Stock Outstanding [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Common Stock in Treasury [Member] | Total Equity Attributable to Common Shareholders [Member] | Noncontrolling Interests [Member] |
Beginning Balance at Sep. 30, 2012 | $ 812.6 | $ 4.4 | $ 116.8 | $ 1,400.3 | $ (78) | $ (630.9) | $ 812.6 | ||
Balance, shares at Sep. 30, 2012 | 60,796,923 | (19,526,989) | |||||||
Net income | 105 | $ 105 | 105 | ||||||
Other comprehensive income (loss), net of tax of ($18.1), $4.9 and $5.1 in 2013, 2014, and 2015 | 42.3 | $ 42.3 | 42.3 | ||||||
Dividends | (31.2) | $ 0.3 | $ (31.5) | (31.2) | |||||
Treasury shares acquired | (94) | $ (94) | (94) | ||||||
Treasury shares acquired, shares | (2,844,765) | (2,844,765) | |||||||
Stock awards and option exercises | 24 | $ 5.6 | $ 18.4 | 24 | |||||
Stock awards and option exercises, shares | 571,234 | (571,234) | |||||||
Ending Balance at Sep. 30, 2013 | 858.7 | $ 4.4 | $ 122.7 | $ 1,473.8 | $ (35.7) | $ (706.5) | 858.7 | ||
Balance, shares at Sep. 30, 2013 | 58,523,392 | (21,800,520) | |||||||
Net income | 60.6 | $ 60.6 | 60.6 | ||||||
Other comprehensive income (loss), net of tax of ($18.1), $4.9 and $5.1 in 2013, 2014, and 2015 | (38.4) | $ (38.4) | (38.4) | ||||||
Dividends | (34.2) | $ 0.4 | $ (34.6) | (34.2) | |||||
Treasury shares acquired | (71.8) | $ (71.8) | (71.8) | ||||||
Treasury shares acquired, shares | (1,709,523) | (1,709,523) | |||||||
Stock awards and option exercises | 31.6 | $ 11 | $ 20.6 | 31.6 | |||||
Stock awards and option exercises, shares | 626,042 | (626,042) | |||||||
Ending Balance at Sep. 30, 2014 | 806.5 | $ 4.4 | $ 134.1 | $ 1,499.8 | $ (74.1) | $ (757.7) | 806.5 | ||
Balance, shares at Sep. 30, 2014 | 57,439,911 | (22,884,001) | |||||||
Net income | 46.8 | $ 47.7 | $ 47.7 | $ (0.9) | |||||
Consolidation of noncontrolling interest | 10.9 | $ 10.9 | |||||||
Other comprehensive income (loss), net of tax of ($18.1), $4.9 and $5.1 in 2013, 2014, and 2015 | (66.7) | $ (66.7) | $ (66.7) | ||||||
Dividends | (37.1) | $ 0.5 | $ (37.6) | (37.1) | |||||
Issuance of common stock | 416.3 | $ 416.3 | 416.3 | ||||||
Issuance of common stock, shares | 8,133,722 | ||||||||
Treasury shares acquired | (63.3) | $ (63.3) | (63.3) | ||||||
Treasury shares acquired, shares | (1,373,321) | (1,373,321) | |||||||
Stock awards and option exercises | 43.5 | $ 11.1 | $ 32.4 | 43.5 | |||||
Stock awards and option exercises, shares | 965,584 | (965,584) | |||||||
Ending Balance at Sep. 30, 2015 | $ 1,156.9 | $ 4.4 | $ 562 | $ 1,509.9 | $ (140.8) | $ (788.6) | $ 1,146.9 | $ 10 | |
Balance, shares at Sep. 30, 2015 | 65,165,896 | (23,291,738) |
STATEMENTS OF CONSOLIDATED SHA8
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY [Abstract] | |||
Comprehensive income, tax effect | $ 5.1 | $ 4.9 | $ (18.1) |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Sep. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 1. Nature of Operations Hill-Rom Holdings, Inc. (the “Company,” “Hill-Rom,” “we,” “us,” or “our”) was incorporated on August 7, 1969 in the State of Indiana and is headquartered in Chicago, Illinois. We are a leading global medical technology company with more than 10,000 100 five Basis of Presentation and Principles of Consolidation The Consolidated Financial Statements include the accounts of Hill-Rom and its wholly-owned subsidiaries. In addition, we also consolidate variable interest entities (VIEs) where Hill-Rom is deemed to have a controlling financial interest. Intercompany accounts and transactions have been eliminated in consolidation, including the intercompany transactions with consolidated VIEs. Where our ownership interest is less than 100 percent, the noncontrolling interests are reported in our Consolidated Financial Statements. Certain prior year amounts have been reclassified to conform to current year presentation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. Examples of such estimates include our accounts receivable reserves (Note 1), accrued warranties (Note 1), the impairment of intangibles and goodwill (Note 3), income taxes (Notes 1 and 9) and commitments and contingencies (Note 13), among others. Cash and Cash Equivalents We consider investments in marketable securities and other highly liquid instruments with a maturity of three months or less at date of purchase to be cash equivalents. Investments which have no stated maturity are also considered cash equivalents. All of our marketable securities may be freely traded. Trade Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest, unless the transaction is an installment sale with payment terms exceeding one year. Reserves for uncollectible accounts represent our best estimate of the amount of probable credit losses and collection risk in our existing accounts receivable. We determine such reserves based on historical write-off experience by industry and reimbursement platform. Receivables are generally reviewed on a pooled basis based on historical collection experience for each reimbursement and receivable type. Receivables for sales transactions are also reviewed individually for collectability. Account balances are charged against the allowance when we believe it is probable the receivable will not be recovered. We do not have any off-balance sheet credit exposure related to our customers. If circumstances change, such as higher than expected claims denials, payment defaults, changes in our business composition or processes, adverse changes in general economic conditions, unfavorable impacts of austerity measures initiated by some governmental authorities, instability or disruption of credit markets, or an unexpected material adverse change in a major customer's or payer's ability to meet its obligations, our estimates of the realizability of trade receivables could be reduced by a material amount. Within rental revenue, the domestic third-party payers' reimbursement process requires extensive documentation, which has had the effect of slowing both the billing and cash collection cycles relative to the rest of the business, and therefore, increasing total accounts receivable. Because of the extensive documentation required and the requirement to settle a claim with the primary payer prior to billing the secondary and/or patient portion of the claim, the collection period for a claim in a portion of our business may, in some cases, be extended. We generally hold our trade accounts receivable until they are paid. Certain long-term receivables are occasionally sold to third parties; however, any recognized gain or loss on such sales has historically not been material. Inventories Inventories are valued at the lower of cost or market. Inventory costs are determined by the last-in, first-out (“LIFO”) method for approximately 21 29 September 30 2015 2014 Finished products $ 133.2 $ 93.5 Work in process 46.1 17.3 Raw materials 88.1 65.4 Total $ 267.4 $ 176.2 If the FIFO method of inventory accounting, which approximates current cost, had been used for all inventories, they would have been approximately $ 3.2 4.0 Property, Plant and Equipment Property, plant and equipment is recorded at cost and depreciated over the estimated useful life of the assets using principally the straight-line method. Ranges of estimated useful lives are as follows: Useful Life Land improvements 6 15 Buildings and building equipment 10 40 Machinery and equipment 3 10 Equipment leased to others 2 10 When property, plant and equipment is retired from service or otherwise disposed of, the cost and related amount of depreciation or amortization are eliminated from the asset and accumulated depreciation accounts. The difference, if any, between the net asset value and the proceeds on sale are charged or credited to income. Total depreciation expense for fiscal years 2015, 2014 and 2013 was $ 73.6 65.4 71.2 September 30 2015 2014 Accumulated Accumulated Cost Depreciation Cost Depreciation Land and land improvements $ 23.3 $ 2.8 $ 19.4 $ 2.3 Buildings and building equipment 196.2 90.3 158.3 88.6 Machinery and equipment 369.5 226.5 321.3 213.7 Equipment leased to others 387.4 278.4 350.6 283.5 Total $ 976.4 $ 598.0 $ 849.6 $ 588.1 Intangible Assets Intangible assets are stated at cost and consist predominantly of goodwill, software, patents, acquired technology, trademarks, and acquired customer relationship assets. With the exception of goodwill and certain trademarks, our intangible assets are amortized on a straight-line basis over periods generally ranging from 3 20 We assess the carrying value of goodwill and non-amortizable intangibles annually, during the third quarter of each fiscal year, or more often if events or changes in circumstances indicate there may be impairment. Goodwill is allocated among the reporting units based on the relative fair value of those units. The majority of our goodwill and many of our intangible assets are not deductible for income tax purposes. A summary of intangible assets and the related accumulated amortization and impairment losses follows: September 30 2015 2014 Amortization Amortization Cost and Impairment Cost and Impairment Goodwill $ 2,083.3 $ 472.8 $ 872.6 $ 472.8 Software 181.7 139.2 170.5 146.6 Patents and Trademarks 497.6 16.9 67.1 16.0 Other 872.8 148.3 306.8 120.7 Total $ 3,635.4 $ 777.2 $ 1,417.0 $ 756.1 Amortization expense for fiscal years 2015, 2014 and 2013 was $ 44.6 41.0 45.6 Amount 2016 $ 92.9 2017 $ 85.8 2018 $ 81.6 2019 $ 78.0 2020 $ 74.4 2021 and beyond $ 368.1 Software consists mainly of capitalized costs associated with internal use software, including applicable costs associated with the implementation/upgrade of our Enterprise Resource Planning systems. In addition, software includes capitalized development costs for software products to be sold. The net book value of computer software costs, included within intangible assets, was $ 42.5 23.9 three ten 9.8 11.5 17.8 Fair Value Measurements Fair value measurements are classified and disclosed in one of the following three categories:  Level 1: Financial instruments with unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities.  Level 2: Financial instruments with observable inputs other than those included in Level 1 such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.  Level 3: Financial instruments with unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Unobservable inputs reflect our own assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs shall be developed based on the best information available in the circumstances, which might include our own data. We record cash and cash equivalents, as disclosed on our Consolidated Balance Sheets, as Level 1 instruments and certain other investments and insignificant derivatives as either Level 2 or 3 instruments. Refer to Note 4 for disclosure of our debt instrument fair values. Guarantees We routinely grant limited warranties on our products with respect to defects in material and workmanship. The terms of these warranties are generally one year, however, certain components and products have substantially longer warranty periods. We recognize a reserve with respect to these obligations at the time of product sale, with subsequent warranty claims recorded directly against the reserve. The amount of the warranty reserve is determined based on historical trend experience for the covered products. For more significant warranty-related matters which might require a broad-based correction, separate reserves are established when such events are identified and the cost of correction can be reasonably estimated. A reconciliation of changes in our warranty reserve is as follows: 2015 2014 2013 Balance at October 1 $ 28.4 $ 38.1 $ 42.2 Provision for warranties during the period 14.7 9.8 29.2 Warranty reserves acquired 7.1 3.0 (2.6 ) Warranty claims incurred during the period (18.1 ) (22.5 ) (30.7 ) Balance at September 30 $ 32.1 $ 28.4 $ 38.1 In the normal course of business we enter into various other guarantees and indemnities in our relationships with suppliers, service providers, customers, business partners and others. Examples of these arrangements would include guarantees of product performance, indemnifications to service providers and indemnifications of our actions to business partners. These guarantees and indemnifications have not historically nor do we expect them to have a material impact on our financial condition or results of operations, although indemnifications associated with our actions generally have no dollar limitations. In conjunction with our acquisition and divestiture activities, we have entered into select guarantees and indemnifications of performance with respect to the fulfillment of our commitments under applicable purchase and sale agreements. The arrangements generally indemnify the buyer or seller for damages associated with breach of contract, inaccuracies in representations and warranties surviving the closing date and satisfaction of liabilities and commitments retained under the applicable contract. With respect to sale transactions, we also routinely enter into non-competition agreements for varying periods of time. Guarantees and indemnifications with respect to acquisition and divestiture activities, if triggered, could have a materially adverse impact on our financial condition and results of operations. Accrued Rebates We provide rebates and sales incentives to certain customer groups and distributors. Provisions for rebates are recorded as a reduction in net revenue when revenue is recognized. In some cases, rebates may be payable directly to the customer or distributor. We also have arrangements where we provide rebates to certain distributors that sell to end-user customers at prices determined under a contract between us and the end-user customer. Employee Benefits Change During the second quarter of fiscal 2014, we implemented a new paid time off policy as part of our employee benefits programs, replacing certain previously existing vacation and sick time policies. In conjunction with these changes in policies, the vesting provisions with respect to the accumulation of paid time off were delayed resulting in the recognition and utilization of paid time off in the same benefits year. As a result of this change, significant portions of our existing accrued vacation balance were no longer necessary and we reversed $ 12.2 1.2 Retirement Plans We sponsor retirement and postretirement plans covering select employees. Expense recognized in relation to these defined benefit retirement plans and postretirement health care plans in the U.S. is based upon actuarial valuations and inherent in those valuations are key assumptions including discount rates, and where applicable, expected returns on assets, projected future salary rates and projected health care cost trends. The discount rates used in the valuation of our defined benefit pension and postretirement plans are evaluated annually based on current market conditions. In setting these rates we utilize long-term bond indices and yield curves as a preliminary indication of interest rate movements, and then make adjustments to the respective indices to reflect differences in the terms of the bonds covered under the indices in comparison to the projected outflow of our obligations. Our overall expected long-term rate of return on pension assets is based on historical and expected future returns, which are inflation adjusted and weighted for the expected return for each component of the investment portfolio. Our rate of assumed compensation increase is also based on our specific historical trends of wage adjustments. We account for our defined benefit pension and other postretirement plans by recognizing the funded status of a benefit plan in the statement of financial position. We also recognize in accumulated other comprehensive income (loss) certain gains and losses that arose during the period. See Note 6 for key assumptions and further discussion related to our pension and postretirement plans. Environmental Liabilities Expenditures that relate to an existing condition caused by past operations, and which do not contribute to future revenue generation, are expensed. A reserve is established when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These reserves are determined without consideration of possible loss recoveries from third parties. Specific costs included in environmental expense and reserves include site assessment, development of a remediation plan, clean-up costs, post-remediation expenditures, monitoring, fines, penalties and legal fees. Reserve amounts represent the expected undiscounted future cash outflows associated with such plans and actions. Self Insurance We are also involved in other possible claims, including product and general liability, workers' compensation, auto liability and employment related matters. Such claims in the United States have deductibles and self-insured retentions ranging from $ 25 1.0 . Treasury Stock Treasury stock consists of our common shares that have been issued, but subsequently reacquired. We account for treasury stock purchases under the cost method. When these shares are reissued, we use an average-cost method to determine cost. Proceeds in excess of cost are credited to additional paid-in capital. Revenue Recognition — Sales and Rentals Net revenue reflects gross revenue less sales discounts and allowances and customer returns for product sales and rental revenue reserves. Revenue is evaluated under the following criteria and recognized when each is met: • Evidence of an arrangement: • Delivery: • Fixed or determinable price: • Collection is deemed probable: As a general interpretation of the above guidelines, revenue for health care and surgical products is generally recognized upon the assumption of risk of loss and other risks and rewards of ownership by the customer. Local business customs and non-standard sales terms can sometimes result in deviations to this normal practice in certain instances; however, in no case is revenue recognized prior to the transfer of risk of loss and rewards of ownership. For non-invasive therapy products and medical equipment management services, the majority of product offerings are rental products for which revenue is recognized consistent with the rendering of the service and use of products. For The Vest® product, revenue is generally recognized at the time of receipt of authorization for billing from the applicable paying entity as this serves as evidence of the arrangement and sets a fixed or determinable price. For health care products and services in the information technology space, various revenue recognition techniques are used, depending on the offering. Arrangements to provide services, routinely under separately sold service and maintenance contracts, result in the deferral of revenue until specified services are performed. Service contract revenue is generally recognized ratably over the contract period, if applicable, or as services are rendered. Product-related goods are generally recognized upon delivery to the customer. Revenue is presented in the Statements of Consolidated Income net of certain discounts, GPO fees, and sales adjustments. For product sales, we record reserves resulting in a reduction of revenue for contractual discounts, as well as price concessions and product returns. Likewise, rental revenue reserves, reflecting contractual and other routine billing adjustments, are recorded as a reduction of revenue. Reserves for revenue are estimated based upon historical rates for revenue adjustments. Taxes Collected from Customers and Remitted to Governmental Units Taxes assessed by a governmental authority that are directly imposed on a revenue producing transaction between us and our customers, including but not limited to sales taxes, use taxes, and value added taxes, are accounted for on a net (excluded from revenue and cost) basis. Cost of Revenue Cost of goods sold for product sales consists primarily of purchased material costs, fixed manufacturing expense, variable direct labor, overhead costs and costs associated with the distribution and delivery of products to our customers. Rental expenses consist of costs associated directly with rental revenue, including depreciation, maintenance, logistics and service center facility and personnel costs. Research and Development Costs Research and development costs are expensed as incurred. Costs were $ 91.8 71.9 70.2 In addition, certain costs for software development technology held for sale are capitalized as intangibles and are amortized over a period of three five 2.6 2.6 2.4 Advertising Costs Advertising costs are expensed as incurred. Costs were $ 6.8 7.3 7.4 Comprehensive Income We include the net-of-tax effect of unrealized gains or losses on our available-for-sale securities, foreign currency translation adjustments and pension or other defined benefit postretirement plans' actuarial gains or losses and prior service costs or credits in comprehensive income. See Note 5 for further details. Foreign Currency Translation The functional currency of foreign operations is generally the local currency in the country of domicile. Assets and liabilities of foreign operations are primarily translated into U.S. dollars at year-end rates of exchange and the income statements are translated at the average rates of exchange prevailing during the year. Adjustments resulting from translation of the financial statements of foreign operations into U.S. dollars are excluded from the determination of net income, but included as a component of accumulated other comprehensive income (loss). Foreign currency gains and losses resulting from foreign currency transactions are included in our results of operations and are not material. Stock-Based Compensation We account for stock-based compensation under fair value provisions. Stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period. In order to determine the fair value of stock options and other performance-based stock awards on the date of grant, we utilize a Binomial model. Inherent in this model are assumptions related to a volatility factor, expected life, risk-free interest rate, dividend yield and expected forfeitures. The risk-free interest rate is based on factual data derived from public sources. The volatility factor, expected life, dividend yield and expected forfeiture assumptions require judgment utilizing historical information, peer data and future expectations. Deferred stock (also known as restricted stock units (“RSUs”)) is measured based on the fair market price of our common stock on the date of grant, as reported by the New York Stock Exchange, multiplied by the number of units granted. See Note 7 for further details. Income Taxes The Company and our eligible domestic subsidiaries file a consolidated U.S. income tax return. Foreign operations file income tax returns in a number of jurisdictions. Deferred income taxes are computed using an asset and liability approach to reflect the net tax effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and the corresponding income tax amounts. We have a variety of deferred tax assets in numerous tax jurisdictions. These deferred tax assets are subject to periodic assessment as to recoverability. If it is determined that it is more likely than not that the benefits will not be realized, valuation allowances are recognized. In evaluating whether it is more likely than not that we would recover these deferred tax assets, future taxable income, the reversal of existing temporary differences and tax planning strategies are considered. We account for uncertain income tax positions using a threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The difference between the tax benefit recognized in the financial statements for an uncertain income tax position and the tax benefit claimed in the tax return is referred to as an unrecognized tax benefit. See Note 9 for further details. Derivative Instruments and Hedging Activity We use derivative financial instruments to manage the economic impact of fluctuations in currency exchange and interest rates. Derivative financial instruments related to currency exchange rates include forward purchase and sale agreements which generally have terms no greater than 15 months. Additionally, interest rate swaps are sometimes used to convert some or all of our long-term debt to either a fixed or variable rate. Derivative financial instruments are recognized on the Consolidated Balance Sheets as either assets or liabilities and are measured at fair value. Changes in the fair value of derivatives are recorded each period in the Statement of Consolidated Income or the Statement of Consolidated Comprehensive Income, depending on whether a derivative is designated and considered effective as part of a hedge transaction, and if it is, the type of hedge transaction. Gains and losses on derivative instruments reported in accumulated other comprehensive income (loss) are subsequently included in the Statement of Consolidated Income in the periods in which earnings are affected by the hedged item. These activities have not had a material effect on our financial position or results of operations for the periods presented herein. Recently Issued Accounting Guidance In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers”, which provides guidance for revenue recognition. The standard's core principle, as further amended, is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 which delayed the effective date of the new revenue guidance by one year. As a result, the provisions of ASU 2014-09 will be effective for us in the first quarter of fiscal 2019, ending December 31, 2018. Early adoption is permitted as of the original effective date, but not earlier. We are currently in the process of evaluating the impact of adoption of this ASU on our Consolidated Financial Statements. In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued In September 2015, the Company adopted ASU 2015-16, "Simplifying the Accounting for Measurement Period Adjustments." This update eliminates the need to retrospectively adjust prior period information in the financial statements for acquisition adjustments to goodwill during the measurement period. The impact of ASU 2015-16 will be dependent on any future measurement period adjustments for acquisitions. In February 2013, an accounting standards update was issued that amends the reporting of amounts reclassified out of accumulated other comprehensive income (loss). This standard does not change the current requirements for reporting net income or other comprehensive income (loss) in the financial statements. However, the guidance requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income (loss) by component, either on the face of the financial statement where net income is presented or in the notes to the financial statements. The company adopted this standard in fiscal 2014, and the disclosures of reclassifications out of accumulated other comprehensive loss are included in Note 5. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's consolidated financial statements upon adoption. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Sep. 30, 2015 | |
ACQUISITIONS [Abstract] | |
ACQUISITIONS | NOTE 2. ACQUISITIONS Welch Allyn On September 8, 2015, we completed the acquisition of Welch Allyn Holdings, Inc. and its subsidiaries (collectively, “Welch Allyn”) for a consideration of $ 1,687.3 1,633.6 8,133,722 2.1 The cash portion of the consideration is preliminary and subject to adjustment for various true-up provisions as described in the terms of the merger agreement. The transaction was funded with new borrowings, including $ 1.8 425.0 The following summarizes the fair value of assets acquired and liabilities assumed at the date of the acquisition. These results are preliminary and subject to normal true-up provisions in the purchase agreement and other fair value adjustments. Amount Trade receivables $ 63.2 Inventory 110.5 Other current assets 52.7 Current deferred income taxes 27.3 Property, plant, and equipment 93.2 Goodwill 1,203.5 Trade name (indefinite life) 434.0 Customer relationships ( 12 516.8 Developed technology ( 7 54.0 Other intangibles 19.9 Other noncurrent assets 30.6 Current liabilities (161.5 ) Noncurrent deferred income taxes (368.7 ) Other noncurrent liabilities (25.6 ) Total purchase price, net of cash acquired $ 2,049.9 Fair value of common stock issued $ 416.3 Cash payment, net of cash acquired 1,633.6 Total consideration $ 2,049.9 Goodwill from the Welch Allyn acquisition, which is not deductible for tax purposes, is primarily due to enhanced customer relevance and a stronger competitive position resulting from the business combination, including a complementary commercial position, product portfolio, and enhanced synergies. As stated in Note 11, Welch Allyn is reported as a reconciling item in our segment disclosures for the year ended September 30, 2015. Accordingly, the goodwill from the Welch Allyn acquisition has not yet been allocated to a reportable segment. Our total revenue on an unaudited pro forma basis, as if the Welch Allyn acquisition had been consummated at the beginning of our 2014 fiscal year, would have been higher by approximately $ 638 677 59 61 The unaudited pro forma results are based on the Company's historical financial statements and those of the Welch Allyn business and do not necessarily indicate the results of operations that would have resulted had the acquisition been completed at the beginning of the comparable period presented and are not indicative of the results of operations in future periods. Trumpf Medical On August 1, 2014, we completed the acquisition of Trumpf Medical (“Trumpf”) and funded the transaction with a combination of cash on hand and borrowings. Trumpf Medical provides a portfolio of well-established operating room (OR) infrastructure products such as surgical tables, surgical lighting, and supply units and expands our product offerings in the surgical suite. The purchase price was $ 232.9 226.6 39.0 The following summarizes the fair value of assets acquired and liabilities assumed at the date of the acquisition. These results are now considered final. Amount Trade receivables $ 67.6 Inventory 63.6 Other current assets 23.4 Property, plant, and equipment 42.1 Goodwill 66.0 Trade name ( 5 6.7 Customer relationships ( 10 15.8 Developed technology ( 8 17.8 Other intangibles 4.8 Other noncurrent assets 0.7 Deferred tax asset 12.9 Current liabilities (74.4 ) Long term debt (6.0 ) Noncurrent liabilities (8.1 ) Total purchase price $ 232.9 Goodwill was allocated entirely to our Surgical and Respiratory Care segment. The goodwill related to the acquired German operations will be tax deductible while the remaining goodwill will not be deductible for tax purposes. Our total revenue on an unaudited pro forma basis, as if the Trumpf acquisition had been consummated at the beginning of our 2013 fiscal year, would have been higher by approximately $ 218 235 Virtus, Inc. On March 31, 2014 we completed a stock purchase agreement with the stockholders of Virtus, Inc. (“Virtus”) to acquire the entire equity interest in Virtus: a supplier of finished surfaces and components for our bed and stretcher products. The acquisition of Virtus insources a component of our supply chain. The purchase price was $ 17.6 13.0 The following summarizes the fair value of assets acquired and liabilities assumed at the date of the acquisition. During the third quarter of fiscal 2014, the remaining provisions of the stock purchase agreement were settled and the purchase price is now final. Amount Inventory $ 2.6 Other current assets 5.4 Property, plant, and equipment 1.9 Goodwill 9.4 Current liabilities (1.6 ) Deferred tax liability (0.1 ) Total purchase price $ 17.6 Goodwill is not deductible for tax purposes and was allocated to both our North America and International segments. The impact to our total revenue and net income on an unaudited proforma basis, as if the Virtus acquisition had been consummated at the beginning of our 2013 fiscal year, would not have been significant for the fiscal years ended September 30, 2014 and 2013. Other We have used cash on hand for other business acquisitions and equity investments which we do not consider individually material to the Company's financial position or results of operations. These included one equity investment in which the investee was determined to be a VIE and Hill-Rom was determined to have a controlling financial interest, resulting in consolidation of the investee. The portion of this investee's assets, liabilities, and operating results which are not attributable to Hill-Rom's equity investment are recognized in our Consolidated Financial Statements as attributable to noncontrolling interests. |
GOODWILL AND INDEFINITE-LIVED I
GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS | 12 Months Ended |
Sep. 30, 2015 | |
GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS [Abstract] | |
GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS | NOTE 3. GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS The following summarizes goodwill activity by reportable segment: North America Surgical and Respiratory Care International Welch Allyn Total Balances at September 30, 2013: Goodwill $ 383.0 $ 279.0 $ 153.6 $ - $ 815.6 Accumulated impairment losses (358.1 ) - (114.7 ) - (472.8 ) Goodwill, net at September 30, 2013 24.9 279.0 38.9 - 342.8 Changes in Goodwill during the period: Goodwill related to acquisitions 7.6 57.3 (2.8 ) - 62.1 Currency translation effect - (2.8 ) (2.3 ) - (5.1 ) Balances at September 30, 2014: Goodwill 390.6 333.5 148.5 - 872.6 Accumulated impairment losses (358.1 ) - (114.7 ) - (472.8 ) Goodwill, net at September 30, 2014 32.5 333.5 33.8 - 399.8 Changes in Goodwill during the period: Goodwill related to acquisitions - 22.1 - 1,203.5 1,225.6 Currency translation effect - (11.8 ) (3.1 ) - (14.9 ) Balances at September 30, 2015: Goodwill 390.6 343.8 145.4 1,203.5 2,083.3 Accumulated impairment losses (358.1 ) - (114.7 ) - (472.8 ) Goodwill, net at September 30, 2015 $ 32.5 $ 343.8 $ 30.7 $ 1,203.5 $ 1,610.5 We acquired Welch Allyn on September 8, 2015 and Trumpf on August 1, 2014. All goodwill associated with the Welch Allyn acquisition is presented as a reconciling item in the table above, as it has not yet been assigned to a reportable segment. All goodwill related to the Trumpf acquisition was assigned to the Surgical and Respiratory Care segment. During fiscal 2015, we recorded adjustments to goodwill related to the Trumpf acquisition completed during the fourth quarter of fiscal 2014. We also consolidated an investment made in fiscal 2015 that was determined to be a VIE in which we have a controlling financial interest. The consolidation resulted in $ 12.1 9.4 As discussed in Note 11, we operate in three ten Testing for impairment must be performed annually, or on an interim basis upon the occurrence of a triggering event or change in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The annual evaluation of goodwill performed during the third quarter of fiscal 2015 and 2014 did not result in any impairments. A 10 Indefinite-lived intangible assets We have various indefinite-lived intangible assets representing trade names with a carrying value of $ 466.9 32.9 |
FINANCING AGREEMENTS
FINANCING AGREEMENTS | 12 Months Ended |
Sep. 30, 2015 | |
FINANCING AGREEMENTS [Abstract] | |
FINANCING AGREEMENTS | NOTE 4. FINANCING AGREEMENTS Total debt consists of the following: September 30 2015 2014 Revolving credit facilities $ - $ 265.0 Current portion of long-term debt 58.0 16.2 Senior secured Term Loan A, long-term portion 931.7 - Senior secured Term Loan B, long-term portion 778.3 - Senior unsecured 5.75 418.2 - Term loan under August 2012 credit facility, long-term portion - 159.6 Unsecured 7.00 13.8 19.2 Unsecured 6.75 29.6 29.6 Other 3.6 1.4 Total debt 2,233.2 491.0 Less current portion of debt 58.0 126.9 Total long-term debt $ 2,175.2 $ 364.1 The following table summarizes the scheduled maturities of long-term debt for fiscal years 2016 through 2020: Term Loan A Term Loan B Total 2016 $ 50.0 $ 8.0 $ 58.0 2017 $ 75.0 $ 8.0 $ 83.0 2018 $ 100.0 $ 8.0 $ 108.0 2019 $ 100.0 $ 8.0 $ 108.0 2020 $ 675.0 $ 8.0 $ 683.0 In September 2015, the Company entered into four • 1.0 • 800.0 • 500.0 • 425.0 The TLA Facility, TLB Facility, and Revolving Credit Facility (collectively, the “Senior Secured Credit Facilities”) all bear interest at variable rates which are currently less than 4.0 50.0 75.0 100.0 8.0 At September 30, 2015, there were no 490.9 9.1 42.4 39.8 The Senior Secured Credit Facilities are held with a syndicate of banks, which includes over 20 institutions. The general corporate assets of the Company and its subsidiaries collateralize these obligations. The credit agreement governing these facilities contains financial covenants which specify a maximum secured net leverage ratio and a minimum interest coverage ratio, as such terms are defined in the credit agreement. These financial covenants are measured at the end of each fiscal quarter, with the first measurement date on December 31, 2015. The required ratios vary through December 31, 2019 providing a gradually decreasing maximum secured net leverage ratio and a gradually increasing minimum interest coverage ratio, as set forth in the table below: Fiscal Quarter Ended Maximum Secured Net Leverage Ratio Minimum Interest Coverage Ratio December 31, 2015 4.75 3.25 December 31, 2016 4.50 3.25 December 31, 2017 4.00 3.50 December 31, 2018 3.50 3.75 December 31, 2019 and thereafter 3.00 4.00 The Senior Notes bear interest at a fixed rate of 5.75 We are in compliance with all applicable financial covenants as of September 30, 2015. In conjunction with the issuance of the Senior Secured Credit Facilities and the Senior Notes, the Company incurred $ 48.7 the Company has elected to early-adopt ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” Following this guidance, as of September 30, 2015, unamortized debt issuance costs of $ 39.1 9.4 Unsecured debentures outstanding at September 30, 2015 and September 30, 2014 have fixed rates of interest. We have deferred gains included in the amounts above from the termination of previous interest rate swap agreements, and those deferred gains amounted to less than $ 1.0 From August 2012 through April 2015, we had a credit facility that provided for revolving loans of up to $ 500.0 200.0 900.0 165.0 2.6 We are exposed to market risk from fluctuations in interest rates. The Company sometimes manages its exposure to interest rate fluctuations through the use of interest rate swaps (cash flow hedges). As of September 30, 2014, we had one 1.0 2 1 The fair value of our debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same remaining maturities. The book values of our short-term debt instruments approximate fair value. The estimated fair values of our long-term debt instruments are described in the table below: September 30 2015 2014 Senior secured Term Loan A $ 990.7 $ - Senior secured Term Loan B 780.7 - Senior unsecured 5.75 428.4 - Term loan under August 2012 credit facility - 175.2 Unsecured debentures 43.4 55.5 Total debt $ 2,243.2 $ 230.7 The estimated fair values of our long-term unsecured debentures were based on observable inputs such as quoted prices in markets that are not active. The estimated fair values of our term loans and the Senior Notes were based on quoted prices for similar liabilities. These fair value measurements were classified as Level 2, as described in Note 1. |
OTHER COMPREHENSIVE INCOME
OTHER COMPREHENSIVE INCOME | 12 Months Ended |
Sep. 30, 2015 | |
OTHER COMPREHENSIVE INCOME [Abstract] | |
OTHER COMPREHENSIVE INCOME | NOTE 5. OTHER COMPREHENSIVE INCOME The following tables represent the changes in accumulated other comprehensive loss by component for the year to date periods ended September 30, 2015 and 2014: Year Ended September 30, 2015 Other comprehensive income (loss) Accumulated other comprehensive loss Prior to Reclassification Pre-tax Tax effect Net of tax Beginning Net activity Ending Available-for-sale securities and currency hedges $ (0.6 ) $ 0.6 $ - $ - $ - $ - $ - $ - Foreign currency translation adjustment (58.6 ) - (58.6 ) - (58.6 ) (34.2 ) (58.6 ) (92.8 ) Change in pension and postretirement defined benefit plans (28.7 ) 15.5 (13.2 ) 5.1 (8.1 ) (39.9 ) (8.1 ) (48.0 ) Total $ (87.9 ) $ 16.1 $ (71.8 ) $ 5.1 $ (66.7 ) $ (74.1 ) $ (66.7 ) $ (140.8 ) Year Ended September 30, 2014 Other comprehensive income (loss) Accumulated other comprehensive loss Prior to Reclassification Pre-tax Tax effect Net of tax Beginning Net activity Ending Available-for-sale securities and currency hedges $ 0.3 $ 0.1 $ 0.4 $ (0.1 ) $ 0.3 $ (0.3 ) $ 0.3 $ - Foreign currency translation adjustment (29.6 ) - (29.6 ) - (29.6 ) (4.6 ) (29.6 ) (34.2 ) Change in pension and postretirement defined benefit plans (16.8 ) 2.7 (14.1 ) 5.0 (9.1 ) (30.8 ) (9.1 ) (39.9 ) Total $ (46.1 ) $ 2.8 $ (43.3 ) $ 4.9 $ (38.4 ) $ (35.7 ) $ (38.4 ) $ (74.1 ) The following table represents the items reclassified out of accumulated other comprehensive loss and the related tax effects during fiscal 2015 and 2014: Years Ended September 30 2015 2014 Amount Tax effect Net of tax Amount Tax effect Net of tax Change in pension and postretirement defined benefit plans (1) $ 15.5 $ (5.6 ) $ 9.9 $ 2.7 $ (1.0 ) $ 1.7 Available-for-sale securities and currency hedges (2) $ 0.6 $ (0.2 ) $ 0.4 $ 0.1 $ - $ 0.1 (1) Reclassified from accumulated other comprehensive loss into cost of goods sold and selling and administrative expenses. These components are included in the computation of net periodic pension and postretirement benefit expense. (2) Reclassified from accumulated other comprehensive loss into other income (expense), net. |
RETIREMENT AND POSTRETIREMENT B
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS | 12 Months Ended |
Sep. 30, 2015 | |
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS [Abstract] | |
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS | NOTE 6. RETIREMENT AND POSTRETIREMENT BENEFIT PLANS Our retirement plans consist of defined benefit plans, postretirement healthcare plans, and defined contribution savings plans. Plans cover certain employees both in and outside of the U.S. Retirement Plans We sponsor five three Effect on Operations The components of net periodic benefit cost for our defined benefit retirement plans were as follows: Years Ended September 30 2015 2014 2013 Service cost $ 5.4 $ 5.0 $ 6.1 Interest cost 14.6 14.4 13.2 Expected return on plan assets (16.7 ) (16.7 ) (15.9 ) Amortization of unrecognized prior service cost, net 0.6 0.6 0.6 Amortization of net loss 5.2 3.2 7.8 Net periodic benefit cost 9.1 6.5 11.8 Settlement charge 9.6 - - Special termination benefits - 2.4 - Net pension expense $ 18.7 $ 8.9 $ 11.8 In April, 2015, we offered all terminated vested participants of our domestic master defined benefit retirement plan an option to receive a lump sum cash payout in lieu of their right to future periodic benefit payments under the plan upon their retirement. Lump sums of $ 42.3 9.6 During the second quarter of fiscal 2014, we initiated a domestic early retirement program, which offered certain special termination benefits relating to our pension and postretirement health care plans. This program and the related special termination benefits resulted in a non-cash charge of $ 3.2 2.4 0.8 0.8 1.3 Obligations and Funded Status The change in benefit obligations, plan assets and funded status, along with amounts recognized in the Consolidated Balance Sheets for our defined benefit retirement plans were as follows: Years Ended September 30 2015 2014 Change in benefit obligation: Benefit obligation at beginning of year $ 343.8 $ 297.9 Service cost 5.4 5.0 Interest cost 14.6 14.4 Actuarial loss 12.5 31.4 Benefits paid (54.0 ) (10.2 ) Acquisitions - 4.3 Special termination benefits - 2.4 Plan settlement (4.4 ) - Exchange rate gain (2.4 ) (1.4 ) Benefit obligation at end of year 315.5 343.8 Change in plan assets: Fair value of plan assets at beginning of year 276.1 254.4 Actual return on plan assets (3.9 ) 30.9 Employer contributions 0.9 1.0 Benefits paid (54.0 ) (10.2 ) Fair value of plan assets at end of year 219.1 276.1 Funded status and net amounts recognized $ (96.4 ) $ (67.7 ) Amounts recorded in the Consolidated Balance Sheets: Accrued pension benefits, current portion $ (1.0 ) $ (1.0 ) Accrued pension benefits, long-term (95.4 ) (66.7 ) Net amount recognized $ (96.4 ) $ (67.7 ) In addition to the amounts above, net actuarial losses of $ 79.3 1.0 30.0 65.0 1.7 24.8 The estimated net actuarial loss and prior service cost for our defined benefit retirement plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year are $ 4.5 0.3 Accumulated Benefit Obligation The accumulated benefit obligation for all defined benefit pension plans was $ 296.7 325.9 September 30 2015 2014 PBO ABO Plan Assets PBO ABO Plan Assets Master plan $ 292.5 $ 275.3 $ 218.9 $ 319.1 $ 303.2 $ 275.8 International plans 17.9 16.3 0.2 20.3 18.5 0.3 Supplemental executive plan 5.1 5.1 - 4.4 4.2 - $ 315.5 $ 296.7 $ 219.1 $ 343.8 $ 325.9 $ 276.1 Actuarial Assumptions The weighted average assumptions used in accounting for our domestic pension plans were as follows: 2015 2014 2013 Weighted average assumptions to determine benefit obligations at the measurement date: Discount rate for obligation 4.4 % 4.5 % 5.0 % Rate of compensation increase 3.0 % 3.0 % 3.3 % Weighted average assumptions to determine benefit cost for the year: Discount rate for expense 4.5 % 5.0 % 4.1 % Expected rate of return on plan assets 6.8 % 7.0 % 7.0 % Rate of compensation increase 3.0 % 3.3 % 3.3 % The discount rates used in the valuation of our defined benefit pension plans are evaluated annually based on current market conditions. In setting these rates we utilize long-term bond indices and yield curves as a preliminary indication of interest rate movements, and then make adjustments to the respective indices to reflect differences in the terms of the bonds covered under the indices in comparison to the projected outflow of our pension obligations. The overall expected long-term rate of return is based on historical and expected future returns, which are inflation adjusted and weighted for the expected return for each component of the investment portfolio, as well as taking into consideration economic and capital market conditions. The rate of assumed compensation increase is also based on our specific historical trends of past wage adjustments. The weighted average discount rate assumptions used for our international plans are lower than our domestic plan assumptions and do not significantly affect the consolidated net benefit obligation or net periodic benefit cost balances. Plan Assets The weighted average asset allocations of our master defined benefit retirement plan at September 30, 2015 and 2014, by asset category, along with target allocations, are as follows: 2015 2014 2015 2014 Target Target Actual Actual Allocation Allocation Allocation Allocation Equity securities 39 49 40 60 42 % 52 % Fixed income securities 51 61 40 60 58 % 48 % Total 100 % 100 % We have a Plan Committee that sets investment guidelines with the assistance of an external consultant. These guidelines are established based on market conditions, risk tolerance, funding requirements and expected benefit payments. The Plan Committee also oversees the investment allocation process and monitors asset performance. As pension liabilities are long-term in nature, we employ a long-term total return approach to maximize the long-term rate of return on plan assets for a prudent level of risk. Target allocations are guidelines, not limitations, and plan fiduciaries may occasionally approve allocations above or below a target range or elect to rebalance the portfolio within the targeted range. The investment portfolio contains a diversified portfolio of primarily equities and fixed income securities. Securities are also diversified in terms of domestic and international securities, short- and long-term securities, growth and value styles, large cap and small cap stocks. The primary investment strategy is a dynamic target allocation method that periodically rebalances among various investment categories depending on the current funded positions. This program is designed to actively move from return-seeking investments (such as equities) toward liability-hedging investments (such as long-duration fixed income) as funding levels improve. Trust assets are invested subject to the following policy restrictions: short-term securities must be rated A2/P2 or higher; all fixed-income securities shall have a credit quality rating “BBB” or higher; investments in equities in any one 10 Fair Value Measurements of Plan Assets The following table summarizes the valuation of our pension plan assets by pricing categories: Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Balance at Assets Inputs Inputs September 30, 2015 (Level 1) (Level 2) (Level 3) Cash $ 3.5 $ 3.5 $ - $ - Equities U.S. companies 47.1 - 47.1 - International companies 44.8 - 44.8 - Fixed income securities 123.7 - 123.7 - Total plan assets at fair value $ 219.1 $ 3.5 $ 215.6 $ - Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Balance at Assets Inputs Inputs September 30, 2014 (Level 1) (Level 2) (Level 3) Cash $ 2.1 $ 2.1 $ - $ - Equities U.S. companies 101.7 101.7 - - International companies 38.7 38.7 - - Fixed income securities 133.2 66.8 66.4 - Other 0.4 0.4 - - Total plan assets at fair value $ 276.1 $ 209.7 $ 66.4 $ - The Level 2 investments are commingled funds and/or collective trusts valued using the net asset value (“NAV”) unit price provided by the fund administrator. The NAV is based on the value of the underlying assets owned by the fund. For further descriptions of the asset Levels used in the above chart, refer to Note 1. Cash Flows Our U.S. qualified defined benefit plan is funded in excess of 80 During 2015 and 2014, we contributed cash of $ 0.9 1.0 Estimated Future Benefit Payments The benefit payments, which are expected to be funded through plan assets and company contributions and reflect expected future service, are expected to be paid as follows: Pension Benefits 2016 $ 12.3 2017 $ 12.8 2018 $ 13.3 2019 $ 14.0 2020 $ 14.8 2021-2025 $ 86.5 Defined Contribution Savings Plans We have defined contribution savings plans that cover substantially all U.S. employees and certain non-U.S. employees. The general purpose of these plans is to provide additional financial security during retirement by providing employees with an incentive to make regular savings. Company contributions to the plans are based on eligibility and employee contributions. Expense under these plans was $ 17.4 15.0 15.8 Postretirement Health Care Plans In addition to defined benefit retirement plans, we also offer two domestic postretirement health care plans, one of which was assumed in the acquisition of Welch Allyn, that provide health care benefits to qualified retirees and their dependents. The plans are closed to new participants and include retiree cost sharing provisions and generally extends retiree coverage for medical and prescription benefits beyond the COBRA continuation period to the date of Medicare eligibility. We use a measurement date of September 30 for these plans. The postretirement health care plans, including the Welch Allyn plan on a post-acquisition basis, reflected a credit during fiscal 2015, 2014 and 2013 of ($ 0.2 0.2 0.1 Years Ended September 30 2015 2014 Change in benefit obligation: Benefit obligation at beginning of year $ 11.2 $ 9.8 Service cost 0.4 0.4 Interest cost 0.4 0.4 Acquired obligation 14.1 - Actuarial gain (0.9 ) (0.2 ) Benefits paid (0.2 ) (0.2 ) Retiree contributions 0.1 0.2 Special termination benefits - 0.8 Benefit obligation at end of year $ 25.1 $ 11.2 Amounts recorded in the Consolidated Balance Sheets: Accrued benefits obligation, current portion $ 1.8 $ 1.1 Accrued benefits obligation, long-term 23.3 10.1 Net amount recognized $ 25.1 $ 11.2 We contributed less than $ 0.2 0.1 In addition to the amounts above, net actuarial gains of $ 2.4 1.4 1.5 1.7 2.3 1.6 The estimated net actuarial gain and prior service benefit for our postretirement health care plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year are ($ 0.1 0.9 The discount rate used to determine the net periodic benefit cost for the postretirement health care plans during the fiscal year ended September 30, 2015, 2014 and 2013 was 3.7 4.1 3.3 3.5 3.7 4.1 5.25 7.0 4 5 A one 0.1 1.9 1.7 We fund the postretirement health care plans as benefits are paid, and current plan benefits are expected to require net company contributions of approximately $ 1.8 2 |
COMMON STOCK
COMMON STOCK | 12 Months Ended |
Sep. 30, 2015 | |
COMMON STOCK [Abstract] | |
COMMON STOCK | NOTE 7. COMMON STOCK Share Repurchases We repurchased 1.2 1.7 2.8 54.8 70.5 92.7 190 Stock-Based Compensation We have stock-based compensation plans under which employees and non-employee directors may be granted options to purchase shares of Company common stock at the fair market value at the time of grant. In addition to stock options, we grant performance share units (“PSUs”) and RSUs to certain management level employees and vested deferred stock to non-employee directors. We also offer eligible employees the opportunity to buy shares of our common stock at a discount via an Employee Stock Purchase Plan (“ESPP”). Our primary stock-based compensation program is the Stock Incentive Plan, which has been approved by our shareholders. Under the Stock Incentive Plan, we have a total of 15.3 4.3 23.3 The following table sets forth a summary of the annual stock-based compensation cost that was charged against income for all types of awards: Years Ended September 30 2015 2014 2013 Total stock-based compensation cost (pre-tax) $ 25.0 $ 18.0 $ 13.5 Total income tax benefit (7.5 ) (6.5 ) (4.9 ) Total stock-based compensation cost, net of tax $ 17.5 $ 11.5 $ 8.6 Stock Options Stock options granted by our Compensation Committee under the Stock Incentive Plan are non-qualified stock options. These awards are generally granted with exercise prices equal to the average of the high and low prices of our common stock on the date of grant. They vest in equal annual installments over a three four ten The following table sets forth the weighted average fair value per share of stock options and the related valuation assumptions used in the determination of those fair values: Years Ended September 30 2015 2014 2013 Weighted average fair value per share $ 12.83 $ 11.91 $ 7.91 Valuation assumptions: Risk-free interest rate 1.6 % 1.3 % 0.6 % Expected dividend yield 1.4 % 1.4 % 1.9 % Expected volatility 35.0 % 36.1 % 40.2 % Weighted average expected life 4.9 4.9 4.9 The risk-free interest rate is based upon observed U.S. Treasury interest rates appropriate for the term of our employee stock options. Expected dividend yield is based on the history and our expectation of dividend payouts. Expected volatility was based on our historical stock price volatility. Expected life represents the weighted average period the stock options are expected to remain outstanding and is a derived output of the Binomial model. The expected life of employee stock options is impacted by the above assumptions as well as the post-vesting forfeiture rate and the exercise factor used in the Binomial model. These two variables are based on the history of exercises and forfeitures for previous stock options granted by us. The following table summarizes transactions under our stock option plans for fiscal year 2015: Weighted Weighted Average Weighted Average Aggregate Number of Average Remaining Intrinsic Shares Exercise Contractual Value (1) (in thousands) Price Term (in millions) Balance Outstanding at October 1, 2014 1,992 $ 31.99 Granted 381 45.01 Exercised (371 ) 31.83 Cancelled/Forfeited (101 ) 36.63 Balance Outstanding at September 30, 2015 1,901 $ 34.38 6.6 $ 33.5 Exercisable at September 30, 2015 1,060 $ 30.98 5.3 $ 22.3 Options Expected to Vest 773 $ 38.34 8.0 $ 10.6 (1) The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $ 51.99 The total intrinsic value of options exercised during fiscal years 2015, 2014 and 2013 was $ 6.3 4.6 1.6 As of September 30, 2015, there was $ 4.1 2.4 Restricted Stock Units RSUs are granted to certain employees with fair values equal to the average of the high and low prices of our common stock on the date of grant, multiplied by the number of units granted. RSU grants are contingent upon continued employment and vest over periods ranging from one four The following table summarizes transactions for our nonvested RSUs for fiscal year 2015: Weighted Number of Average Share Units Grant Date (in thousands) Fair Value Nonvested RSUs at October 1, 2014 431 $ 34.92 Granted 351 47.85 Vested (93 ) 37.76 Forfeited (55 ) 35.90 Nonvested RSUs at September 30, 2015 634 $ 41.35 As of September 30, 2015, there was $ 13.4 2 4.3 5.3 5.4 Performance Share Units Our Compensation Committee grants PSUs to certain employees and these awards are subject to any stock dividends, stock splits, and other similar rights inuring to common stock, but unlike our RSUs are not entitled to dividend reinvestment. Vesting of the grants is contingent upon achievement of performance targets and The fair value of the PSUs is equal to the average of the high and low prices of our common stock on the date of grant, multiplied by the number of units granted. For PSUs with a market condition such as total shareholder return, the Monte-Carlo simulation method is used to determine fair value. The following table sets forth the weighted average fair value per share for PSUs and the related valuation assumptions used in the determination of those fair values. PSUs granted in both fiscal 2015 and 2014 are based on company-specific performance targets, with a total shareholder return collar, while grants in fiscal 2013 are based entirely on shareholder return targets. Years Ended September 30 2015 2014 2013 Weighted average fair value per share $ 47.82 $ 47.91 $ 19.77 Valuation assumptions: Risk-free interest rate 0.9 % 0.5 % 0.3 % Expected dividend yield 0.0 % 0.0 % 0.0 % Expected volatility 23.5 % 30.1 % 32.6 % The basis for the assumptions listed above is similar to the valuation assumptions used for stock options, as discussed previously. The following table summarizes transactions for our nonvested PSUs for fiscal 2015: Weighted Number of Average Share Units Grant Date (in thousands) Fair Value Nonvested PSUs as of October 1, 2014 586 $ 29.98 Granted 331 49.27 Vested (414 ) 30.11 Cancelled (76 ) 24.57 Forfeited (73 ) 41.15 Nonvested PSUs at September 30, 2015 354 $ 42.16 As of September 30, 2015, there was $ 10.2 20.5 |
SPECIAL CHARGES
SPECIAL CHARGES | 12 Months Ended |
Sep. 30, 2015 | |
SPECIAL CHARGES [Abstract] | |
SPECIAL CHARGES | NOTE 8. SPECIAL CHARGES Over the past several years, we have placed a focus on improving our cost structure and business processes through various means including consolidation of certain manufacturing and select back office operations, customer rationalizations and various other organizational changes. As a result of these actions, we recognized special charges of $ 41.2 37.1 5.7 Welch Allyn Integration In conjunction with the acquisition of Welch Allyn in September 2015, we eliminated approximately 80 14.4 3 Pension Settlement Charge As disclosed in Note 6, we offered lump sum settlements to all terminated vested participants in our domestic master defined benefit retirement plan, which resulted in a settlement charge of $ 9.6 Site Consolidation In the third quarter of fiscal 2015, we initiated a plan to streamline our operations and simplify our supply chain by consolidating certain manufacturing and distribution operations. As part of this action, we announced the closure of sites in Redditch, England and Charleston, South Carolina. Upon closure, each site's operations will either be relocated to other existing Company facilities or outsourced to third-party suppliers. For the year ended September 30, 2015, we recorded severance and benefit charges of $ 2.7 160 1.8 3 Global Restructuring Program During the second quarter of fiscal 2014, we announced a global restructuring program focused on improving our cost structure. This action included early retirement and reduction in force programs that eliminated over 200 6.0 7.2 0.5 Since the inception of the global restructuring program through September 30, 2015, we have recognized aggregate special charges of $ 37.6 24.9 5 10 Discontinuance of Third-Party Payer Rentals Also during the second quarter of fiscal 2014, we initiated a plan to discontinue third-party payer rentals of therapy products occurring primarily in home care settings. Special charges recorded for this action included a $ 7.7 2.0 70 1.6 0.2 Batesville Manufacturing Early Retirement Program During the first quarter of fiscal 2014, we initiated a plan to improve our cost structure and streamline our organization by offering an early retirement program to certain manufacturing employees in our Batesville, Indiana plant, meeting specific eligibility requirements, and other minor reduction in force actions. These programs resulted in the elimination of approximately 35 1 Fiscal 2013 Restructuring Program During the second quarter of fiscal 2013, we announced a plan to improve our cost structure and streamline our organization by eliminating in excess of 100 1.7 0.6 0.2 1.0 0.6 During the third and fourth quarters of fiscal 2013, we continued actions under the previously announced plan and incurred charges of $ 0.8 2.0 For all accrued severance and other benefit charges described above, we record restructuring reserves within other current liabilities and other long-term liabilities. The reserve activity for severance and other benefits during fiscal 2015 was as follows: Balance at September 30, 2014 $ 11.7 Expenses 23.1 Cash Payments (10.0 ) Reversals (0.5 ) Balance at September 30, 2015 $ 24.3 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Sep. 30, 2015 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | NOTE 9. INCOME TAXES The significant components of income before income taxes and the consolidated income tax provision were as follows: Years Ended September 30 2015 2014 2013 Income before income taxes: Domestic $ 49.2 $ 87.0 $ 120.0 Foreign 15.9 28.2 24.0 Total $ 65.1 $ 115.2 $ 144.0 Income tax expense: Current provision Federal $ 35.3 $ 40.2 $ 45.0 State 3.6 3.1 1.8 Foreign 1.7 7.4 7.0 Total current provision 40.6 50.7 53.8 Deferred provision: Federal (18.1 ) (12.2 ) (9.9 ) State (1.3 ) (1.0 ) 1.1 Foreign (2.9 ) 17.1 (6.0 ) Total deferred provision (22.3 ) 3.9 (14.8 ) Income tax expense $ 18.3 $ 54.6 $ 39.0 Differences between income tax expense reported for financial reporting purposes and that computed based upon the application of the statutory U.S. Federal tax rate to the reported income before income taxes were as follows: Years Ended September 30 2015 2014 2013 % of % of % of Pretax Pretax Pretax Amount Income Amount Income Amount Income Federal income tax (a) $ 22.8 35.0 $ 40.3 35.0 $ 50.4 35.0 State income tax (b) 1.6 2.4 2.0 1.7 2.5 1.7 Foreign income tax (c) (10.2 ) (15.7 ) (7.7 ) (6.7 ) (5.7 ) (4.0 ) Application of federal tax credits (2.2 ) (3.4 ) (0.6 ) (0.5 ) (3.5 ) (2.4 ) Adjustment of estimated income tax accruals (1.6 ) (2.4 ) (0.6 ) (0.5 ) (1.5 ) (1.0 ) Valuation of tax attributes 4.0 6.2 21.3 18.5 0.6 0.4 Domestic manufacturer's deduction (1.5 ) (2.3 ) (1.8 ) (1.5 ) (2.2 ) (1.5 ) Capitalized transaction costs 2.5 3.8 0.3 0.2 - - Other, net 2.9 4.5 1.4 1.2 (1.6 ) (1.1 ) Income tax expense $ 18.3 28.1 $ 54.6 47.4 $ 39.0 27.1 (a) At statutory rate. (b) Net of Federal benefit. (c) Federal tax rate differential. The tax effect of temporary differences that gave rise to the deferred tax balance sheet accounts were as follows: Years Ended September 30 2015 2014 Deferred tax assets: Employee benefit accruals $ 106.4 $ 49.3 Inventory 6.2 13.9 Reserve for bad debts 8.4 10.0 Net operating loss carryforwards 45.8 40.3 Tax credit carryforwards 11.7 2.5 Other, net 39.6 25.7 218.1 141.7 Less: Valuation allowance (40.7 ) (28.3 ) Total deferred tax assets 177.4 113.4 Deferred tax liabilities: Depreciation (35.3 ) (13.9 ) Amortization (409.1 ) (62.8 ) Other, net (16.4 ) (4.9 ) Total deferred tax liabilities (460.8 ) (81.6 ) Deferred tax asset (liability) - net $ (283.4 ) $ 31.8 At September 30, 2015, we had $ 43.2 2.2 2033 0.4 2016 2033 11.7 2016 2026 The gross deferred tax assets as of September 30, 2015 were reduced by valuation allowances of $ 40.7 We operate under tax holidays in both Singapore and Puerto Rico. The Singapore tax holiday is effective through 2016 2025 4.3 4.0 2.9 0.07 0.07 0.05 With respect to the undistributed earnings of Welch Allyn's foreign subsidiaries, given the timing of the acquisition, we are still evaluating the investment of such foreign earnings. As for the undistributed earnings of Hill-Rom's foreign subsidiaries, including Welch Allyn for the post-acquisition period, foreign earnings are considered to be indefinitely reinvested for use in meeting working capital, business expansion and development, and other general needs. Accordingly, no provision has been made for deferred taxes related to the future repatriation of such earnings. If such earnings were repatriated, additional tax expense may result. It is not practicable to estimate the amount of tax that may be payable upon any such distribution. We file a consolidated federal income tax return as well as multiple state, local and foreign jurisdiction tax returns. In the normal course of business, we are subject to examination by the taxing authorities in each of the jurisdictions where we file tax returns. During fiscal 2015, the Internal Revenue Service (“IRS”) concluded its audit for fiscal year 2013 2014 2016 2017 2009 Welch Allyn also filed a consolidated federal income tax return as well as multiple state, local and foreign jurisdiction tax returns. In the normal course of business, Welch Allyn is subject to examination by the taxing authorities in each of the jurisdictions where it files tax returns. During calendar year 2015, the Internal Revenue Service (“IRS”) concluded its post-filing audit for calendar year 2013 (subject to certain exceptions), and initiated its post-filing examination of the calendar year 2014 consolidated federal return. Welch Allyn continues to participate in the IRS Compliance Assurance Program (“CAP”) for 2015 to include the period up through the date of the acquisition by Hill-Rom on September 8, 2015. Thereafter, Welch Allyn will be integrated into Hill-Rom's CAP going forward. Welch Allyn has received Partial Acceptance Letters from the IRS under CAP for calendar years 2011 through 2014 primarily for an issue that's before Competent Authority. We also have on-going audits in various stages of completion in several state and foreign jurisdictions, one 12 0.5 1.5 twelve The total amount of gross unrecognized tax benefits as of September 30, 2015, 2014 and 2013 was $ 5.8 4.1 4.6 3.3 2.7 3.9 A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Years Ended September 30 2015 2014 2013 Balance at October 1 $ 4.1 $ 4.6 $ 9.8 Increases in tax position of prior years 0.4 2.1 - Decreases in tax position of prior years (1.3 ) (0.9 ) (0.5 ) Increases in tax positions related to the current year - - 0.1 Settlements with taxing authorities (1.2 ) (0.1 ) (3.2 ) Lapse of applicable statute of limitations (1.3 ) (1.5 ) (1.7 ) Increase in positions due to acquisitions 5.5 - - Foreign currency adjustments (0.4 ) (0.1 ) 0.1 Total change 1.7 (0.5 ) (5.2 ) Balance at September 30 $ 5.8 $ 4.1 $ 4.6 We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. Accrued interest and penalties, which are not presented in the reconciliation table above, were $ 3.0 0.4 0.6 0.2 0.2 0.1 |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 12 Months Ended |
Sep. 30, 2015 | |
EARNINGS PER COMMON SHARE [Abstract] | |
EARNINGS PER COMMON SHARE | NOTE 10. EARNINGS PER COMMON SHARE Basic earnings per share is calculated based upon the weighted average number of outstanding common shares for the period, plus the effect of deferred vested shares. Diluted earnings per share is calculated consistent with the basic earnings per share calculation plus the effect of dilutive unissued common shares related to stock-based employee compensation programs. For all years presented, anti-dilutive stock options were excluded from the calculation of dilutive earnings per share. Excluded shares were 0.2 0.3 1.4 Earnings per share is calculated as follows: Years Ended September 30 2015 2014 2013 Net income attributable to common shareholders $ 47.7 $ 60.6 $ 105.0 Average shares outstanding - Basic (thousands) 57,249 57,555 59,910 Add potential effect of exercise of stock options and other unvested equity awards (thousands) 1,287 968 340 Average shares outstanding - Diluted (thousands) 58,536 58,523 60,250 Net income attributable to common shareholders per common share - Basic $ 0.83 $ 1.05 $ 1.75 Net income attributable to common shareholders per common share - Diluted $ 0.82 $ 1.04 $ 1.74 |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Sep. 30, 2015 | |
SEGMENT REPORTING [Abstract] | |
SEGMENT REPORTING | NOTE 11. SEGMENT REPORTING We disclose segment information that is consistent with the way in which management operates and views the business. Beginning in fiscal 2014, we changed our definition of divisional income within our internal reporting to management to exclude the impacts of acquisition-related intangible asset amortization. All segment information included below has been updated to reflect this change. Our operating structure consists of the following three reporting segments: • North America - sells and rents our patient support and near-patient technologies and services, as well as our health information technology solutions, in the U.S. and Canada. • Surgical and Respiratory Care - sells and rents our surgical and respiratory care products globally . • International - sells and rents similar products as our North America segment in regions outside of the U.S. and Canada. Our performance under each reportable segment is measured on a divisional income basis before non-allocated operating and administrative costs, impairment of other intangibles, litigation, special charges, acquisition and integration costs, acquisition-related intangible asset amortization, and other unusual events. Divisional income generally represents the division's gross profit less its direct operating costs along with an allocation of manufacturing and distribution costs, research and development and certain corporate functional expenses. Non-allocated operating and administrative costs include functional expenses that support the entire organization such as administration, finance, legal and human resources, expenses associated with strategic developments, acquisition-related intangible asset amortization, and other events that are not indicative of operating trends. We exclude such amounts from divisional income to allow management to evaluate and understand divisional operating trends without the effects of such items. In September 2015, we acquired Welch Allyn Holdings, Inc. (“Welch Allyn”). The results of Welch Allyn's operations for the 22 days under our ownership are reported as a reconciling item in our segment disclosures for the year ended September 30, 2015. Years Ended September 30 2015 2014 2013 Revenue: North America $ 1,002.0 $ 888.9 $ 958.3 Surgical and Respiratory Care 506.6 301.6 245.8 International 429.4 495.6 512.1 Welch Allyn 1 50.2 - - Total revenue $ 1,988.2 $ 1,686.1 $ 1,716.2 Divisional income: North America $ 204.1 $ 165.0 $ 201.7 Surgical and Respiratory Care 80.5 68.6 56.8 International 12.8 24.9 33.5 Other: Non-allocated operating costs, administrative costs, and other 173.1 98.8 131.4 Special charges 41.2 37.1 5.7 Operating profit 83.1 122.6 154.9 Interest expense (18.4 ) (9.8 ) (9.5 ) Investment income and other, net 0.4 2.4 (1.4 ) Income before income taxes $ 65.1 $ 115.2 $ 144.0 1 Welch Allyn is not considered a separate reportable segment but is presented as a reconciling item to total consolidated revenue. Geographic Information Geographic data for net revenue and long-lived assets (which consist mainly of property and equipment leased to others) were as follows: Years Ended September 30 2015 2014 2013 Net revenue to unaffiliated customers: (a) United States $ 1,273.0 $ 1,070.8 $ 1,116.4 Foreign 715.2 615.3 599.8 Total revenue $ 1,988.2 $ 1,686.1 $ 1,716.2 Long-lived assets: (b) United States $ 263.9 $ 151.7 $ 158.0 Foreign 114.5 109.8 76.3 Total long-lived assets $ 378.4 $ 261.5 $ 234.3 (a) Net revenue is attributed to geographic areas based on the location of the customer. (b) Includes property and equipment leased to others. |
QUARTERLY FINANCIAL INFORMATION
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | 12 Months Ended |
Sep. 30, 2015 | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) [Abstract] | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | NOTE 12. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) The following table presents selected consolidated financial data by quarter for each of the last two fiscal years. 2015 Quarter Ended December 31, 2014 March 31, 2015 June 30, 2015 September 30, 2015 Net revenue $ 465.0 $ 474.8 $ 474.5 $ 573.9 Gross profit $ 199.9 $ 214.2 $ 209.5 $ 256.7 Net income (loss) attributable to common shareholders $ 12.1 $ 26.1 $ 19.1 $ (9.6 ) Basic net income (loss) attributable to common shareholders per common share $ 0.21 $ 0.46 $ 0.34 $ (0.16 ) Diluted net income (loss) attributable to common shareholders per common share $ 0.21 $ 0.45 $ 0.33 $ (0.16 ) 2014 Quarter Ended December 31, 2013 March 31, 2014 June 30, 2014 September 30, 2014 Net revenue $ 393.4 $ 415.3 $ 397.6 $ 479.8 Gross profit $ 176.8 $ 202.7 $ 187.1 $ 213.3 Net income (loss) attributable to common shareholders $ 13.2 $ (3.3 ) $ 26.1 $ 24.6 Basic net income (loss) attributable to common shareholders per common share $ 0.23 $ (0.06 ) $ 0.46 $ 0.43 Diluted net income (loss) attributable to common shareholders per common share $ 0.22 $ (0.06 ) $ 0.45 $ 0.42 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Sep. 30, 2015 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 13. COMMITMENTS AND CONTINGENCIES Lease Commitments Rental expense for fiscal years 2015, 2014 and 2013 was $ 25.2 24.7 21.5 73.8 Amount 2016 $ 28.2 2017 $ 18.4 2018 $ 12.1 2019 $ 6.3 2020 $ 3.2 2021 and beyond $ 5.6 Self Insurance We are involved with various possible claims, including product and general liability, workers' compensation, auto liability and employment related matters. Such claims in the United States have deductibles and self-insured retentions ranging from $ 25 1.0 . Legal Proceedings Universal Hospital Services, Inc. Litigation On January 13, 2015, Universal Hospital Services, Inc. filed a complaint against us in the United States District Court for the Western District of Texas. The plaintiff alleges, among other things, that we engaged in certain customer contracting practices in violation of state and federal antitrust laws. The plaintiff also has asserted claims for tortious interference with business relationships. The plaintiff seeks injunctive relief and money damages in an unspecified amount. We believe that the allegations are without merit and intend to defend this matter vigorously. Stryker Litigation On April 4, 2011, we filed two separate actions against Stryker Corporation alleging infringement of certain Hill-Rom patents covering proprietary communications networks, status information systems and powered wheels used in our beds or stretchers. Both suits sought monetary damages and injunctions against Stryker for selling or distributing any beds, stretchers or ancillary products that infringe on Hill-Rom's patents. On August 14, 2012, we entered into a confidential favorable settlement agreement with Stryker Corporation to resolve our claims about our powered wheel patents, and on March 26, 2015, we entered into a confidential favorable settlement agreement with Stryker Corporation to resolve our claims about our status information systems. No trial date for the remaining claims covering proprietary communications networks has been set, and accordingly we cannot, at this time, assess the likelihood of any potential outcome or damages or other relief. General We are subject to various other claims and contingencies arising out of the normal course of business, including those relating to governmental investigations and proceedings, commercial transactions, product liability, employee related matters, antitrust, safety, health, taxes, environmental and other matters. Litigation is subject to many uncertainties and the outcome of individual litigated matters is not predictable with assurance. It is possible that some litigation matters for which reserves have not been established could be decided unfavorably to us, and that any such unfavorable decisions could have a material adverse effect on our financial condition, results of operations and cash flows. |
Valuation and Qualifying Accoun
Valuation and Qualifying Accounts | 12 Months Ended |
Sep. 30, 2015 | |
Valuation and Qualifying Accounts [Abstract] | |
Valuation and Qualifying Accounts | Valuation and Qualifying Accounts For The Fiscal Years Ended September 30, 2015, 2014 and 2013 (Dollars in millions) ADDITIONS BALANCE AT CHARGED TO CHARGED TO DEDUCTIONS BALANCE BEGINNING COSTS AND OTHER NET OF AT END DESCRIPTION OF PERIOD EXPENSES ACCOUNTS RECOVERIES OF PERIOD Reserves deducted from assets to which they apply: Allowance for possible losses and sales returns - accounts receivable: Period Ended: September 30, 2015 $ 31.4 $ 1.8 $ 0.1 (a) $ (7.3 ) (b) $ 26.0 September 30, 2014 $ 30.1 $ 1.5 $ 8.6 (a) $ (8.8 ) (b) $ 31.4 September 30, 2013 $ 38.5 $ 2.7 $ (0.1 ) (a) $ (11.0 ) (b) $ 30.1 Allowance for inventory valuation: Period Ended: September 30, 2015 $ 42.9 $ 0.9 $ 5.7 (c) $ (4.0 ) (d) $ 45.5 September 30, 2014 $ 22.0 $ 4.0 $ 19.8 (c) $ (2.9 ) (d) $ 42.9 September 30, 2013 $ 22.0 $ 1.8 $ - $ (1.8 ) (d) $ 22.0 Valuation allowance against deferred tax assets: Period Ended: September 30, 2015 $ 28.3 $ 4.0 $ 11.1 (c) $ (2.7 ) (e) $ 40.7 September 30, 2014 $ 8.9 $ 21.3 $ - $ (1.9 ) (e) $ 28.3 September 30, 2013 $ 8.6 $ 0.6 $ - $ (0.3 ) (e) $ 8.9 (a) Reduction of gross revenue for uncollectible health care rental reimbursements, cash discounts and other adjustments in determining net revenue. Also includes the effect of acquired businesses, if any. (b) Generally reflects the write-off of specific receivables against recorded reserves. (c) Generally reflects the effect of acquired businesses, if any. (d) Generally reflects the write-off of specific inventory against recorded reserves. (e) Primarily reflects write-offs of deferred tax assets against the valuation allowance and other movement of the valuation allowance offset by an opposing change in deferred tax assets. |
SUMMARY OF SIGNIFICANT ACCOUN23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Nature of Operations | Nature of Operations Hill-Rom Holdings, Inc. (the “Company,” “Hill-Rom,” “we,” “us,” or “our”) was incorporated on August 7, 1969 in the State of Indiana and is headquartered in Chicago, Illinois. We are a leading global medical technology company with more than 10,000 100 five |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The Consolidated Financial Statements include the accounts of Hill-Rom and its wholly-owned subsidiaries. In addition, we also consolidate variable interest entities (VIEs) where Hill-Rom is deemed to have a controlling financial interest. Intercompany accounts and transactions have been eliminated in consolidation, including the intercompany transactions with consolidated VIEs. Where our ownership interest is less than 100 percent, the noncontrolling interests are reported in our Consolidated Financial Statements. Certain prior year amounts have been reclassified to conform to current year presentation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. Examples of such estimates include our accounts receivable reserves (Note 1), accrued warranties (Note 1), the impairment of intangibles and goodwill (Note 3), income taxes (Notes 1 and 9) and commitments and contingencies (Note 13), among others. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider investments in marketable securities and other highly liquid instruments with a maturity of three months or less at date of purchase to be cash equivalents. Investments which have no stated maturity are also considered cash equivalents. All of our marketable securities may be freely traded. |
Trade Accounts Receivable | Trade Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest, unless the transaction is an installment sale with payment terms exceeding one year. Reserves for uncollectible accounts represent our best estimate of the amount of probable credit losses and collection risk in our existing accounts receivable. We determine such reserves based on historical write-off experience by industry and reimbursement platform. Receivables are generally reviewed on a pooled basis based on historical collection experience for each reimbursement and receivable type. Receivables for sales transactions are also reviewed individually for collectability. Account balances are charged against the allowance when we believe it is probable the receivable will not be recovered. We do not have any off-balance sheet credit exposure related to our customers. If circumstances change, such as higher than expected claims denials, payment defaults, changes in our business composition or processes, adverse changes in general economic conditions, unfavorable impacts of austerity measures initiated by some governmental authorities, instability or disruption of credit markets, or an unexpected material adverse change in a major customer's or payer's ability to meet its obligations, our estimates of the realizability of trade receivables could be reduced by a material amount. Within rental revenue, the domestic third-party payers' reimbursement process requires extensive documentation, which has had the effect of slowing both the billing and cash collection cycles relative to the rest of the business, and therefore, increasing total accounts receivable. Because of the extensive documentation required and the requirement to settle a claim with the primary payer prior to billing the secondary and/or patient portion of the claim, the collection period for a claim in a portion of our business may, in some cases, be extended. We generally hold our trade accounts receivable until they are paid. Certain long-term receivables are occasionally sold to third parties; however, any recognized gain or loss on such sales has historically not been material. |
Inventories | Inventories Inventories are valued at the lower of cost or market. Inventory costs are determined by the last-in, first-out (“LIFO”) method for approximately 21 29 September 30 2015 2014 Finished products $ 133.2 $ 93.5 Work in process 46.1 17.3 Raw materials 88.1 65.4 Total $ 267.4 $ 176.2 If the FIFO method of inventory accounting, which approximates current cost, had been used for all inventories, they would have been approximately $ 3.2 4.0 |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment is recorded at cost and depreciated over the estimated useful life of the assets using principally the straight-line method. Ranges of estimated useful lives are as follows: Useful Life Land improvements 6 15 Buildings and building equipment 10 40 Machinery and equipment 3 10 Equipment leased to others 2 10 When property, plant and equipment is retired from service or otherwise disposed of, the cost and related amount of depreciation or amortization are eliminated from the asset and accumulated depreciation accounts. The difference, if any, between the net asset value and the proceeds on sale are charged or credited to income. Total depreciation expense for fiscal years 2015, 2014 and 2013 was $ 73.6 65.4 71.2 September 30 2015 2014 Accumulated Accumulated Cost Depreciation Cost Depreciation Land and land improvements $ 23.3 $ 2.8 $ 19.4 $ 2.3 Buildings and building equipment 196.2 90.3 158.3 88.6 Machinery and equipment 369.5 226.5 321.3 213.7 Equipment leased to others 387.4 278.4 350.6 283.5 Total $ 976.4 $ 598.0 $ 849.6 $ 588.1 |
Intangible Assets | Intangible Assets Intangible assets are stated at cost and consist predominantly of goodwill, software, patents, acquired technology, trademarks, and acquired customer relationship assets. With the exception of goodwill and certain trademarks, our intangible assets are amortized on a straight-line basis over periods generally ranging from 3 20 We assess the carrying value of goodwill and non-amortizable intangibles annually, during the third quarter of each fiscal year, or more often if events or changes in circumstances indicate there may be impairment. Goodwill is allocated among the reporting units based on the relative fair value of those units. The majority of our goodwill and many of our intangible assets are not deductible for income tax purposes. A summary of intangible assets and the related accumulated amortization and impairment losses follows: September 30 2015 2014 Amortization Amortization Cost and Impairment Cost and Impairment Goodwill $ 2,083.3 $ 472.8 $ 872.6 $ 472.8 Software 181.7 139.2 170.5 146.6 Patents and Trademarks 497.6 16.9 67.1 16.0 Other 872.8 148.3 306.8 120.7 Total $ 3,635.4 $ 777.2 $ 1,417.0 $ 756.1 Amortization expense for fiscal years 2015, 2014 and 2013 was $ 44.6 41.0 45.6 Amount 2016 $ 92.9 2017 $ 85.8 2018 $ 81.6 2019 $ 78.0 2020 $ 74.4 2021 and beyond $ 368.1 Software consists mainly of capitalized costs associated with internal use software, including applicable costs associated with the implementation/upgrade of our Enterprise Resource Planning systems. In addition, software includes capitalized development costs for software products to be sold. The net book value of computer software costs, included within intangible assets, was $ 42.5 23.9 three ten 9.8 11.5 17.8 |
Fair Value Measurements | Fair Value Measurements Fair value measurements are classified and disclosed in one of the following three categories: ï‚· Level 1: Financial instruments with unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities. ï‚· Level 2: Financial instruments with observable inputs other than those included in Level 1 such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ï‚· Level 3: Financial instruments with unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Unobservable inputs reflect our own assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs shall be developed based on the best information available in the circumstances, which might include our own data. We record cash and cash equivalents, as disclosed on our Consolidated Balance Sheets, as Level 1 instruments and certain other investments and insignificant derivatives as either Level 2 or 3 instruments. Refer to Note 4 for disclosure of our debt instrument fair values. |
Guarantees | Guarantees We routinely grant limited warranties on our products with respect to defects in material and workmanship. The terms of these warranties are generally one year, however, certain components and products have substantially longer warranty periods. We recognize a reserve with respect to these obligations at the time of product sale, with subsequent warranty claims recorded directly against the reserve. The amount of the warranty reserve is determined based on historical trend experience for the covered products. For more significant warranty-related matters which might require a broad-based correction, separate reserves are established when such events are identified and the cost of correction can be reasonably estimated. A reconciliation of changes in our warranty reserve is as follows: 2015 2014 2013 Balance at October 1 $ 28.4 $ 38.1 $ 42.2 Provision for warranties during the period 14.7 9.8 29.2 Warranty reserves acquired 7.1 3.0 (2.6 ) Warranty claims incurred during the period (18.1 ) (22.5 ) (30.7 ) Balance at September 30 $ 32.1 $ 28.4 $ 38.1 In the normal course of business we enter into various other guarantees and indemnities in our relationships with suppliers, service providers, customers, business partners and others. Examples of these arrangements would include guarantees of product performance, indemnifications to service providers and indemnifications of our actions to business partners. These guarantees and indemnifications have not historically nor do we expect them to have a material impact on our financial condition or results of operations, although indemnifications associated with our actions generally have no dollar limitations. In conjunction with our acquisition and divestiture activities, we have entered into select guarantees and indemnifications of performance with respect to the fulfillment of our commitments under applicable purchase and sale agreements. The arrangements generally indemnify the buyer or seller for damages associated with breach of contract, inaccuracies in representations and warranties surviving the closing date and satisfaction of liabilities and commitments retained under the applicable contract. With respect to sale transactions, we also routinely enter into non-competition agreements for varying periods of time. Guarantees and indemnifications with respect to acquisition and divestiture activities, if triggered, could have a materially adverse impact on our financial condition and results of operations. |
Accrued Rebates | Accrued Rebates We provide rebates and sales incentives to certain customer groups and distributors. Provisions for rebates are recorded as a reduction in net revenue when revenue is recognized. In some cases, rebates may be payable directly to the customer or distributor. We also have arrangements where we provide rebates to certain distributors that sell to end-user customers at prices determined under a contract between us and the end-user customer. |
Employee Benefits Change | Employee Benefits Change During the second quarter of fiscal 2014, we implemented a new paid time off policy as part of our employee benefits programs, replacing certain previously existing vacation and sick time policies. In conjunction with these changes in policies, the vesting provisions with respect to the accumulation of paid time off were delayed resulting in the recognition and utilization of paid time off in the same benefits year. As a result of this change, significant portions of our existing accrued vacation balance were no longer necessary and we reversed $ 12.2 1.2 |
Retirement Plans | Retirement Plans We sponsor retirement and postretirement plans covering select employees. Expense recognized in relation to these defined benefit retirement plans and postretirement health care plans in the U.S. is based upon actuarial valuations and inherent in those valuations are key assumptions including discount rates, and where applicable, expected returns on assets, projected future salary rates and projected health care cost trends. The discount rates used in the valuation of our defined benefit pension and postretirement plans are evaluated annually based on current market conditions. In setting these rates we utilize long-term bond indices and yield curves as a preliminary indication of interest rate movements, and then make adjustments to the respective indices to reflect differences in the terms of the bonds covered under the indices in comparison to the projected outflow of our obligations. Our overall expected long-term rate of return on pension assets is based on historical and expected future returns, which are inflation adjusted and weighted for the expected return for each component of the investment portfolio. Our rate of assumed compensation increase is also based on our specific historical trends of wage adjustments. We account for our defined benefit pension and other postretirement plans by recognizing the funded status of a benefit plan in the statement of financial position. We also recognize in accumulated other comprehensive income (loss) certain gains and losses that arose during the period. See Note 6 for key assumptions and further discussion related to our pension and postretirement plans. |
Environmental Liabilities | Environmental Liabilities Expenditures that relate to an existing condition caused by past operations, and which do not contribute to future revenue generation, are expensed. A reserve is established when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These reserves are determined without consideration of possible loss recoveries from third parties. Specific costs included in environmental expense and reserves include site assessment, development of a remediation plan, clean-up costs, post-remediation expenditures, monitoring, fines, penalties and legal fees. Reserve amounts represent the expected undiscounted future cash outflows associated with such plans and actions. |
Self Insurance | Self Insurance We are also involved in other possible claims, including product and general liability, workers' compensation, auto liability and employment related matters. Such claims in the United States have deductibles and self-insured retentions ranging from $ 25 1.0 . |
Treasury Stock | Treasury Stock Treasury stock consists of our common shares that have been issued, but subsequently reacquired. We account for treasury stock purchases under the cost method. When these shares are reissued, we use an average-cost method to determine cost. Proceeds in excess of cost are credited to additional paid-in capital. |
Revenue Recognition - Sales and Rentals | Revenue Recognition — Sales and Rentals Net revenue reflects gross revenue less sales discounts and allowances and customer returns for product sales and rental revenue reserves. Revenue is evaluated under the following criteria and recognized when each is met: • Evidence of an arrangement: • Delivery: • Fixed or determinable price: • Collection is deemed probable: As a general interpretation of the above guidelines, revenue for health care and surgical products is generally recognized upon the assumption of risk of loss and other risks and rewards of ownership by the customer. Local business customs and non-standard sales terms can sometimes result in deviations to this normal practice in certain instances; however, in no case is revenue recognized prior to the transfer of risk of loss and rewards of ownership. For non-invasive therapy products and medical equipment management services, the majority of product offerings are rental products for which revenue is recognized consistent with the rendering of the service and use of products. For The Vest® product, revenue is generally recognized at the time of receipt of authorization for billing from the applicable paying entity as this serves as evidence of the arrangement and sets a fixed or determinable price. For health care products and services in the information technology space, various revenue recognition techniques are used, depending on the offering. Arrangements to provide services, routinely under separately sold service and maintenance contracts, result in the deferral of revenue until specified services are performed. Service contract revenue is generally recognized ratably over the contract period, if applicable, or as services are rendered. Product-related goods are generally recognized upon delivery to the customer. Revenue is presented in the Statements of Consolidated Income net of certain discounts, GPO fees, and sales adjustments. For product sales, we record reserves resulting in a reduction of revenue for contractual discounts, as well as price concessions and product returns. Likewise, rental revenue reserves, reflecting contractual and other routine billing adjustments, are recorded as a reduction of revenue. Reserves for revenue are estimated based upon historical rates for revenue adjustments. |
Taxes Collected from Customers and Remitted to Governmental Units | Taxes Collected from Customers and Remitted to Governmental Units Taxes assessed by a governmental authority that are directly imposed on a revenue producing transaction between us and our customers, including but not limited to sales taxes, use taxes, and value added taxes, are accounted for on a net (excluded from revenue and cost) basis. |
Cost of Revenue | Cost of Revenue Cost of goods sold for product sales consists primarily of purchased material costs, fixed manufacturing expense, variable direct labor, overhead costs and costs associated with the distribution and delivery of products to our customers. Rental expenses consist of costs associated directly with rental revenue, including depreciation, maintenance, logistics and service center facility and personnel costs. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. Costs were $ 91.8 71.9 70.2 In addition, certain costs for software development technology held for sale are capitalized as intangibles and are amortized over a period of three five 2.6 2.6 2.4 |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. Costs were $ 6.8 7.3 7.4 |
Comprehensive Income | Comprehensive Income We include the net-of-tax effect of unrealized gains or losses on our available-for-sale securities, foreign currency translation adjustments and pension or other defined benefit postretirement plans' actuarial gains or losses and prior service costs or credits in comprehensive income. See Note 5 for further details. |
Foreign Currency Translation | Foreign Currency Translation The functional currency of foreign operations is generally the local currency in the country of domicile. Assets and liabilities of foreign operations are primarily translated into U.S. dollars at year-end rates of exchange and the income statements are translated at the average rates of exchange prevailing during the year. Adjustments resulting from translation of the financial statements of foreign operations into U.S. dollars are excluded from the determination of net income, but included as a component of accumulated other comprehensive income (loss). Foreign currency gains and losses resulting from foreign currency transactions are included in our results of operations and are not material. |
Stock-Based Compensation | Stock-Based Compensation We account for stock-based compensation under fair value provisions. Stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period. In order to determine the fair value of stock options and other performance-based stock awards on the date of grant, we utilize a Binomial model. Inherent in this model are assumptions related to a volatility factor, expected life, risk-free interest rate, dividend yield and expected forfeitures. The risk-free interest rate is based on factual data derived from public sources. The volatility factor, expected life, dividend yield and expected forfeiture assumptions require judgment utilizing historical information, peer data and future expectations. Deferred stock (also known as restricted stock units (“RSUs”)) is measured based on the fair market price of our common stock on the date of grant, as reported by the New York Stock Exchange, multiplied by the number of units granted. See Note 7 for further details. |
Income Taxes | Income Taxes The Company and our eligible domestic subsidiaries file a consolidated U.S. income tax return. Foreign operations file income tax returns in a number of jurisdictions. Deferred income taxes are computed using an asset and liability approach to reflect the net tax effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and the corresponding income tax amounts. We have a variety of deferred tax assets in numerous tax jurisdictions. These deferred tax assets are subject to periodic assessment as to recoverability. If it is determined that it is more likely than not that the benefits will not be realized, valuation allowances are recognized. In evaluating whether it is more likely than not that we would recover these deferred tax assets, future taxable income, the reversal of existing temporary differences and tax planning strategies are considered. We account for uncertain income tax positions using a threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The difference between the tax benefit recognized in the financial statements for an uncertain income tax position and the tax benefit claimed in the tax return is referred to as an unrecognized tax benefit. See Note 9 for further details. |
Derivative Instruments and Hedging Activity | Derivative Instruments and Hedging Activity We use derivative financial instruments to manage the economic impact of fluctuations in currency exchange and interest rates. Derivative financial instruments related to currency exchange rates include forward purchase and sale agreements which generally have terms no greater than 15 months. Additionally, interest rate swaps are sometimes used to convert some or all of our long-term debt to either a fixed or variable rate. Derivative financial instruments are recognized on the Consolidated Balance Sheets as either assets or liabilities and are measured at fair value. Changes in the fair value of derivatives are recorded each period in the Statement of Consolidated Income or the Statement of Consolidated Comprehensive Income, depending on whether a derivative is designated and considered effective as part of a hedge transaction, and if it is, the type of hedge transaction. Gains and losses on derivative instruments reported in accumulated other comprehensive income (loss) are subsequently included in the Statement of Consolidated Income in the periods in which earnings are affected by the hedged item. These activities have not had a material effect on our financial position or results of operations for the periods presented herein. |
Recently Issued Accounting Guidance | Recently Issued Accounting Guidance In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers”, which provides guidance for revenue recognition. The standard's core principle, as further amended, is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 which delayed the effective date of the new revenue guidance by one year. As a result, the provisions of ASU 2014-09 will be effective for us in the first quarter of fiscal 2019, ending December 31, 2018. Early adoption is permitted as of the original effective date, but not earlier. We are currently in the process of evaluating the impact of adoption of this ASU on our Consolidated Financial Statements. In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued In September 2015, the Company adopted ASU 2015-16, "Simplifying the Accounting for Measurement Period Adjustments." This update eliminates the need to retrospectively adjust prior period information in the financial statements for acquisition adjustments to goodwill during the measurement period. The impact of ASU 2015-16 will be dependent on any future measurement period adjustments for acquisitions. In February 2013, an accounting standards update was issued that amends the reporting of amounts reclassified out of accumulated other comprehensive income (loss). This standard does not change the current requirements for reporting net income or other comprehensive income (loss) in the financial statements. However, the guidance requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income (loss) by component, either on the face of the financial statement where net income is presented or in the notes to the financial statements. The company adopted this standard in fiscal 2014, and the disclosures of reclassifications out of accumulated other comprehensive loss are included in Note 5. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's consolidated financial statements upon adoption. |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Schedule of Inventories | September 30 2015 2014 Finished products $ 133.2 $ 93.5 Work in process 46.1 17.3 Raw materials 88.1 65.4 Total $ 267.4 $ 176.2 |
Schedule of Ranges of Estimated Useful Lives | Property, plant and equipment is recorded at cost and depreciated over the estimated useful life of the assets using principally the straight-line method. Ranges of estimated useful lives are as follows: Useful Life Land improvements 6 15 Buildings and building equipment 10 40 Machinery and equipment 3 10 Equipment leased to others 2 10 |
Schedule of Major Components of Property and Related Accumulated Depreciation | September 30 2015 2014 Accumulated Accumulated Cost Depreciation Cost Depreciation Land and land improvements $ 23.3 $ 2.8 $ 19.4 $ 2.3 Buildings and building equipment 196.2 90.3 158.3 88.6 Machinery and equipment 369.5 226.5 321.3 213.7 Equipment leased to others 387.4 278.4 350.6 283.5 Total $ 976.4 $ 598.0 $ 849.6 $ 588.1 |
Schedule of Intangible Assets and Related Accumulated Amortization and Impairment Losses | September 30 2015 2014 Amortization Amortization Cost and Impairment Cost and Impairment Goodwill $ 2,083.3 $ 472.8 $ 872.6 $ 472.8 Software 181.7 139.2 170.5 146.6 Patents and Trademarks 497.6 16.9 67.1 16.0 Other 872.8 148.3 306.8 120.7 Total $ 3,635.4 $ 777.2 $ 1,417.0 $ 756.1 |
Schedule of Expected Amortization Expense | Amount 2016 $ 92.9 2017 $ 85.8 2018 $ 81.6 2019 $ 78.0 2020 $ 74.4 2021 and beyond $ 368.1 |
Reconciliation of Changes in Warranty Reserve | 2015 2014 2013 Balance at October 1 $ 28.4 $ 38.1 $ 42.2 Provision for warranties during the period 14.7 9.8 29.2 Warranty reserves acquired 7.1 3.0 (2.6 ) Warranty claims incurred during the period (18.1 ) (22.5 ) (30.7 ) Balance at September 30 $ 32.1 $ 28.4 $ 38.1 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Welch Allyn Holdings, Inc. [Member] | |
Business Acquisition [Line Items] | |
Schedule of Fair Value of the Assets Acquired and Liabilities Assumed | Amount Trade receivables $ 63.2 Inventory 110.5 Other current assets 52.7 Current deferred income taxes 27.3 Property, plant, and equipment 93.2 Goodwill 1,203.5 Trade name (indefinite life) 434.0 Customer relationships ( 12 516.8 Developed technology ( 7 54.0 Other intangibles 19.9 Other noncurrent assets 30.6 Current liabilities (161.5 ) Noncurrent deferred income taxes (368.7 ) Other noncurrent liabilities (25.6 ) Total purchase price, net of cash acquired $ 2,049.9 Fair value of common stock issued $ 416.3 Cash payment, net of cash acquired 1,633.6 Total consideration $ 2,049.9 |
Trumpf Medical [Member] | |
Business Acquisition [Line Items] | |
Schedule of Fair Value of the Assets Acquired and Liabilities Assumed | Amount Trade receivables $ 67.6 Inventory 63.6 Other current assets 23.4 Property, plant, and equipment 42.1 Goodwill 66.0 Trade name ( 5 6.7 Customer relationships ( 10 15.8 Developed technology ( 8 17.8 Other intangibles 4.8 Other noncurrent assets 0.7 Deferred tax asset 12.9 Current liabilities (74.4 ) Long term debt (6.0 ) Noncurrent liabilities (8.1 ) Total purchase price $ 232.9 |
Virtus, Inc. [Member] | |
Business Acquisition [Line Items] | |
Schedule of Fair Value of the Assets Acquired and Liabilities Assumed | Amount Inventory $ 2.6 Other current assets 5.4 Property, plant, and equipment 1.9 Goodwill 9.4 Current liabilities (1.6 ) Deferred tax liability (0.1 ) Total purchase price $ 17.6 |
GOODWILL AND INDEFINITE-LIVED26
GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS [Abstract] | |
Schedule of Goodwill Activity | North America Surgical and Respiratory Care International Welch Allyn Total Balances at September 30, 2013: Goodwill $ 383.0 $ 279.0 $ 153.6 $ - $ 815.6 Accumulated impairment losses (358.1 ) - (114.7 ) - (472.8 ) Goodwill, net at September 30, 2013 24.9 279.0 38.9 - 342.8 Changes in Goodwill during the period: Goodwill related to acquisitions 7.6 57.3 (2.8 ) - 62.1 Currency translation effect - (2.8 ) (2.3 ) - (5.1 ) Balances at September 30, 2014: Goodwill 390.6 333.5 148.5 - 872.6 Accumulated impairment losses (358.1 ) - (114.7 ) - (472.8 ) Goodwill, net at September 30, 2014 32.5 333.5 33.8 - 399.8 Changes in Goodwill during the period: Goodwill related to acquisitions - 22.1 - 1,203.5 1,225.6 Currency translation effect - (11.8 ) (3.1 ) - (14.9 ) Balances at September 30, 2015: Goodwill 390.6 343.8 145.4 1,203.5 2,083.3 Accumulated impairment losses (358.1 ) - (114.7 ) - (472.8 ) Goodwill, net at September 30, 2015 $ 32.5 $ 343.8 $ 30.7 $ 1,203.5 $ 1,610.5 |
FINANCING AGREEMENTS (Tables)
FINANCING AGREEMENTS (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
FINANCING AGREEMENTS [Abstract] | |
Schedule of Total Debt | September 30 2015 2014 Revolving credit facilities $ - $ 265.0 Current portion of long-term debt 58.0 16.2 Senior secured Term Loan A, long-term portion 931.7 - Senior secured Term Loan B, long-term portion 778.3 - Senior unsecured 5.75 418.2 - Term loan under August 2012 credit facility, long-term portion - 159.6 Unsecured 7.00 13.8 19.2 Unsecured 6.75 29.6 29.6 Other 3.6 1.4 Total debt 2,233.2 491.0 Less current portion of debt 58.0 126.9 Total long-term debt $ 2,175.2 $ 364.1 |
Schedule of Maturities of Long-Term Debt | Term Loan A Term Loan B Total 2016 $ 50.0 $ 8.0 $ 58.0 2017 $ 75.0 $ 8.0 $ 83.0 2018 $ 100.0 $ 8.0 $ 108.0 2019 $ 100.0 $ 8.0 $ 108.0 2020 $ 675.0 $ 8.0 $ 683.0 |
Schedule of Facilities Covenants | Fiscal Quarter Ended Maximum Secured Net Leverage Ratio Minimum Interest Coverage Ratio December 31, 2015 4.75 3.25 December 31, 2016 4.50 3.25 December 31, 2017 4.00 3.50 December 31, 2018 3.50 3.75 December 31, 2019 and thereafter 3.00 4.00 |
Schedule of Fair Values of Long-Term Debt Instruments | September 30 2015 2014 Senior secured Term Loan A $ 990.7 $ - Senior secured Term Loan B 780.7 - Senior unsecured 5.75 428.4 - Term loan under August 2012 credit facility - 175.2 Unsecured debentures 43.4 55.5 Total debt $ 2,243.2 $ 230.7 |
OTHER COMPREHENSIVE INCOME (Tab
OTHER COMPREHENSIVE INCOME (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
OTHER COMPREHENSIVE INCOME [Abstract] | |
Schedule of Changes in AOCL by Component | Year Ended September 30, 2015 Other comprehensive income (loss) Accumulated other comprehensive loss Prior to Reclassification Pre-tax Tax effect Net of tax Beginning Net activity Ending Available-for-sale securities and currency hedges $ (0.6 ) $ 0.6 $ - $ - $ - $ - $ - $ - Foreign currency translation adjustment (58.6 ) - (58.6 ) - (58.6 ) (34.2 ) (58.6 ) (92.8 ) Change in pension and postretirement defined benefit plans (28.7 ) 15.5 (13.2 ) 5.1 (8.1 ) (39.9 ) (8.1 ) (48.0 ) Total $ (87.9 ) $ 16.1 $ (71.8 ) $ 5.1 $ (66.7 ) $ (74.1 ) $ (66.7 ) $ (140.8 ) Year Ended September 30, 2014 Other comprehensive income (loss) Accumulated other comprehensive loss Prior to Reclassification Pre-tax Tax effect Net of tax Beginning Net activity Ending Available-for-sale securities and currency hedges $ 0.3 $ 0.1 $ 0.4 $ (0.1 ) $ 0.3 $ (0.3 ) $ 0.3 $ - Foreign currency translation adjustment (29.6 ) - (29.6 ) - (29.6 ) (4.6 ) (29.6 ) (34.2 ) Change in pension and postretirement defined benefit plans (16.8 ) 2.7 (14.1 ) 5.0 (9.1 ) (30.8 ) (9.1 ) (39.9 ) Total $ (46.1 ) $ 2.8 $ (43.3 ) $ 4.9 $ (38.4 ) $ (35.7 ) $ (38.4 ) $ (74.1 ) |
Schedule of Items Reclassified out of AOCL | Years Ended September 30 2015 2014 Amount Tax effect Net of tax Amount Tax effect Net of tax Change in pension and postretirement defined benefit plans (1) $ 15.5 $ (5.6 ) $ 9.9 $ 2.7 $ (1.0 ) $ 1.7 Available-for-sale securities and currency hedges (2) $ 0.6 $ (0.2 ) $ 0.4 $ 0.1 $ - $ 0.1 (1) Reclassified from accumulated other comprehensive loss into cost of goods sold and selling and administrative expenses. These components are included in the computation of net periodic pension and postretirement benefit expense. (2) Reclassified from accumulated other comprehensive loss into other income (expense), net. |
RETIREMENT AND POSTRETIREMENT29
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Master Defined Benefit Retirement Plan [Member] | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Schedule of Components of Net Pension Expense | Years Ended September 30 2015 2014 2013 Service cost $ 5.4 $ 5.0 $ 6.1 Interest cost 14.6 14.4 13.2 Expected return on plan assets (16.7 ) (16.7 ) (15.9 ) Amortization of unrecognized prior service cost, net 0.6 0.6 0.6 Amortization of net loss 5.2 3.2 7.8 Net periodic benefit cost 9.1 6.5 11.8 Settlement charge 9.6 - - Special termination benefits - 2.4 - Net pension expense $ 18.7 $ 8.9 $ 11.8 |
Schedule of Changes in Obligations, Assets and Funded Status | Years Ended September 30 2015 2014 Change in benefit obligation: Benefit obligation at beginning of year $ 343.8 $ 297.9 Service cost 5.4 5.0 Interest cost 14.6 14.4 Actuarial loss 12.5 31.4 Benefits paid (54.0 ) (10.2 ) Acquisitions - 4.3 Special termination benefits - 2.4 Plan settlement (4.4 ) - Exchange rate gain (2.4 ) (1.4 ) Benefit obligation at end of year 315.5 343.8 Change in plan assets: Fair value of plan assets at beginning of year 276.1 254.4 Actual return on plan assets (3.9 ) 30.9 Employer contributions 0.9 1.0 Benefits paid (54.0 ) (10.2 ) Fair value of plan assets at end of year 219.1 276.1 Funded status and net amounts recognized $ (96.4 ) $ (67.7 ) Amounts recorded in the Consolidated Balance Sheets: Accrued pension benefits, current portion $ (1.0 ) $ (1.0 ) Accrued pension benefits, long-term (95.4 ) (66.7 ) Net amount recognized $ (96.4 ) $ (67.7 ) |
Schedule of Accumulated Benefit Obligation | September 30 2015 2014 PBO ABO Plan Assets PBO ABO Plan Assets Master plan $ 292.5 $ 275.3 $ 218.9 $ 319.1 $ 303.2 $ 275.8 International plans 17.9 16.3 0.2 20.3 18.5 0.3 Supplemental executive plan 5.1 5.1 - 4.4 4.2 - $ 315.5 $ 296.7 $ 219.1 $ 343.8 $ 325.9 $ 276.1 |
Schedule of Actuarial Assumptions | 2015 2014 2013 Weighted average assumptions to determine benefit obligations at the measurement date: Discount rate for obligation 4.4 % 4.5 % 5.0 % Rate of compensation increase 3.0 % 3.0 % 3.3 % Weighted average assumptions to determine benefit cost for the year: Discount rate for expense 4.5 % 5.0 % 4.1 % Expected rate of return on plan assets 6.8 % 7.0 % 7.0 % Rate of compensation increase 3.0 % 3.3 % 3.3 % |
Schedule of Allocation of Plan Assets | 2015 2014 2015 2014 Target Target Actual Actual Allocation Allocation Allocation Allocation Equity securities 39 49 40 60 42 % 52 % Fixed income securities 51 61 40 60 58 % 48 % Total 100 % 100 % |
Schedule of Fair Value Measurements of Plan Assets | Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Balance at Assets Inputs Inputs September 30, 2015 (Level 1) (Level 2) (Level 3) Cash $ 3.5 $ 3.5 $ - $ - Equities U.S. companies 47.1 - 47.1 - International companies 44.8 - 44.8 - Fixed income securities 123.7 - 123.7 - Total plan assets at fair value $ 219.1 $ 3.5 $ 215.6 $ - Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Balance at Assets Inputs Inputs September 30, 2014 (Level 1) (Level 2) (Level 3) Cash $ 2.1 $ 2.1 $ - $ - Equities U.S. companies 101.7 101.7 - - International companies 38.7 38.7 - - Fixed income securities 133.2 66.8 66.4 - Other 0.4 0.4 - - Total plan assets at fair value $ 276.1 $ 209.7 $ 66.4 $ - |
Schedule of Estimated Future Benefit Payments | Pension Benefits 2016 $ 12.3 2017 $ 12.8 2018 $ 13.3 2019 $ 14.0 2020 $ 14.8 2021-2025 $ 86.5 |
Postretirement Health Care Plan [Member] | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Schedule of Changes in Obligations, Assets and Funded Status | Years Ended September 30 2015 2014 Change in benefit obligation: Benefit obligation at beginning of year $ 11.2 $ 9.8 Service cost 0.4 0.4 Interest cost 0.4 0.4 Acquired obligation 14.1 - Actuarial gain (0.9 ) (0.2 ) Benefits paid (0.2 ) (0.2 ) Retiree contributions 0.1 0.2 Special termination benefits - 0.8 Benefit obligation at end of year $ 25.1 $ 11.2 Amounts recorded in the Consolidated Balance Sheets: Accrued benefits obligation, current portion $ 1.8 $ 1.1 Accrued benefits obligation, long-term 23.3 10.1 Net amount recognized $ 25.1 $ 11.2 |
COMMON STOCK (Tables)
COMMON STOCK (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
COMMON STOCK [Abstract] | |
Schedule of Stock-Based Compensation Cost | Years Ended September 30 2015 2014 2013 Total stock-based compensation cost (pre-tax) $ 25.0 $ 18.0 $ 13.5 Total income tax benefit (7.5 ) (6.5 ) (4.9 ) Total stock-based compensation cost, net of tax $ 17.5 $ 11.5 $ 8.6 |
Schedule of Weighted Average Fair Value per Share of Stock Options and Related Valuation Assumptions | Years Ended September 30 2015 2014 2013 Weighted average fair value per share $ 12.83 $ 11.91 $ 7.91 Valuation assumptions: Risk-free interest rate 1.6 % 1.3 % 0.6 % Expected dividend yield 1.4 % 1.4 % 1.9 % Expected volatility 35.0 % 36.1 % 40.2 % Weighted average expected life 4.9 4.9 4.9 |
Schedule of Transactions under Stock Option Plans | Weighted Weighted Average Weighted Average Aggregate Number of Average Remaining Intrinsic Shares Exercise Contractual Value (1) (in thousands) Price Term (in millions) Balance Outstanding at October 1, 2014 1,992 $ 31.99 Granted 381 45.01 Exercised (371 ) 31.83 Cancelled/Forfeited (101 ) 36.63 Balance Outstanding at September 30, 2015 1,901 $ 34.38 6.6 $ 33.5 Exercisable at September 30, 2015 1,060 $ 30.98 5.3 $ 22.3 Options Expected to Vest 773 $ 38.34 8.0 $ 10.6 (1) The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $ 51.99 |
Schedule of Transactions for Nonvested RSUs | Weighted Number of Average Share Units Grant Date (in thousands) Fair Value Nonvested RSUs at October 1, 2014 431 $ 34.92 Granted 351 47.85 Vested (93 ) 37.76 Forfeited (55 ) 35.90 Nonvested RSUs at September 30, 2015 634 $ 41.35 |
Schedule of Weighted Average Fair Value per Share of PSUs and Related Valuation Assumptions | Years Ended September 30 2015 2014 2013 Weighted average fair value per share $ 47.82 $ 47.91 $ 19.77 Valuation assumptions: Risk-free interest rate 0.9 % 0.5 % 0.3 % Expected dividend yield 0.0 % 0.0 % 0.0 % Expected volatility 23.5 % 30.1 % 32.6 % |
Schedule of Transactions for Nonvested PSUs | Weighted Number of Average Share Units Grant Date (in thousands) Fair Value Nonvested PSUs as of October 1, 2014 586 $ 29.98 Granted 331 49.27 Vested (414 ) 30.11 Cancelled (76 ) 24.57 Forfeited (73 ) 41.15 Nonvested PSUs at September 30, 2015 354 $ 42.16 |
SPECIAL CHARGES (Tables)
SPECIAL CHARGES (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
SPECIAL CHARGES [Abstract] | |
Restructuring Activity | Balance at September 30, 2014 $ 11.7 Expenses 23.1 Cash Payments (10.0 ) Reversals (0.5 ) Balance at September 30, 2015 $ 24.3 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
INCOME TAXES [Abstract] | |
Schedule of Components of Income before Income Taxes | Years Ended September 30 2015 2014 2013 Income before income taxes: Domestic $ 49.2 $ 87.0 $ 120.0 Foreign 15.9 28.2 24.0 Total $ 65.1 $ 115.2 $ 144.0 |
Schedule of Income Tax Expense | Income tax expense: Current provision Federal $ 35.3 $ 40.2 $ 45.0 State 3.6 3.1 1.8 Foreign 1.7 7.4 7.0 Total current provision 40.6 50.7 53.8 Deferred provision: Federal (18.1 ) (12.2 ) (9.9 ) State (1.3 ) (1.0 ) 1.1 Foreign (2.9 ) 17.1 (6.0 ) Total deferred provision (22.3 ) 3.9 (14.8 ) Income tax expense $ 18.3 $ 54.6 $ 39.0 |
Reconciliation of Income Tax Expense to Income Taxes at Statutory Rate | Years Ended September 30 2015 2014 2013 % of % of % of Pretax Pretax Pretax Amount Income Amount Income Amount Income Federal income tax (a) $ 22.8 35.0 $ 40.3 35.0 $ 50.4 35.0 State income tax (b) 1.6 2.4 2.0 1.7 2.5 1.7 Foreign income tax (c) (10.2 ) (15.7 ) (7.7 ) (6.7 ) (5.7 ) (4.0 ) Application of federal tax credits (2.2 ) (3.4 ) (0.6 ) (0.5 ) (3.5 ) (2.4 ) Adjustment of estimated income tax accruals (1.6 ) (2.4 ) (0.6 ) (0.5 ) (1.5 ) (1.0 ) Valuation of tax attributes 4.0 6.2 21.3 18.5 0.6 0.4 Domestic manufacturer's deduction (1.5 ) (2.3 ) (1.8 ) (1.5 ) (2.2 ) (1.5 ) Capitalized transaction costs 2.5 3.8 0.3 0.2 - - Other, net 2.9 4.5 1.4 1.2 (1.6 ) (1.1 ) Income tax expense $ 18.3 28.1 $ 54.6 47.4 $ 39.0 27.1 (a) At statutory rate. (b) Net of Federal benefit. (c) Federal tax rate differential. |
Schedule of Deferred Taxes | Years Ended September 30 2015 2014 Deferred tax assets: Employee benefit accruals $ 106.4 $ 49.3 Inventory 6.2 13.9 Reserve for bad debts 8.4 10.0 Net operating loss carryforwards 45.8 40.3 Tax credit carryforwards 11.7 2.5 Other, net 39.6 25.7 218.1 141.7 Less: Valuation allowance (40.7 ) (28.3 ) Total deferred tax assets 177.4 113.4 Deferred tax liabilities: Depreciation (35.3 ) (13.9 ) Amortization (409.1 ) (62.8 ) Other, net (16.4 ) (4.9 ) Total deferred tax liabilities (460.8 ) (81.6 ) Deferred tax asset (liability) - net $ (283.4 ) $ 31.8 |
Reconciliation of the Beginning and Ending Amount of Unrecognized Tax Benefits | Years Ended September 30 2015 2014 2013 Balance at October 1 $ 4.1 $ 4.6 $ 9.8 Increases in tax position of prior years 0.4 2.1 - Decreases in tax position of prior years (1.3 ) (0.9 ) (0.5 ) Increases in tax positions related to the current year - - 0.1 Settlements with taxing authorities (1.2 ) (0.1 ) (3.2 ) Lapse of applicable statute of limitations (1.3 ) (1.5 ) (1.7 ) Increase in positions due to acquisitions 5.5 - - Foreign currency adjustments (0.4 ) (0.1 ) 0.1 Total change 1.7 (0.5 ) (5.2 ) Balance at September 30 $ 5.8 $ 4.1 $ 4.6 |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
EARNINGS PER COMMON SHARE [Abstract] | |
Calculated Earnings per Share | Years Ended September 30 2015 2014 2013 Net income attributable to common shareholders $ 47.7 $ 60.6 $ 105.0 Average shares outstanding - Basic (thousands) 57,249 57,555 59,910 Add potential effect of exercise of stock options and other unvested equity awards (thousands) 1,287 968 340 Average shares outstanding - Diluted (thousands) 58,536 58,523 60,250 Net income attributable to common shareholders per common share - Basic $ 0.83 $ 1.05 $ 1.75 Net income attributable to common shareholders per common share - Diluted $ 0.82 $ 1.04 $ 1.74 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
SEGMENT REPORTING [Abstract] | |
Reconciliation of Segment Information to Consolidated Financial Information | Years Ended September 30 2015 2014 2013 Revenue: North America $ 1,002.0 $ 888.9 $ 958.3 Surgical and Respiratory Care 506.6 301.6 245.8 International 429.4 495.6 512.1 Welch Allyn 1 50.2 - - Total revenue $ 1,988.2 $ 1,686.1 $ 1,716.2 Divisional income: North America $ 204.1 $ 165.0 $ 201.7 Surgical and Respiratory Care 80.5 68.6 56.8 International 12.8 24.9 33.5 Other: Non-allocated operating costs, administrative costs, and other 173.1 98.8 131.4 Special charges 41.2 37.1 5.7 Operating profit 83.1 122.6 154.9 Interest expense (18.4 ) (9.8 ) (9.5 ) Investment income and other, net 0.4 2.4 (1.4 ) Income before income taxes $ 65.1 $ 115.2 $ 144.0 1 Welch Allyn is not considered a separate reportable segment but is presented as a reconciling item to total consolidated revenue. |
Schedule of Geographic Information | Years Ended September 30 2015 2014 2013 Net revenue to unaffiliated customers: (a) United States $ 1,273.0 $ 1,070.8 $ 1,116.4 Foreign 715.2 615.3 599.8 Total revenue $ 1,988.2 $ 1,686.1 $ 1,716.2 Long-lived assets: (b) United States $ 263.9 $ 151.7 $ 158.0 Foreign 114.5 109.8 76.3 Total long-lived assets $ 378.4 $ 261.5 $ 234.3 (a) Net revenue is attributed to geographic areas based on the location of the customer. (b) Includes property and equipment leased to others. |
QUARTERLY FINANCIAL INFORMATI35
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) [Abstract] | |
Schedule of Selected Consolidated Financial Data | 2015 Quarter Ended December 31, 2014 March 31, 2015 June 30, 2015 September 30, 2015 Net revenue $ 465.0 $ 474.8 $ 474.5 $ 573.9 Gross profit $ 199.9 $ 214.2 $ 209.5 $ 256.7 Net income (loss) attributable to common shareholders $ 12.1 $ 26.1 $ 19.1 $ (9.6 ) Basic net income (loss) attributable to common shareholders per common share $ 0.21 $ 0.46 $ 0.34 $ (0.16 ) Diluted net income (loss) attributable to common shareholders per common share $ 0.21 $ 0.45 $ 0.33 $ (0.16 ) 2014 Quarter Ended December 31, 2013 March 31, 2014 June 30, 2014 September 30, 2014 Net revenue $ 393.4 $ 415.3 $ 397.6 $ 479.8 Gross profit $ 176.8 $ 202.7 $ 187.1 $ 213.3 Net income (loss) attributable to common shareholders $ 13.2 $ (3.3 ) $ 26.1 $ 24.6 Basic net income (loss) attributable to common shareholders per common share $ 0.23 $ (0.06 ) $ 0.46 $ 0.43 Diluted net income (loss) attributable to common shareholders per common share $ 0.22 $ (0.06 ) $ 0.45 $ 0.42 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
Schedule of Future Minimum Rental Payments | Amount 2016 $ 28.2 2017 $ 18.4 2018 $ 12.1 2019 $ 6.3 2020 $ 3.2 2021 and beyond $ 5.6 |
SUMMARY OF SIGNIFICANT ACCOUN37
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Nature of Operations) (Details) | Sep. 30, 2015employeescountries |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Number of employees | employees | 10,000 |
Number of countries | 100 |
SUMMARY OF SIGNIFICANT ACCOUN38
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Inventories) (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Sep. 30, 2014 |
Inventories | ||
Percentage of LIFO inventory | 21.00% | 29.00% |
Inventories consist of the following: | ||
Finished products | $ 133.2 | $ 93.5 |
Work in process | 46.1 | 17.3 |
Raw materials | 88.1 | 65.4 |
Total inventory | 267.4 | 176.2 |
Excess of current costs over reported LIFO value | $ 3.2 | $ 4 |
SUMMARY OF SIGNIFICANT ACCOUN39
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Property, Plant and Equipment) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Property, Plant and Equipment | |||
Depreciation expense | $ 73.6 | $ 65.4 | $ 71.2 |
Major components of property and the related accumulated depreciation: | |||
Cost | 976.4 | 849.6 | |
Accumulated Depreciation | $ 598 | 588.1 | |
Land Improvements [Member] | Minimum [Member] | |||
Property, Plant and Equipment | |||
Estimated useful life | 6 years | ||
Land Improvements [Member] | Maximum [Member] | |||
Property, Plant and Equipment | |||
Estimated useful life | 15 years | ||
Land and Land Improvements [Member] | |||
Major components of property and the related accumulated depreciation: | |||
Cost | $ 23.3 | 19.4 | |
Accumulated Depreciation | 2.8 | 2.3 | |
Buildings and Building Equipment [Member] | |||
Major components of property and the related accumulated depreciation: | |||
Cost | 196.2 | 158.3 | |
Accumulated Depreciation | $ 90.3 | 88.6 | |
Buildings and Building Equipment [Member] | Minimum [Member] | |||
Property, Plant and Equipment | |||
Estimated useful life | 10 years | ||
Buildings and Building Equipment [Member] | Maximum [Member] | |||
Property, Plant and Equipment | |||
Estimated useful life | 40 years | ||
Machinery and Equipment [Member] | |||
Major components of property and the related accumulated depreciation: | |||
Cost | $ 369.5 | 321.3 | |
Accumulated Depreciation | $ 226.5 | 213.7 | |
Machinery and Equipment [Member] | Minimum [Member] | |||
Property, Plant and Equipment | |||
Estimated useful life | 3 years | ||
Machinery and Equipment [Member] | Maximum [Member] | |||
Property, Plant and Equipment | |||
Estimated useful life | 10 years | ||
Equipment Leased to Others [Member] | |||
Major components of property and the related accumulated depreciation: | |||
Cost | $ 387.4 | 350.6 | |
Accumulated Depreciation | $ 278.4 | $ 283.5 | |
Equipment Leased to Others [Member] | Minimum [Member] | |||
Property, Plant and Equipment | |||
Estimated useful life | 2 years | ||
Equipment Leased to Others [Member] | Maximum [Member] | |||
Property, Plant and Equipment | |||
Estimated useful life | 10 years |
SUMMARY OF SIGNIFICANT ACCOUN40
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Intangible Assets) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Goodwill: | |||
Cost | $ 2,083.3 | $ 872.6 | $ 815.6 |
Amortization and Impairment | 472.8 | 472.8 | 472.8 |
Total | |||
Cost | 3,635.4 | 1,417 | |
Amortization and Impairment | 777.2 | 756.1 | |
Amortization expense | 44.6 | 41 | 45.6 |
Indefinite-lived intangible assets | 466.9 | 32.9 | |
Expected future amortization: | |||
2,016 | 92.9 | ||
2,017 | 85.8 | ||
2,018 | 81.6 | ||
2,019 | 78 | ||
2,020 | 74.4 | ||
2021 and beyond | 368.1 | ||
Capitalized computer software: | |||
Net book value of computer software costs | 42.5 | 23.9 | |
Amortization expense of capitalized software costs | $ 9.8 | 11.5 | $ 17.8 |
Minimum [Member] | |||
Other intangible assets: | |||
Useful life | 3 years | ||
Maximum [Member] | |||
Other intangible assets: | |||
Useful life | 20 years | ||
Software [Member] | |||
Other intangible assets: | |||
Cost | $ 181.7 | 170.5 | |
Amortization and Impairment | 139.2 | 146.6 | |
Patents and Trademarks [Member] | |||
Other intangible assets: | |||
Cost | 497.6 | 67.1 | |
Amortization and Impairment | 16.9 | 16 | |
Others [Member] | |||
Other intangible assets: | |||
Cost | 872.8 | 306.8 | |
Amortization and Impairment | $ 148.3 | $ 120.7 | |
Capitalized Software Costs [Member] | Minimum [Member] | |||
Other intangible assets: | |||
Useful life | 3 years | ||
Capitalized Software Costs [Member] | Maximum [Member] | |||
Other intangible assets: | |||
Useful life | 10 years |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Guarantees) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Guarantees | |||
Balance at October 1 | $ 28.4 | $ 38.1 | $ 42.2 |
Provision for warranties during the period | 14.7 | 9.8 | 29.2 |
Warranty reserves acquired | 7.1 | 3 | (2.6) |
Warranty claims incurred during the period | (18.1) | (22.5) | (30.7) |
Balance at September 30 | $ 32.1 | $ 28.4 | $ 38.1 |
SUMMARY OF SIGNIFICANT ACCOUN42
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Employee Benefits Change and Self Insurance) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2015 | |
Paid Time Off Policy [Member] | |||
Change in Accounting Estimate [Line Items] | |||
Employee benefits expense reversed | $ (1,200) | $ (12,200) | |
Uninsured Risk [Member] | |||
Loss Contingencies [Line Items] | |||
Deductibles and self-insured retentions, minimum | $ 25 | ||
Deductibles and self-insured retentions, maximum | $ 1,000 |
SUMMARY OF SIGNIFICANT ACCOUN43
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Research and Development and Advertising Costs) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Research and Development Costs | |||
Research and development expenses | $ 91.8 | $ 71.9 | $ 70.2 |
Software development technology costs capitalized during the period | 2.6 | 2.6 | 2.4 |
Advertising Costs | |||
Advertising costs | $ 6.8 | $ 7.3 | $ 7.4 |
ACQUISITIONS (Acquisition of We
ACQUISITIONS (Acquisition of Welch Allyn) (Details) - USD ($) $ in Millions | Sep. 08, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 |
Business Acquisition [Line Items] | ||||
Purchase price of entity, net of cash acquired | $ 1,638.7 | $ 239.5 | ||
Fair value of the assets acquired and liabilities assumed: | ||||
Goodwill | 1,610.5 | $ 399.8 | $ 342.8 | |
Consideration: | ||||
Fair value of common stock issued | 416.3 | |||
Cash payment, net of cash acquired | 1,638.7 | $ 239.5 | ||
Term Loans [Member] | ||||
Business Acquisition [Line Items] | ||||
Proceeds from new borrowings | 1,800 | |||
Senior Notes [Member] | ||||
Business Acquisition [Line Items] | ||||
Proceeds from new borrowings | 425 | |||
Welch Allyn Holdings, Inc. [Member] | ||||
Business Acquisition [Line Items] | ||||
Purchase price of entity | $ 1,687.3 | |||
Purchase price of entity, net of cash acquired | $ 1,633.6 | |||
Number of shares issued for acquisition | 8,133,722 | |||
Combined purchase price | $ 2,049.9 | |||
Fair value of the assets acquired and liabilities assumed: | ||||
Trade receivables | 63.2 | |||
Inventory | 110.5 | |||
Other current assets | 52.7 | |||
Current deferred income taxes | 27.3 | |||
Property, plant, and equipment | 93.2 | |||
Goodwill | 1,203.5 | |||
Other noncurrent assets | 30.6 | |||
Current liabilities | (161.5) | |||
Noncurrent deferred income taxes | (368.7) | |||
Other noncurrent liabilities | (25.6) | |||
Total purchase price | 2,049.9 | |||
Consideration: | ||||
Fair value of common stock issued | 416.3 | |||
Cash payment, net of cash acquired | 1,633.6 | |||
Total consideration | 2,049.9 | |||
Pro Forma Information: | ||||
Total revenues | 638 | 677 | ||
Impact to net income | $ (59) | $ (61) | ||
Welch Allyn Holdings, Inc. [Member] | Trade Name [Member] | ||||
Fair value of the assets acquired and liabilities assumed: | ||||
Intangible assets (Indefinite Lived) | 434 | |||
Welch Allyn Holdings, Inc. [Member] | Customer Relationships [Member] | ||||
Fair value of the assets acquired and liabilities assumed: | ||||
Intangible assets (Finite Lived) | 516.8 | |||
Useful lives assigned to intangibles: | ||||
Weighted-average useful life | 12 years | |||
Welch Allyn Holdings, Inc. [Member] | Developed Technology [Member] | ||||
Fair value of the assets acquired and liabilities assumed: | ||||
Intangible assets (Finite Lived) | 54 | |||
Useful lives assigned to intangibles: | ||||
Weighted-average useful life | 7 years | |||
Welch Allyn Holdings, Inc. [Member] | Other Intangible Assets [Member] | ||||
Fair value of the assets acquired and liabilities assumed: | ||||
Intangible assets (Finite Lived) | $ 19.9 |
ACQUISITIONS (Acquisition of Tr
ACQUISITIONS (Acquisition of Trumpf Medical) (Details) - USD ($) $ in Millions | Aug. 01, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 |
Business Acquisition [Line Items] | ||||
Purchase price of entity, net of cash acquired | $ 1,638.7 | $ 239.5 | ||
Fair value of the assets acquired and liabilities assumed: | ||||
Goodwill | $ 1,610.5 | 399.8 | $ 342.8 | |
Trumpf Medical [Member] | ||||
Business Acquisition [Line Items] | ||||
Purchase price of entity | $ 232.9 | |||
Purchase price of entity, net of cash acquired | 226.6 | |||
Revenues included in statements of operations | 39 | |||
Fair value of the assets acquired and liabilities assumed: | ||||
Trade receivables | 67.6 | |||
Inventory | 63.6 | |||
Other current assets | 23.4 | |||
Property, plant, and equipment | 42.1 | |||
Goodwill | 66 | |||
Other noncurrent assets | 0.7 | |||
Deferred tax asset | 12.9 | |||
Current liabilities | (74.4) | |||
Long term debt | (6) | |||
Noncurrent liabilities | (8.1) | |||
Total purchase price | 232.9 | |||
Pro Forma Information: | ||||
Total revenues | $ 218 | $ 235 | ||
Trumpf Medical [Member] | Trade Name [Member] | ||||
Fair value of the assets acquired and liabilities assumed: | ||||
Intangible assets (Finite Lived) | 6.7 | |||
Useful lives assigned to intangibles: | ||||
Weighted-average useful life | 5 years | |||
Trumpf Medical [Member] | Customer Relationships [Member] | ||||
Fair value of the assets acquired and liabilities assumed: | ||||
Intangible assets (Finite Lived) | 15.8 | |||
Useful lives assigned to intangibles: | ||||
Weighted-average useful life | 10 years | |||
Trumpf Medical [Member] | Developed Technology [Member] | ||||
Fair value of the assets acquired and liabilities assumed: | ||||
Intangible assets (Finite Lived) | 17.8 | |||
Useful lives assigned to intangibles: | ||||
Weighted-average useful life | 8 years | |||
Trumpf Medical [Member] | Other Intangible Assets [Member] | ||||
Fair value of the assets acquired and liabilities assumed: | ||||
Intangible assets (Finite Lived) | $ 4.8 |
ACQUISITIONS (Acquisition of Vi
ACQUISITIONS (Acquisition of Virtus) (Details) - USD ($) $ in Millions | Mar. 31, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 |
Business Acquisition [Line Items] | ||||
Purchase price of entity, net of cash acquired | $ 1,638.7 | $ 239.5 | ||
Fair value of the assets acquired and liabilities assumed: | ||||
Goodwill | $ 1,610.5 | $ 399.8 | $ 342.8 | |
Virtus, Inc. [Member] | ||||
Business Acquisition [Line Items] | ||||
Purchase price of entity | $ 17.6 | |||
Purchase price of entity, net of cash acquired | 13 | |||
Fair value of the assets acquired and liabilities assumed: | ||||
Inventory | 2.6 | |||
Other current assets | 5.4 | |||
Property, plant, and equipment | 1.9 | |||
Goodwill | 9.4 | |||
Current liabilities | (1.6) | |||
Deferred tax liability | (0.1) | |||
Total purchase price | $ 17.6 |
GOODWILL AND INDEFINITE-LIVED47
GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS (Schedule of Goodwill Activity) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Goodwill [Line Items] | |||
Goodwill | $ 2,083.3 | $ 872.6 | $ 815.6 |
Accumulated impairment losses | (472.8) | (472.8) | (472.8) |
Goodwill, net | 1,610.5 | 399.8 | 342.8 |
Goodwill related to acquisitions | 1,225.6 | 62.1 | |
Currency translation effect | (14.9) | (5.1) | |
North America Segment [Member] | |||
Goodwill [Line Items] | |||
Goodwill | 390.6 | 390.6 | 383 |
Accumulated impairment losses | (358.1) | (358.1) | (358.1) |
Goodwill, net | $ 32.5 | 32.5 | 24.9 |
Goodwill related to acquisitions | $ 7.6 | ||
Currency translation effect | |||
Surgical and Respiratory Care Segment [Member] | |||
Goodwill [Line Items] | |||
Goodwill | $ 343.8 | $ 333.5 | $ 279 |
Accumulated impairment losses | |||
Goodwill, net | $ 343.8 | $ 333.5 | $ 279 |
Goodwill related to acquisitions | 22.1 | 57.3 | |
Currency translation effect | (11.8) | (2.8) | |
International [Member] | |||
Goodwill [Line Items] | |||
Goodwill | 145.4 | 148.5 | 153.6 |
Accumulated impairment losses | (114.7) | (114.7) | (114.7) |
Goodwill, net | $ 30.7 | 33.8 | $ 38.9 |
Goodwill related to acquisitions | (2.8) | ||
Currency translation effect | $ (3.1) | $ (2.3) | |
Welch Allyn Holdings, Inc. [Member] | |||
Goodwill [Line Items] | |||
Goodwill | $ 1,203.5 | ||
Accumulated impairment losses | |||
Goodwill, net | $ 1,203.5 | ||
Goodwill related to acquisitions | $ 1,203.5 | ||
Currency translation effect |
GOODWILL AND INDEFINITE-LIVED48
GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS (Narrative) (Details) $ in Millions | 12 Months Ended | |||
Sep. 30, 2015USD ($)units | Sep. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Sep. 30, 2013USD ($) | |
Goodwill [Line Items] | ||||
Goodwill | $ 1,610.5 | $ 399.8 | $ 342.8 | |
Number of reportable business segments | units | 3 | |||
Number of reporting units | units | 10 | |||
Minimum threshold at which impairment charge may be recognized | 10.00% | |||
Goodwill related to acquisitions | $ 1,225.6 | 62.1 | ||
Indefinite-lived Intangible Assets [Line Items] | ||||
Indefinite-lived intangible assets | 466.9 | $ 32.9 | ||
Consolidation of VIE [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill related to acquisitions | $ 12.1 | |||
Virtus, Inc. [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 9.4 |
FINANCING AGREEMENTS (Schedule
FINANCING AGREEMENTS (Schedule of Total Debt) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total debt | $ 2,233.2 | $ 491 |
Current portion of long-term debt | 58 | 16.2 |
Less current portion of debt | 58 | 126.9 |
Total long-term debt | $ 2,175.2 | 364.1 |
Revolving Credit Facility [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total debt | $ 265 | |
Senior Secured Term Loan A [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total long-term debt | $ 931.7 | |
Debt instrument, maturity date | Sep. 30, 2020 | |
Senior Secured Term Loan B [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total long-term debt | $ 778.3 | |
Debt instrument, maturity date | Sep. 30, 2022 | |
Senior Unsecured 5.75% Notes due on September 1, 2023 [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total long-term debt | $ 418.2 | |
Unsecured debenture interest rate | 5.75% | |
Debt instrument, maturity date | Sep. 1, 2023 | |
Term Loan under August 2012 Credit Facility [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total long-term debt | $ 159.6 | |
Unsecured 7.00% Debentures due on February 15, 2024 [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total debt | $ 13.8 | 19.2 |
Unsecured debenture interest rate | 7.00% | |
Debt instrument, maturity date | Feb. 15, 2024 | |
Unsecured 6.75% Debentures due on December 15, 2027 [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total debt | $ 29.6 | 29.6 |
Unsecured debenture interest rate | 6.75% | |
Debt instrument, maturity date | Dec. 15, 2027 | |
Other [Member] | ||
Long-term Debt, by Current and Noncurrent [Abstract] | ||
Total debt | $ 3.6 | $ 1.4 |
FINANCING AGREEMENTS (Schedul50
FINANCING AGREEMENTS (Schedule of Maturities of Long-Term Debt) (Details) $ in Millions | Sep. 30, 2015USD ($) |
Debt Instrument [Line Items] | |
2,016 | $ 58 |
2,017 | 83 |
2,018 | 108 |
2,019 | 108 |
2,020 | 683 |
Senior Secured Term Loan A [Member] | |
Debt Instrument [Line Items] | |
2,016 | 50 |
2,017 | 75 |
2,018 | 100 |
2,019 | 100 |
2,020 | 675 |
Senior Secured Term Loan B [Member] | |
Debt Instrument [Line Items] | |
2,016 | 8 |
2,017 | 8 |
2,018 | 8 |
2,019 | 8 |
2,020 | $ 8 |
FINANCING AGREEMENTS (Narrative
FINANCING AGREEMENTS (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | May. 01, 2015 | Apr. 30, 2015 | |
Debt Instrument [Line Items] | |||||
Outstanding letters of credit | $ 9.1 | $ 42.4 | |||
Deferred gains from the termination of previous interest rate swap agreements | 1 | $ 1 | |||
Repayment of unsecured debentures | 5.9 | ||||
Debt issuance costs incurred | 48.7 | ||||
Unamortized debt issuance costs | 39.1 | ||||
Interest Rate Swap [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate swap, fair value | $ 1 | ||||
Senior Secured Term Loan A [Member] | |||||
Debt Instrument [Line Items] | |||||
Senior revolving credit facility, maximum borrowing amount | $ 1,000 | ||||
Debt instrument, maturity date | Sep. 30, 2020 | ||||
Maximum interest rate during period | 4.00% | ||||
Senior Secured Term Loan B [Member] | |||||
Debt Instrument [Line Items] | |||||
Senior revolving credit facility, maximum borrowing amount | $ 800 | ||||
Debt instrument, maturity date | Sep. 30, 2022 | ||||
Maximum interest rate during period | 4.00% | ||||
Senior Secured Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Senior revolving credit facility, maximum borrowing amount | $ 500 | ||||
Debt instrument, maturity date | Sep. 30, 2020 | ||||
Maximum interest rate during period | 4.00% | ||||
Current borrowing capacity under the facility | $ 490.9 | ||||
Unamortized debt issuance costs | 9.4 | ||||
Senior Unsecured 5.75% Notes due on September 1, 2023 [Member] | |||||
Debt Instrument [Line Items] | |||||
Aggregate value of debt | $ 425 | ||||
Debt instrument, maturity date | Sep. 1, 2023 | ||||
Guarantee of Trumpf Outstanding Debt [Member] | |||||
Debt Instrument [Line Items] | |||||
Outstanding letters of credit | $ 39.8 | ||||
Previous Credit Facility [Member] | Revolving Credit Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Senior revolving credit facility, maximum borrowing amount | $ 900 | $ 500 | |||
Charge due to acceleration of unamortized debt issuance costs | $ 2.6 | ||||
Previous Credit Facility [Member] | Term Loan under August 2012 Credit Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Aggregate value of debt | $ 165 | $ 200 |
FINANCING AGREEMENTS (Schedul52
FINANCING AGREEMENTS (Schedule of Covenants) (Details) - Scenario, Forecast [Member] | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Secured Net Leverage Ratio | 3 | 3.50 | 4 | 4.50 | 4.75 |
Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest Coverage Ratio | 4 | 3.75 | 3.50 | 3.25 | 3.25 |
FINANCING AGREEMENTS (Schedul53
FINANCING AGREEMENTS (Schedule of Fair Value) (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Sep. 30, 2014 |
Debt Instrument [Line Items] | ||
Total debt | $ 2,243.2 | $ 230.7 |
Senior Secured Term Loan A [Member] | ||
Debt Instrument [Line Items] | ||
Fair value of term loan | 990.7 | |
Senior Secured Term Loan B [Member] | ||
Debt Instrument [Line Items] | ||
Fair value of term loan | 780.7 | |
Senior Unsecured 5.75% Notes due on September 1, 2023 [Member] | ||
Debt Instrument [Line Items] | ||
Fair value of unsecured notes | $ 428.4 | |
Term Loan under August 2012 Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Fair value of term loan | $ 175.2 | |
Unsecured Debentures [Member] | ||
Debt Instrument [Line Items] | ||
Fair value of unsecured notes | $ 43.4 | $ 55.5 |
OTHER COMPREHENSIVE INCOME (Sch
OTHER COMPREHENSIVE INCOME (Schedule of Changes in AOCL by Component) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Other comprehensive income (loss) | |||
Tax effect | $ 5.1 | $ 4.9 | $ (18.1) |
Total Other Comprehensive Income (Loss), Net of Tax | (66.7) | (38.4) | 42.3 |
Accumulated other comprehensive loss | |||
Beginning balance | 806.5 | ||
Net activity | (66.7) | (38.4) | 42.3 |
Ending balance | 1,146.9 | 806.5 | |
Available-for-Sale Securities and Currency Hedges [Member] | |||
Other comprehensive income (loss) | |||
Prior to reclassification | (0.6) | 0.3 | |
Reclassification from | $ 0.6 | 0.1 | |
Pre-tax | 0.4 | ||
Tax effect | (0.1) | ||
Total Other Comprehensive Income (Loss), Net of Tax | 0.3 | ||
Accumulated other comprehensive loss | |||
Beginning balance | (0.3) | ||
Net activity | $ 0.3 | ||
Ending balance | (0.3) | ||
Foreign Currency Translation Adjustment [Member] | |||
Other comprehensive income (loss) | |||
Prior to reclassification | $ (58.6) | $ (29.6) | |
Reclassification from | |||
Pre-tax | $ (58.6) | $ (29.6) | |
Tax effect | |||
Total Other Comprehensive Income (Loss), Net of Tax | $ (58.6) | $ (29.6) | |
Accumulated other comprehensive loss | |||
Beginning balance | (34.2) | (4.6) | |
Net activity | (58.6) | (29.6) | |
Ending balance | (92.8) | (34.2) | (4.6) |
Pension and Postretirement Defined Benefit Plan Items [Member] | |||
Other comprehensive income (loss) | |||
Prior to reclassification | (28.7) | (16.8) | |
Reclassification from | 15.5 | 2.7 | |
Pre-tax | (13.2) | (14.1) | |
Tax effect | 5.1 | 5 | |
Total Other Comprehensive Income (Loss), Net of Tax | (8.1) | (9.1) | |
Accumulated other comprehensive loss | |||
Beginning balance | (39.9) | (30.8) | |
Net activity | (8.1) | (9.1) | |
Ending balance | (48) | (39.9) | (30.8) |
Accumulated Other Comprehensive Income (Loss) [Member] | |||
Other comprehensive income (loss) | |||
Prior to reclassification | (87.9) | (46.1) | |
Reclassification from | 16.1 | 2.8 | |
Pre-tax | (71.8) | (43.3) | |
Tax effect | 5.1 | 4.9 | |
Total Other Comprehensive Income (Loss), Net of Tax | (66.7) | (38.4) | |
Accumulated other comprehensive loss | |||
Beginning balance | (74.1) | (35.7) | |
Net activity | (66.7) | (38.4) | |
Ending balance | $ (140.8) | $ (74.1) | $ (35.7) |
OTHER COMPREHENSIVE INCOME (S55
OTHER COMPREHENSIVE INCOME (Schedule of Items Reclassified out of AOCL) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||||||
Amount reclassified | $ (65.1) | $ (115.2) | $ (144) | |||||||||
Tax effect | 18.3 | 54.6 | 39 | |||||||||
Net of tax | $ 9.6 | $ (19.1) | $ (26.1) | $ (12.1) | $ (24.6) | $ (26.1) | $ 3.3 | $ (13.2) | (47.7) | (60.6) | $ (105) | |
Pension and Postretirement Defined Benefit Plan Items [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member] | ||||||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||||||
Amount reclassified | [1] | 15.5 | 2.7 | |||||||||
Tax effect | [1] | (5.6) | (1) | |||||||||
Net of tax | [1] | 9.9 | 1.7 | |||||||||
Available-for-Sale Securities and Currency Hedges [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member] | ||||||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||||||||
Amount reclassified | [2] | 0.6 | $ 0.1 | |||||||||
Tax effect | [2] | (0.2) | ||||||||||
Net of tax | [2] | $ 0.4 | $ 0.1 | |||||||||
[1] | Reclassified from accumulated other comprehensive loss into cost of goods sold and selling and administrative expenses. These components are included in the computation of net periodic pension and postretirement benefit expense. | |||||||||||
[2] | Reclassified from accumulated other comprehensive loss into other income (expense), net. |
RETIREMENT AND POSTRETIREMENT56
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Schedule of Net Periodic Benefit Cost) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Settlement charge | $ 9.6 | |||
Special termination benefits | $ 3.2 | |||
Master Defined Benefit Retirement Plan [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 5.4 | $ 5 | $ 6.1 | |
Interest cost | 14.6 | 14.4 | 13.2 | |
Expected return on plan assets | (16.7) | (16.7) | (15.9) | |
Amortization of unrecognized prior service cost, net | 0.6 | 0.6 | 0.6 | |
Amortization of net loss | 5.2 | 3.2 | 7.8 | |
Net periodic benefit cost | 9.1 | $ 6.5 | $ 11.8 | |
Settlement charge | $ 9.6 | |||
Special termination benefits | $ 2.4 | $ 2.4 | ||
Net pension expense | $ 18.7 | $ 8.9 | $ 11.8 |
RETIREMENT AND POSTRETIREMENT57
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Schedule of Obligations and Funded Status) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Amounts recorded in the Consolidated Balance Sheets: | |||
Accrued pension benefits, long-term | $ (118.8) | $ (76.9) | |
Master Defined Benefit Retirement Plan [Member] | |||
Change in benefit obligation: | |||
Benefit obligation at beginning of year | 343.8 | 297.9 | |
Service cost | 5.4 | 5 | $ 6.1 |
Interest cost | 14.6 | 14.4 | 13.2 |
Actuarial loss | 12.5 | 31.4 | |
Benefits paid | $ (54) | (10.2) | |
Acquisitions | 4.3 | ||
Special termination benefits | $ 2.4 | ||
Plan settlement | $ (4.4) | ||
Exchange rate gain | (2.4) | $ (1.4) | |
Benefit obligation at end of year | 315.5 | 343.8 | 297.9 |
Change in plan assets: | |||
Fair value of plan assets at beginning of year | 276.1 | 254.4 | |
Actual return on plan assets | (3.9) | 30.9 | |
Employer contributions | 0.9 | 1 | |
Benefits paid | (54) | (10.2) | |
Fair value of plan assets at end of year | 219.1 | 276.1 | $ 254.4 |
Funded status and net amounts recognized | (96.4) | (67.7) | |
Amounts recorded in the Consolidated Balance Sheets: | |||
Accrued pension benefits, current portion | (1) | (1) | |
Accrued pension benefits, long-term | (95.4) | (66.7) | |
Net amount recognized | $ (96.4) | $ (67.7) |
RETIREMENT AND POSTRETIREMENT58
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Narrative) (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Mar. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Defined Benefit Plan Disclosure [Line Items] | ||||||
Settlement loss | $ (9.6) | |||||
Special termination benefits | $ (3.2) | |||||
Defined Contribution Savings Plans | ||||||
Defined contribution savings plans expense | 17.4 | $ 15 | $ 15.8 | |||
Master Defined Benefit Retirement Plan [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Lump sum payments | $ 42.3 | |||||
Settlement loss | $ (9.6) | |||||
Special termination benefits | (2.4) | $ (2.4) | ||||
Net actuarial gains (losses) included in Accumulated Other Comprehensive Income (Loss) | (79.3) | $ (65) | $ (79.3) | (65) | ||
Prior service (credits) costs included in Accumulated Other Comprehensive Income (Loss) | 1 | 1.7 | 1 | 1.7 | ||
Pension items in AOCI, aggregate tax effect | 30 | 24.8 | 30 | 24.8 | ||
Estimated net actuarial loss that will be amortized over the next fiscal year | 4.5 | |||||
Estimated prior service cost that will be amortized over the next fiscal year | 0.3 | |||||
Retirement plans (benefit) cost | 18.7 | 8.9 | $ 11.8 | |||
Accumulated Benefit Obligation | ||||||
Accumulated benefit obligation | $ 296.7 | $ 325.9 | $ 296.7 | 325.9 | ||
Plan Assets | ||||||
Equity securities of one entity, maximum percentage of portfolio | 10.00% | |||||
Cash Flows | ||||||
Employer contributions | $ 0.9 | $ 1 | ||||
Postretirement Health Care Plan | ||||||
Discount rate for expense | 4.50% | 5.00% | 4.10% | |||
Discount rate for obligation | 4.40% | 4.50% | 4.40% | 4.50% | 5.00% | |
Postretirement Health Care Plan [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Special termination benefits | $ (0.8) | $ 1.3 | ||||
Net actuarial gains (losses) included in Accumulated Other Comprehensive Income (Loss) | $ 2.4 | 1.7 | $ 2.4 | $ 1.7 | ||
Prior service (credits) costs included in Accumulated Other Comprehensive Income (Loss) | (1.4) | (2.3) | (1.4) | (2.3) | ||
Pension items in AOCI, aggregate tax effect | $ 1.5 | $ (1.6) | 1.5 | (1.6) | ||
Estimated net actuarial loss that will be amortized over the next fiscal year | (0.1) | |||||
Estimated prior service cost that will be amortized over the next fiscal year | (0.9) | |||||
Retirement plans (benefit) cost | (0.2) | (0.2) | $ (0.1) | |||
Cash Flows | ||||||
Employer contributions | $ 0.2 | $ 0.1 | ||||
Postretirement Health Care Plan | ||||||
Discount rate for expense | 3.70% | 4.10% | 3.30% | |||
Discount rate for obligation | 3.50% | 3.70% | 3.50% | 3.70% | 4.10% | |
Effect of one-percentage-point increase/decrease on service and interest costs | $ 0.1 | |||||
Effect of one-percentage-point increase on service and benefit obligation | 1.9 | |||||
Effect of one-percentage-point decrease on service and benefit obligation | 1.7 | |||||
Expected employer contributions required in next year | 1.8 | |||||
Defined benefit plan estimated future employer contributions in next fiscal, per year, thereafter | $ 2 | $ 2 | ||||
Postretirement Health Care Plan [Member] | Minimum [Member] | ||||||
Postretirement Health Care Plan | ||||||
Health care cost trend rate | 5.25% | |||||
Ultimate health care cost trend rate | 4.00% | |||||
Postretirement Health Care Plan [Member] | Maximum [Member] | ||||||
Postretirement Health Care Plan | ||||||
Health care cost trend rate | 7.00% | |||||
Ultimate health care cost trend rate | 5.00% |
RETIREMENT AND POSTRETIREMENT59
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Schedule of Accumulated Benefit Obligation) (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 |
Master Plan [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
PBO | $ 292.5 | $ 319.1 | |
ABO | 275.3 | 303.2 | |
Plan Assets | 218.9 | 275.8 | |
International Plans [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
PBO | 17.9 | 20.3 | |
ABO | 16.3 | 18.5 | |
Plan Assets | 0.2 | 0.3 | |
Supplemental Executive Plan [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
PBO | 5.1 | 4.4 | |
ABO | $ 5.1 | $ 4.2 | |
Plan Assets | |||
Master Defined Benefit Retirement Plan [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
PBO | $ 315.5 | $ 343.8 | $ 297.9 |
ABO | 296.7 | 325.9 | |
Plan Assets | $ 219.1 | $ 276.1 | $ 254.4 |
RETIREMENT AND POSTRETIREMENT60
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Schedule of Actuarial Assumptions) (Details) - Master Defined Benefit Retirement Plan [Member] | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Weighted average assumptions to determined benefit obligations at the measurement date: | |||
Discount rate for obligation | 4.40% | 4.50% | 5.00% |
Rate of compensation increase | 3.00% | 3.00% | 3.30% |
Weighted average assumptions to determined benefit cost for the year: | |||
Discount rate for expense | 4.50% | 5.00% | 4.10% |
Expected rate of return on plan assets | 6.80% | 7.00% | 7.00% |
Rate of compensation increase | 3.00% | 3.30% | 3.30% |
RETIREMENT AND POSTRETIREMENT61
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Schedule of Allocation of Plan Assets) (Details) - Master Defined Benefit Retirement Plan [Member] | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Actual allocation | 100.00% | 100.00% |
Equity Securities [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target allocation, minimum | 39.00% | 40.00% |
Target allocation, maximum | 49.00% | 60.00% |
Actual allocation | 42.00% | 52.00% |
Fixed Income Securities [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Target allocation, minimum | 51.00% | 40.00% |
Target allocation, maximum | 61.00% | 60.00% |
Actual allocation | 58.00% | 48.00% |
RETIREMENT AND POSTRETIREMENT62
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Schedule of Fair Value Measurements of Plan Assets) (Details) - Master Defined Benefit Retirement Plan [Member] - USD ($) $ in Millions | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 |
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | $ 219.1 | $ 276.1 | $ 254.4 |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | 3.5 | 209.7 | |
Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | $ 215.6 | $ 66.4 | |
Significant Unobservable Inputs (Level 3) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | |||
Cash [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | $ 3.5 | $ 2.1 | |
Cash [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | $ 3.5 | $ 2.1 | |
Cash [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | |||
Cash [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | |||
US Companies [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | $ 47.1 | $ 101.7 | |
US Companies [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | $ 101.7 | ||
US Companies [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | $ 47.1 | ||
US Companies [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | |||
International Companies [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | $ 44.8 | $ 38.7 | |
International Companies [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | $ 38.7 | ||
International Companies [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | $ 44.8 | ||
International Companies [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | |||
Fixed Income Securities [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | $ 123.7 | $ 133.2 | |
Fixed Income Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | 66.8 | ||
Fixed Income Securities [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | $ 123.7 | $ 66.4 | |
Fixed Income Securities [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | |||
Other [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | $ 0.4 | ||
Other [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | $ 0.4 | ||
Other [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value | |||
Other [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Fair Value Measurements of Plan Assets | |||
Plan assets at fair value |
RETIREMENT AND POSTRETIREMENT63
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Schedule of Estimated Future Benefit Payments) (Details) - Master Defined Benefit Retirement Plan [Member] $ in Millions | Sep. 30, 2015USD ($) |
Estimated Future Benefit Payments | |
2,016 | $ 12.3 |
2,017 | 12.8 |
2,018 | 13.3 |
2,019 | 14 |
2,020 | 14.8 |
2021 - 2025 | $ 86.5 |
RETIREMENT AND POSTRETIREMENT64
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Schedule of Postretirement Health Care Plan) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Amounts recorded in the Consolidated Balance Sheets: | ||
Accrued pension benefits, long-term | $ 118.8 | $ 76.9 |
Postretirement Health Care Plan [Member] | ||
Change in benefit obligation: | ||
Benefit obligation at beginning of year | 11.2 | 9.8 |
Service cost | 0.4 | 0.4 |
Interest cost | 0.4 | $ 0.4 |
Acquired obligation | 14.1 | |
Actuarial gain | (0.9) | $ (0.2) |
Benefits paid | (0.2) | (0.2) |
Retiree contributions | 0.1 | 0.2 |
Special termination benefits | 0.8 | |
Benefit obligation at end of year | 25.1 | 11.2 |
Amounts recorded in the Consolidated Balance Sheets: | ||
Accrued benefits obligation, current portion | 1.8 | 1.1 |
Accrued pension benefits, long-term | 23.3 | 10.1 |
Net amount recognized | $ 25.1 | $ 11.2 |
COMMON STOCK (Narrative) (Detai
COMMON STOCK (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Share Repurchases | |||
Value of share repurchase authorization | $ 190 | ||
Stock-Based Compensation | |||
Number of shares authorized | 15,300,000 | ||
Shares available for future grants | 4,300,000 | ||
Treasury stock, shares | 23,291,738 | 22,884,001 | |
Common Stock [Member] | |||
Share Repurchases | |||
Shares repurchased | 1,200,000 | 1,700,000 | 2,800,000 |
Value of shares repurchased | $ 54.8 | $ 70.5 | $ 92.7 |
Stock Options [Member] | |||
Stock-Based Compensation | |||
Maximum contractual term | 10 years | ||
Total intrinsic value of options exercised | $ 6.3 | 4.6 | 1.6 |
Unrecognized compensation expense | $ 4.1 | ||
Unrecognized compensation expense, weighted-average recognition period | 2 years 4 months 24 days | ||
Stock Options [Member] | Minimum [Member] | |||
Stock-Based Compensation | |||
Vesting period | 3 years | ||
Stock Options [Member] | Maximum [Member] | |||
Stock-Based Compensation | |||
Vesting period | 4 years | ||
Restricted Stock Units (RSUs) [Member] | |||
Stock-Based Compensation | |||
Unrecognized compensation expense | $ 13.4 | ||
Unrecognized compensation expense, weighted-average recognition period | 2 years | ||
Total vest date fair value of shares that vested | $ 4.3 | $ 5.3 | $ 5.4 |
Restricted Stock Units (RSUs) [Member] | Minimum [Member] | |||
Stock-Based Compensation | |||
Vesting period | 1 year | ||
Restricted Stock Units (RSUs) [Member] | Maximum [Member] | |||
Stock-Based Compensation | |||
Vesting period | 4 years | ||
Performance Shares [Member] | |||
Stock-Based Compensation | |||
Unrecognized compensation expense | $ 10.2 | ||
Total vest date fair value of shares that vested | $ 20.5 |
COMMON STOCK (Schedule of Stock
COMMON STOCK (Schedule of Stock-Based Compensation Cost) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
COMMON STOCK [Abstract] | |||
Total stock-based compensation cost (pre-tax) | $ 25 | $ 18 | $ 13.5 |
Total income tax benefit | (7.5) | (6.5) | (4.9) |
Total stock-based compensation cost, net of tax | $ 17.5 | $ 11.5 | $ 8.6 |
COMMON STOCK (Schedule of Weigh
COMMON STOCK (Schedule of Weighted Average Fair Value per Share of Stock Options and Related Valuation Assumptions) (Details) - Stock Options [Member] - $ / shares | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Stock Options | |||
Weighted average fair value per share | $ 12.83 | $ 11.91 | $ 7.91 |
Valuation assumptions: | |||
Risk-free interest rate | 1.60% | 1.30% | 0.60% |
Expected dividend yield | 1.40% | 1.40% | 1.90% |
Expected volatility | 35.00% | 36.10% | 40.20% |
Weighted average expected life | 4 years 10 months 24 days | 4 years 10 months 24 days | 4 years 10 months 24 days |
COMMON STOCK (Schedule of Trans
COMMON STOCK (Schedule of Transactions under Stock Option Plans) (Details) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | |
Sep. 30, 2015USD ($)$ / sharesshares | ||
Stock-Based Compensation | ||
Closing stock price | $ 51.99 | |
Stock Options [Member] | ||
Weighted Average Number of Shares | ||
Balance Outstanding at October 1, 2014 | shares | 1,992 | |
Granted | shares | 381 | |
Exercised | shares | (371) | |
Cancelled/Forfeited | shares | (101) | |
Balance Outstanding at September 30, 2015 | shares | 1,901 | |
Exercisable at September 30, 2015 | shares | 1,060 | |
Options Expected to Vest | shares | 773 | |
Weighted Average Exercise Price | ||
Balance Outstanding at October 1, 2014 | $ 31.99 | |
Granted | 45.01 | |
Exercised | 31.83 | |
Cancelled/Forfeited | 36.63 | |
Balance Outstanding at September 30, 2015 | 34.38 | |
Exercisable at September 30, 2015 | 30.98 | |
Options Expected to Vest | $ 38.34 | |
Weighted Average Remaining Contractual Term | ||
Balance Outstanding at September 30, 2015 | 6 years 7 months 6 days | |
Exercisable at September 30, 2015 | 5 years 3 months 18 days | |
Options Expected to Vest | 8 years | |
Aggregate Intrinsic Value | ||
Balance Outstanding at September 30, 2015 | $ | $ 33.5 | [1] |
Exercisable at September 30, 2015 | $ | 22.3 | [1] |
Options Expected to Vest | $ | $ 10.6 | [1] |
[1] | The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $51.99, as reported by the New York Stock Exchange on September 30, 2015. This amount, which changes continuously based on the fair value of our common stock, would have been received by the option holders had all option holders exercised their options as of the balance sheet date. |
COMMON STOCK (Schedule of Tra69
COMMON STOCK (Schedule of Transactions for Nonvested RSUs) (Details) - Restricted Stock Units (RSUs) [Member] shares in Thousands | 12 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Number of Share Units | |
Nonvested at October 1, 2014 | shares | 431 |
Granted | shares | 351 |
Vested | shares | (93) |
Forfeited | shares | (55) |
Nonvested at September 30, 2015 | shares | 634 |
Weighted Average Grant Date Fair Value | |
Nonvested at October 1, 2014 | $ 34.92 |
Granted | 47.85 |
Vested | 37.76 |
Forfeited | 35.90 |
Nonvested at September 30, 2015 | $ 41.35 |
COMMON STOCK (Schedule of Wei70
COMMON STOCK (Schedule of Weighted Average Fair Value per Share PSUs and Related Valuation Assumptions) (Details) - Performance Shares [Member] - $ / shares | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Performance Share Units | |||
Weighted average fair value per share | $ 47.82 | $ 47.91 | $ 19.77 |
Valuation assumptions: | |||
Risk-free interest rate | 0.90% | 0.50% | 0.30% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected volatility | 23.50% | 30.10% | 32.60% |
COMMON STOCK (Schedule of Tra71
COMMON STOCK (Schedule of Transactions for Nonvested PSUs) (Details) - Performance Shares [Member] shares in Thousands | 12 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Number of Share Units | |
Nonvested at October 1, 2014 | shares | 586 |
Granted | shares | 331 |
Vested | shares | (414) |
Cancelled | shares | (76) |
Forfeited | shares | (73) |
Nonvested at September 30, 2015 | shares | 354 |
Weighted Average Grant Date Fair Value | |
Nonvested at October 1, 2014 | $ 29.98 |
Granted | 49.27 |
Vested | 30.11 |
Cancelled | 24.57 |
Forfeited | 41.15 |
Nonvested at September 30, 2015 | $ 42.16 |
SPECIAL CHARGES (Narrative) (De
SPECIAL CHARGES (Narrative) (Details) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||
Mar. 31, 2015USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014USD ($)employees | Dec. 31, 2013USD ($)employees | Sep. 30, 2013USD ($) | Jun. 30, 2013USD ($) | Mar. 31, 2013USD ($)employees | Sep. 30, 2015USD ($)employees | Sep. 30, 2014USD ($) | Sep. 30, 2013USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||||||||||
Special charge | $ 41.2 | $ 37.1 | $ 5.7 | |||||||
Settlement charge | 9.6 | |||||||||
Reversals of previously recorded expenses | 0.5 | |||||||||
Welch Allyn Integration [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Special charge | $ 14.4 | |||||||||
Number of positions eliminated | employees | 80 | |||||||||
Expected additional costs | $ 3 | |||||||||
Site Consolidation [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Number of positions eliminated | employees | 160 | |||||||||
Expected additional costs | $ 3 | |||||||||
Site Consolidation [Member] | Employee Termination and Severance [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Special charge | 2.7 | |||||||||
Site Consolidation [Member] | Other Restructuring [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Special charge | $ 1.8 | |||||||||
Global Restructuring Program [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Special charge | $ 24.9 | |||||||||
Number of positions planned to be eliminated | employees | 200 | |||||||||
Total expected charges associated with actions | $ 37.6 | |||||||||
Global Restructuring Program [Member] | Employee Termination and Severance [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Reversals of previously recorded expenses | $ 0.5 | |||||||||
Global Restructuring Program [Member] | Employee Termination and Severance [Member] | Europe [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Special charge | 6 | |||||||||
Global Restructuring Program [Member] | Other Restructuring [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Special charge | 7.2 | |||||||||
Global Restructuring Program [Member] | Minimum [Member] | Europe [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Expected additional costs | 5 | |||||||||
Global Restructuring Program [Member] | Maximum [Member] | Europe [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Expected additional costs | $ 10 | |||||||||
Plan to Discontinue Third Party Payer Rentals [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Impairment of certain tangible assets | $ 7.7 | |||||||||
Number of positions planned to be eliminated | employees | 70 | |||||||||
Plan to Discontinue Third Party Payer Rentals [Member] | Employee Termination and Severance [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Special charge | $ 2 | |||||||||
Plan to Discontinue Third Party Payer Rentals [Member] | Other Restructuring [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Special charge | $ 1.6 | |||||||||
Reversals of previously recorded expenses | $ 0.2 | |||||||||
Batesville, Indiana Plant Restructuring [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Special charge | $ 1 | |||||||||
Number of positions eliminated | employees | 35 | |||||||||
Fiscal 2013 Action [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Special charge | $ 2 | $ 0.8 | ||||||||
Impairment of certain tangible assets | $ 0.2 | |||||||||
Number of positions eliminated | employees | 100 | |||||||||
Fiscal 2013 Action [Member] | Employee Termination and Severance [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Special charge | $ 1.7 | |||||||||
Fiscal 2013 Action [Member] | Lease and Other Contract Termination [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Special charge | 0.6 | |||||||||
Fiscal 2013 Action [Member] | Other Restructuring [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Special charge | $ 1 | |||||||||
Fiscal 2012 Action [Member] | ||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||
Reversals of previously recorded expenses | $ 0.6 |
SPECIAL CHARGES (Schedule of Re
SPECIAL CHARGES (Schedule of Restructuring Activity) (Details) $ in Millions | 12 Months Ended |
Sep. 30, 2015USD ($) | |
Restructuring Reserve [Roll Forward] | |
Beginning Balance | $ 11.7 |
Expenses | 23.1 |
Cash Payments | (10) |
Reversals | (0.5) |
Ending Balance | $ 24.3 |
INCOME TAXES (Schedule of Compo
INCOME TAXES (Schedule of Components of Income before Income Taxes and the Consolidated Income Tax Provision) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income before income taxes: | |||
Domestic | $ 49.2 | $ 87 | $ 120 |
Foreign | 15.9 | 28.2 | 24 |
Total | 65.1 | 115.2 | 144 |
Current provision | |||
Federal | 35.3 | 40.2 | 45 |
State | 3.6 | 3.1 | 1.8 |
Foreign | 1.7 | 7.4 | 7 |
Total current provision | 40.6 | 50.7 | 53.8 |
Deferred provision: | |||
Federal | (18.1) | (12.2) | (9.9) |
State | (1.3) | (1) | 1.1 |
Foreign | (2.9) | 17.1 | (6) |
Total deferred provision | (22.3) | 3.9 | (14.8) |
Income tax expense | $ 18.3 | $ 54.6 | $ 39 |
INCOME TAXES (Schedule of Diffe
INCOME TAXES (Schedule of Differences between Income Tax Expense) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | ||
Amount | ||||
Federal income tax | [1] | $ 22.8 | $ 40.3 | $ 50.4 |
State income tax | [2] | 1.6 | 2 | 2.5 |
Foreign income tax | [3] | (10.2) | (7.7) | (5.7) |
Application of federal tax credits | (2.2) | (0.6) | (3.5) | |
Adjustment of estimated income tax accruals | (1.6) | (0.6) | (1.5) | |
Valuation of tax attributes | 4 | 21.3 | 0.6 | |
Domestic manufacturer's deduction | (1.5) | (1.8) | $ (2.2) | |
Capitalized transaction costs | 2.5 | 0.3 | ||
Other, net | 2.9 | 1.4 | $ (1.6) | |
Income tax expense | $ 18.3 | $ 54.6 | $ 39 | |
% of Pretax Income | ||||
Federal income tax | [1] | 35.00% | 35.00% | 35.00% |
State income tax | [2] | 2.40% | 1.70% | 1.70% |
Foreign income tax | [3] | (15.70%) | (6.70%) | (4.00%) |
Application of federal tax credits | (3.40%) | (0.50%) | (2.40%) | |
Adjustment of estimated income tax accruals | (2.40%) | (0.50%) | (1.00%) | |
Valuation of tax attributes | 6.20% | 18.50% | 0.40% | |
Domestic manufacturer's deduction | (2.30%) | (1.50%) | (1.50%) | |
Capitalized transaction costs | 3.80% | 0.20% | ||
Other, net | 4.50% | 1.20% | (1.10%) | |
Income tax expense | 28.10% | 47.40% | 27.10% | |
[1] | At statutory rate. | |||
[2] | Net of Federal benefit. | |||
[3] | Federal tax rate differential. |
INCOME TAXES (Schedule of Defer
INCOME TAXES (Schedule of Deferred Taxes) (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Sep. 30, 2014 |
Deferred tax assets: | ||
Employee benefit accruals | $ 106.4 | $ 49.3 |
Inventory | 6.2 | 13.9 |
Reserve for bad debts | 8.4 | 10 |
Net operating loss carryforwards | 45.8 | 40.3 |
Tax credit carryforwards | 11.7 | 2.5 |
Other, net | 39.6 | 25.7 |
Deferred Tax Assets, Gross, Total | 218.1 | 141.7 |
Less: Valuation allowance | (40.7) | (28.3) |
Total deferred tax assets | 177.4 | 113.4 |
Deferred tax liabilities: | ||
Depreciation | (35.3) | (13.9) |
Amortization | (409.1) | (62.8) |
Other, net | (16.4) | (4.9) |
Total deferred tax liabilities | (460.8) | (81.6) |
Deferred tax asset - net | $ 31.8 | |
Deferred tax (liability) - net | $ (283.4) |
INCOME TAXES (Narrative) (Detai
INCOME TAXES (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Income taxes: | ||||
Deferred tax assets related to operating loss carryforwards in foreign jurisdictions | $ 43.2 | |||
Deferred tax assets related to domestic federal net operating loss carryforwards | 2.2 | |||
Deferred tax assets related to state net operating loss carryforwards | 0.4 | |||
Deferred tax assets related to state credits | 11.7 | |||
Valuation allowance on deferred tax assets | 40.7 | $ 28.3 | ||
Total gross unrecognized tax benefits | 5.8 | 4.1 | $ 4.6 | $ 9.8 |
Unrecognized tax benefits that would impact effective tax rate, if recognized | 3.3 | 2.7 | 3.9 | |
Accrued interest and penalties related to unrecognized tax benefits | 3 | 0.4 | 0.6 | |
Income tax expense for interest and penalties | 0.2 | 0.2 | 0.1 | |
Income Tax Holiday [Line Items] | ||||
Impact of tax holidays | $ 4.3 | $ 4 | $ 2.9 | |
Benefit of tax holidays on net income per share (diluted) | $ 0.07 | $ 0.07 | $ 0.05 | |
Minimum [Member] | ||||
Income taxes: | ||||
Amount of reasonably possible decrease | $ 0.5 | |||
Maximum [Member] | ||||
Income taxes: | ||||
Amount of reasonably possible decrease | $ 1.5 | |||
Earliest Tax Year [Member] | Domestic Tax Authority [Member] | ||||
Income taxes: | ||||
Operating loss carryforwards, year of expiration | Jan. 1, 2019 | |||
Earliest Tax Year [Member] | State and Local Jurisdiction [Member] | ||||
Income taxes: | ||||
Operating loss carryforwards, year of expiration | Jan. 1, 2016 | |||
Tax credit carryforwards, year of expiration | Jan. 1, 2016 | |||
Latest Tax Year [Member] | Domestic Tax Authority [Member] | ||||
Income taxes: | ||||
Operating loss carryforwards, year of expiration | Dec. 31, 2033 | |||
Latest Tax Year [Member] | State and Local Jurisdiction [Member] | ||||
Income taxes: | ||||
Operating loss carryforwards, year of expiration | Dec. 31, 2033 | |||
Tax credit carryforwards, year of expiration | Dec. 31, 2026 | |||
Inland Revenue, Singapore (IRAS) [Member] | ||||
Income Tax Holiday [Line Items] | ||||
Income tax holiday, year of expiration | 2,016 | |||
Puerto Rico Tax Authority [Member] | ||||
Income Tax Holiday [Line Items] | ||||
Income tax holiday, year of expiration | 2,025 |
INCOME TAXES (Reconciliation of
INCOME TAXES (Reconciliation of Unrecognized Tax Benefits) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: | |||
Balance at October 1 | $ 4.1 | $ 4.6 | $ 9.8 |
Increases in tax position of prior years | 0.4 | 2.1 | |
Decreases in tax position of prior years | $ (1.3) | $ (0.9) | $ (0.5) |
Increases in tax positions related to the current year | 0.1 | ||
Settlements with taxing authorities | $ (1.2) | $ (0.1) | (3.2) |
Lapse of applicable statute of limitations | (1.3) | $ (1.5) | $ (1.7) |
Increase in positions due to acquisitions | 5.5 | ||
Foreign currency adjustments | $ 0.1 | ||
Foreign currency adjustments | (0.4) | $ (0.1) | |
Total change | 1.7 | (0.5) | (5.2) |
Balance at September 30 | $ 5.8 | $ 4.1 | $ 4.6 |
EARNINGS PER COMMON SHARE (Deta
EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
EARNINGS PER COMMON SHARE [Abstract] | |||||||||||
Net income attributable to common shareholders | $ 47.7 | $ 60.6 | $ 105 | ||||||||
Average shares outstanding - Basic | 57,249 | 57,555 | 59,910 | ||||||||
Add potential effect of exercise of stock options and other unvested equity awards | 1,287 | 968 | 340 | ||||||||
Average shares outstanding - Diluted | 58,536 | 58,523 | 60,250 | ||||||||
Basic net income (loss) attributable to common shareholders per common share | $ (0.16) | $ 0.34 | $ 0.46 | $ 0.21 | $ 0.43 | $ 0.46 | $ (0.06) | $ 0.23 | $ 0.83 | $ 1.05 | $ 1.75 |
Diluted net income (loss) attributable to common shareholders per common share | $ (0.16) | $ 0.33 | $ 0.45 | $ 0.21 | $ 0.42 | $ 0.45 | $ (0.06) | $ 0.22 | $ 0.82 | $ 1.04 | $ 1.74 |
Shares with anti-dilutive effect excluded from the computation of Diluted EPS | 200 | 300 | 1,400 |
SEGMENT REPORTING (Schedule of
SEGMENT REPORTING (Schedule of Segment Information) (Details) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Sep. 30, 2015USD ($)units | Sep. 30, 2014USD ($) | Sep. 30, 2013USD ($) | ||
Segment Reporting Information [Line Items] | ||||||||||||
Number of reportable business segments | units | 3 | |||||||||||
Revenue | $ 573.9 | $ 474.5 | $ 474.8 | $ 465 | $ 479.8 | $ 397.6 | $ 415.3 | $ 393.4 | $ 1,988.2 | $ 1,686.1 | $ 1,716.2 | |
Special charge | 41.2 | 37.1 | 5.7 | |||||||||
Operating profit | 83.1 | 122.6 | 154.9 | |||||||||
Interest expense | (18.4) | (9.8) | (9.5) | |||||||||
Investment income and other, net | 0.4 | 2.4 | (1.4) | |||||||||
Income Before Income Taxes | 65.1 | 115.2 | 144 | |||||||||
Corporate and Other [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Operating profit | (173.1) | (98.8) | (131.4) | |||||||||
Segment Reconciling Items [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Special charge | 41.2 | $ 37.1 | $ 5.7 | |||||||||
Welch Allyn Holdings, Inc. [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenue | [1] | 50.2 | ||||||||||
North America Segment [Member] | Operating Segments [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenue | 1,002 | $ 888.9 | $ 958.3 | |||||||||
Operating profit | 204.1 | 165 | 201.7 | |||||||||
Surgical and Respiratory Care Segment [Member] | Operating Segments [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenue | 506.6 | 301.6 | 245.8 | |||||||||
Operating profit | 80.5 | 68.6 | 56.8 | |||||||||
International [Member] | Operating Segments [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenue | 429.4 | 495.6 | 512.1 | |||||||||
Operating profit | $ 12.8 | $ 24.9 | $ 33.5 | |||||||||
[1] | Welch Allyn is not considered a separate reportable segment but is presented as a reconciling item to total consolidated revenue. |
SEGMENT REPORTING (Schedule o81
SEGMENT REPORTING (Schedule of Geographic Information) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | ||
Geographic Information | ||||
Revenue | [1] | $ 1,988.2 | $ 1,686.1 | $ 1,716.2 |
Long-lived assets | [2] | 378.4 | 261.5 | 234.3 |
United States [Member] | ||||
Geographic Information | ||||
Revenue | [1] | 1,273 | 1,070.8 | 1,116.4 |
Long-lived assets | [2] | 263.9 | 151.7 | 158 |
Foreign [Member] | ||||
Geographic Information | ||||
Revenue | [1] | 715.2 | 615.3 | 599.8 |
Long-lived assets | [2] | $ 114.5 | $ 109.8 | $ 76.3 |
[1] | Net revenue is attributed to geographic areas based on the location of the customer. | |||
[2] | Includes property and equipment leased to others. |
QUARTERLY FINANCIAL INFORMATI82
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) [Abstract] | |||||||||||
Net revenue | $ 573.9 | $ 474.5 | $ 474.8 | $ 465 | $ 479.8 | $ 397.6 | $ 415.3 | $ 393.4 | $ 1,988.2 | $ 1,686.1 | $ 1,716.2 |
Gross profit | 256.7 | 209.5 | 214.2 | 199.9 | 213.3 | 187.1 | 202.7 | 176.8 | 880.3 | 779.9 | 780.3 |
Net income (loss) attributable to common shareholders | $ (9.6) | $ 19.1 | $ 26.1 | $ 12.1 | $ 24.6 | $ 26.1 | $ (3.3) | $ 13.2 | $ 47.7 | $ 60.6 | $ 105 |
Basic net income (loss) attributable to common shareholders per common share | $ (0.16) | $ 0.34 | $ 0.46 | $ 0.21 | $ 0.43 | $ 0.46 | $ (0.06) | $ 0.23 | $ 0.83 | $ 1.05 | $ 1.75 |
Diluted net income (loss) attributable to common shareholders per common share | $ (0.16) | $ 0.33 | $ 0.45 | $ 0.21 | $ 0.42 | $ 0.45 | $ (0.06) | $ 0.22 | $ 0.82 | $ 1.04 | $ 1.74 |
COMMITMENTS AND CONTINGENCIES83
COMMITMENTS AND CONTINGENCIES (Lease Commitments and Long-Term Agreement) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | |
Lease Commitments | |||
Rental expense | $ 25.2 | $ 24.7 | $ 21.5 |
Minimum annual rental commitments | 73.8 | ||
2,016 | 28.2 | ||
2,017 | 18.4 | ||
2,018 | 12.1 | ||
2,019 | 6.3 | ||
2,020 | 3.2 | ||
2021 and beyond | $ 5.6 |
COMMITMENTS AND CONTINGENCIES84
COMMITMENTS AND CONTINGENCIES (Self Insurance and Legal Proceedings) (Details) - Uninsured Risk [Member] $ in Thousands | Sep. 30, 2015USD ($) |
Loss Contingencies [Line Items] | |
Deductibles and self-insured retentions, minimum | $ 25 |
Deductibles and self-insured retentions, maximum | $ 1,000 |
Valuation and Qualifying Acco85
Valuation and Qualifying Accounts (Details) - USD ($) $ in Millions | 12 Months Ended | |||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Allowance for Possible Losses and Sales Returns - Accounts Receivable [Member] | ||||||
Reserves deducted from assets to which they apply: | ||||||
BALANCE AT BEGINNING OF PERIOD | $ 31.4 | $ 30.1 | $ 38.5 | |||
CHARGED TO COSTS AND EXPENSES | 1.8 | 1.5 | 2.7 | |||
CHARGED TO OTHER ACCOUNTS | [1] | 0.1 | 8.6 | (0.1) | ||
DEDUCTIONS NET OF RECOVERIES | [2] | (7.3) | (8.8) | (11) | ||
BALANCE AT END OF PERIOD | 26 | 31.4 | 30.1 | |||
Allowance for Inventory Valuation [Member] | ||||||
Reserves deducted from assets to which they apply: | ||||||
BALANCE AT BEGINNING OF PERIOD | 42.9 | 22 | 22 | |||
CHARGED TO COSTS AND EXPENSES | 0.9 | 4 | $ 1.8 | |||
CHARGED TO OTHER ACCOUNTS | 5.7 | [3] | 19.8 | [3] | ||
DEDUCTIONS NET OF RECOVERIES | [4] | (4) | (2.9) | $ (1.8) | ||
BALANCE AT END OF PERIOD | 45.5 | 42.9 | 22 | |||
Valuation Allowance Against Deferred Tax Assets [Member] | ||||||
Reserves deducted from assets to which they apply: | ||||||
BALANCE AT BEGINNING OF PERIOD | 28.3 | 8.9 | 8.6 | |||
CHARGED TO COSTS AND EXPENSES | 4 | $ 21.3 | $ 0.6 | |||
CHARGED TO OTHER ACCOUNTS | 11.1 | [3] | ||||
DEDUCTIONS NET OF RECOVERIES | [5] | (2.7) | $ (1.9) | $ (0.3) | ||
BALANCE AT END OF PERIOD | $ 40.7 | $ 28.3 | $ 8.9 | |||
[1] | Reduction of gross revenue for uncollectible health care rental reimbursements, cash discounts and other adjustments in determining net revenue. Also includes the effect of acquired businesses, if any. | |||||
[2] | Generally reflects the write-off of specific receivables against recorded reserves. | |||||
[3] | Generally reflects the effect of acquired businesses, if any. | |||||
[4] | Generally reflects the write-off of specific inventory against recorded reserves. | |||||
[5] | Primarily reflects write-offs of deferred tax assets against the valuation allowance and other movement of the valuation allowance offset by an opposing change in deferred tax assets. |