HILLENBRAND, INC., 10-Q filed on 1/29/2019
Quarterly Report
v3.10.0.1
Document and Entity Information - shares
3 Months Ended
Dec. 31, 2018
Jan. 24, 2019
Document and Entity Information    
Entity Registrant Name Hillenbrand, Inc.  
Entity Central Index Key 0001417398  
Document Type 10-Q  
Document Period End Date Dec. 31, 2018  
Amendment Flag false  
Current Fiscal Year End Date --09-30  
Entity Current Reporting Status Yes  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   62,529,606
Entity Emerging Growth Company false  
Entity Small Business false  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q1  
v3.10.0.1
Consolidated Statements of Income - USD ($)
shares in Millions, $ in Millions
3 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Income Statement [Abstract]    
Net revenue [1] $ 410.3 $ 397.2
Cost of Goods and Services Sold 263.3 251.0
Gross profit 147.0 146.2
Operating expenses 90.7 89.1
Amortization of Intangible Assets 7.8 7.6
Interest expense 5.5 6.3
Other (expense) income, net 0.5 (0.4)
Income before income taxes 43.5 42.8
Income tax expense 14.5 23.7
Consolidated net income 29.0 19.1
Less: Net income attributable to noncontrolling interests 0.7 1.0
Total reclassifications for the period, net of tax [2] $ 28.3 $ 18.1
Net income - per share of common stock:    
Basic earnings per share $ 0.45 $ 0.28
Diluted earnings per share $ 0.45 $ 0.28
Weighted average shares outstanding (basic) 62.9 63.6
Weighted average shares outstanding (diluted) 63.5 64.1
Cash dividends declared per share $ 0.21 $ 0.2075
[1] We attribute revenue to a geography based upon the location of the business unit that consummates the external sale.
[2] Net income attributable to Hillenbrand
v3.10.0.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Millions
3 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Statement of Comprehensive Income [Abstract]    
Consolidated net income $ 29.0 $ 19.1
Changes in other comprehensive income (loss), net of tax    
Currency translation adjustment (4.9) 6.3
Pension and postretirement (net of tax of $0.1 and $0.3) 0.2 0.7
Change in net unrealized gain (loss) on derivative instruments (net of tax of $1.7 and $0.0) (5.2) (0.2)
Consolidated comprehensive income 19.1 25.9
Less: Comprehensive income attributable to noncontrolling interests 0.9 1.1
Comprehensive income (loss) [1],[2] $ 18.2 $ 24.8
[1] Comprehensive income attributable to Hillenbrand
[2] Comprehensive income attributable to Hillenbrand
v3.10.0.1
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($)
$ in Millions
3 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Statement of Comprehensive Income [Abstract]    
Pension and postretirement, tax $ 0.1 $ 0.3
Change in net unrealized gain (loss) on derivative instruments, tax $ 1.7 $ 0.0
v3.10.0.1
Consolidated Balance Sheets - USD ($)
$ in Millions
Dec. 31, 2018
Sep. 30, 2018
Current Assets    
Cash and cash equivalents $ 64.8 $ 56.0
Trade receivables, net 190.5 218.5
Receivables from long-term manufacturing contracts 134.2 120.3
Inventories 182.3 172.5
Prepaid expenses 24.5 25.2
Other current assets 17.1 18.1
Total current assets 613.4 610.6
Property, plant, and equipment, net 140.2 142.0
Intangible assets, net 490.6 487.3
Goodwill 587.3 581.9
Other assets 38.7 42.8
Total Assets 1,870.2 1,864.6
Current Liabilities    
Trade accounts payable 196.0 196.8
Liabilities from long-term manufacturing contracts and advances 135.8 125.9
Current portion of long-term debt 0.0 0.0
Accrued compensation 53.5 71.9
Other current liabilities 125.2 137.1
Total current liabilities 510.5 531.7
Long-term debt 364.8 344.6
Accrued pension and postretirement healthcare 117.8 120.5
Deferred income taxes 77.7 76.4
Other long-term liabilities 52.0 47.3
Total Liabilities 1,122.8 1,120.5
Commitments and contingencies (Note 14)
SHAREHOLDERS’ EQUITY    
Common stock, no par value (63.9 and 63.9 shares issued, 62.5 and 62.3 shares outstanding) 0.0 0.0
Additional paid-in capital 341.7 351.4
Retained earnings 546.3 531.0
Treasury stock (1.4 and 1.6 shares) (59.2) (67.1)
Accumulated other comprehensive loss (94.3) (84.2)
Hillenbrand Shareholders’ Equity 734.5 731.1
Noncontrolling interests 12.9 13.0
Total Shareholders’ Equity (747.4) (744.1)
Total Liabilities and Equity $ 1,870.2 $ 1,864.6
v3.10.0.1
Consolidated Balance Sheets (Parenthetical) - $ / shares
Dec. 31, 2018
Sep. 30, 2018
Statement of Financial Position [Abstract]    
Common stock, par value (in dollars per share)
Common stock, shares issued 63,900,000 63,900,000
Common stock, shares outstanding 62,500,000 62,300,000
Treasury stock, shares 1,400,000 1,600,000
v3.10.0.1
Consolidated Statements of Cash Flow - USD ($)
$ in Millions
3 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Operating Activities    
Consolidated net income $ 29.0 $ 19.1
Adjustments to reconcile net income to cash provided by operating activities:    
Depreciation and amortization 14.1 13.8
Deferred income taxes 5.3 (14.9)
Trade accounts receivable and receivables from long-term manufacturing contracts 15.7 (20.4)
Inventories (8.9) (14.3)
Prepaid expenses and other current assets 1.9 4.4
Trade accounts payable (0.6) (7.4)
Accrued expenses and other current liabilities (9.7) 12.9
Income taxes payable (12.1) 32.0
Defined benefit plan and postretirement funding (2.3) (2.8)
Defined benefit plan and postretirement expense 0.8 1.1
Other, net 0.4 1.1
Net cash provided by operating activities 35.5 26.9
Investing Activities    
Capital expenditures (3.6) (5.6)
Payments to Acquire Businesses, Net of Cash Acquired (26.2) 0.0
Net cash used in investing activities (29.8) (5.6)
Financing Activities    
Repayments on term loan 0.0 (148.5)
Proceeds from revolving credit facilities, net of financing costs 160.2 371.8
Repayments on revolving credit facilities (139.6) (213.0)
Payments of dividends on common stock (13.1) (13.1)
Repurchases of common stock 0.0 (15.2)
Net (payments) proceeds on stock plans (3.8) 2.6
Other, net (0.9) 2.8
Net cash provided by (used in) financing activities 2.8 (12.6)
Effect of exchange rates on cash and cash equivalents 0.3 2.9
Net cash flows 8.8 11.6
Cash, cash equivalents, and restricted cash:    
At beginning of period 56.5 66.7
At end of period $ 65.3 $ 78.3
v3.10.0.1
Consolidated Statements of Cash Flow Cash, Cash Equivalents, and Restricted Cash - USD ($)
$ in Millions
Dec. 31, 2018
Sep. 30, 2018
Dec. 31, 2017
Sep. 30, 2017
Supplemental Cash Flow Elements [Abstract]        
Cash and cash equivalents $ 64.8 $ 56.0 $ 77.8  
Restricted cash and cash equivalents 0.5   0.5  
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents $ 65.3 $ 56.5 $ 78.3 $ 66.7
v3.10.0.1
Consolidated Statements of Shareholders Equity Statement - USD ($)
$ in Millions
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Treasury Stock
AOCI Attributable to Parent [Member]
Noncontrolling Interests
Balance at Sep. 30, 2017 $ 765.9   $ 349.9 $ 507.1 $ (24.4) $ (81.2) $ 14.5
Balance, shares at Sep. 30, 2017   63,800,000     700,000    
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Other Comprehensive Income (Loss), Net of Tax 6.8         6.7 0.1
Consolidated net income 19.1     18.1     1.0
Common stock, shares issued   (100,000)     (300,000)    
Stock Granted, Value, Share-based Compensation, Net of Forfeitures 2.6   (8.3)   $ 10.9    
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition 2.3   2.3        
Treasury Stock, Shares, Acquired         400,000    
Treasury Stock, Value, Acquired, Cost Method (15.2)       $ (15.2)    
Dividends, Common Stock (13.0)   (0.2) (13.2)     0.0
Balance at Dec. 31, 2017 768.5   344.1 512.0 $ (28.7) (74.5) 15.6
Balance, shares at Dec. 31, 2017   63,900,000     800,000    
Balance at Sep. 30, 2018 744.1   351.4 531.0 $ (67.1) (84.2) 13.0
Balance, shares at Sep. 30, 2018   63,900,000     1,600,000    
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Other Comprehensive Income (Loss), Net of Tax (9.9)         (10.1) 0.2
Consolidated net income 29.0     28.3     0.7
Common stock, shares issued   0     (200,000)    
Stock Granted, Value, Share-based Compensation, Net of Forfeitures (3.8)   (11.7)   $ 7.9    
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition 1.9   1.9        
Adjustment to retained earnings due to adoption of ASC606 0.2     0.2      
Treasury Stock, Shares, Acquired         0    
Treasury Stock, Value, Acquired, Cost Method 0.0       $ 0.0    
Dividends, Common Stock (14.1)   (0.1) (13.2)     (1.0)
Balance at Dec. 31, 2018 $ 747.4   $ 341.7 $ 546.3 $ (59.2) $ (94.3) $ 12.9
Balance, shares at Dec. 31, 2018   63,900,000     1,400,000    
v3.10.0.1
Background and Basis of Presentation
3 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Background and Basis of Presentation
Background and Basis of Presentation
 
Hillenbrand, Inc. (“Hillenbrand”) is a global diversified industrial company with multiple leading brands that serve a wide variety of industries around the world.  We strive to provide superior return for our shareholders, exceptional value for our customers, great professional opportunities for our employees, and to be responsible to our communities through deployment of the Hillenbrand Operating Model (“HOM”). The HOM is a consistent and repeatable framework designed to produce sustainable and predictable results.  The HOM describes our mission, vision, values, and mindset as leaders; applies our management practices in Strategy Management, Segmentation, Lean, Talent Development, and Acquisitions; and prescribes three steps (Understand, Focus, and Grow) designed to make our businesses both bigger and better.  Our goal is to continue developing Hillenbrand as a world-class global diversified industrial company through the deployment of the HOM. Hillenbrand’s portfolio is composed of two business segments:  the Process Equipment Group and Batesville®.  The Process Equipment Group businesses design, develop, manufacture, and service highly engineered industrial equipment around the world.  Batesville is a recognized leader in the death care industry in North America.  “Hillenbrand,” “the Company,” “we,” “us,” “our,” and similar words refer to Hillenbrand and its subsidiaries unless context otherwise requires.
 
The accompanying unaudited consolidated financial statements include the accounts of Hillenbrand and its subsidiaries.  They also include two subsidiaries where the Company’s ownership percentage is less than 100%.  The Company’s fiscal year ends on September 30.  Unless otherwise stated, references to years relate to fiscal years.
 
These unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements and therefore do not include all information required in accordance with accounting principles generally accepted in the United States (“GAAP”).  The unaudited consolidated financial statements have been prepared on the same basis as, and should be read in conjunction with, the audited consolidated financial statements and notes thereto included in our latest Annual Report on Form 10-K for the year ended September 30, 2018, as filed with the SEC.  The September 30, 2018 Consolidated Balance Sheet included in this Form 10-Q was derived from audited consolidated financial statements, but does not include all disclosures required by GAAP for a year-end balance sheet included in Form 10-K.  In the opinion of management, these financial statements reflect all adjustments necessary to present a fair statement of the Company’s consolidated financial position and the consolidated results of operations and cash flow as of the dates and for the periods presented.
 
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period.  Actual results could differ from those estimates.  Examples of such estimates include, but are not limited to, revenue recognition under the percentage-of-completion method and the establishment of reserves related to customer rebates, doubtful accounts, warranties, early-pay discounts, inventories, income taxes, litigation, self-insurance, and progress toward achievement of performance criteria under incentive compensation programs.
v3.10.0.1
Summary of Significant Accounting Policies
3 Months Ended
Dec. 31, 2018
Accounting Policies [Abstract]  
Revenue recognition
Summary of Significant Accounting Policies
 
The significant accounting policies used in preparing these consolidated financial statements are consistent with the accounting policies described in our Annual Report on Form 10-K for 2018, except as described below.

Recently Adopted Accounting Standards

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2017-12 intends to better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components, and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. In addition, this ASU makes certain targeted improvements to simplify the application of hedge accounting guidance. ASU 2017-12 was early adopted for our fiscal year beginning on October 1, 2018 on a prospective basis. The adoption of this standard did not have a significant impact on our consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 became effective and was adopted for our fiscal year beginning on October 1, 2018. The adoption of ASU 2016-18 had a financial statement presentation and disclosure impact only.

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

In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. ASU 2017-07 states that an employer must report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period and present the other components of net benefit cost (as defined in paragraphs 715-30-35-4 and 715-60-35-9) in the income statement separately from the service cost component and outside a subtotal of income from operations (if one is presented). In addition, ASU 2017-07 limits the capitalization of compensation costs to the service cost component only (if capitalization is appropriate). ASU 2017-07 became effective and was adopted for our fiscal year beginning on October 1, 2018. The adoption of this standard resulted in the reclassification of $0.1 credit from Cost of goods sold and $0.1 from Operating expenses to Other (expense) income, net, on the Consolidated Statements of Income for the quarter ended December 31, 2017.

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09 clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications (in accordance with Topic 718). The new guidance will provide relief to entities that make non-substantive changes to share-based payment awards. ASU 2017-09 became effective and was adopted for our fiscal year beginning on October 1, 2018. The adoption of ASU 2017-09 did not have a significant impact on our consolidated financial statements.

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

The primary changes from the adoption of ASC 606 resulted from certain performance obligations that were previously recognized at a point in time that are now recognized over time. The cumulative effect of the changes made to the Consolidated Balance Sheet as of October 1, 2018 for the adoption of ASC 606 was as follows:
 
Balance at September 30, 2018
 
Adjustments due to ASC 606
 
Balance at October 1, 2018
Assets
 
 
 
 
 
Receivables from long-term manufacturing contracts
$
120.3

 
$
1.9

 
$
122.2

Inventories
172.5

 
(1.6
)
 
$
170.9

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Deferred income taxes
76.4

 
0.1

 
76.5

 
 
 
 
 
 
Shareholders’ Equity
 
 
 
 
 
Retained earnings
531.0

 
0.2

 
531.2


The following tables summarize the impacts of adopting ASC 606 on the Company’s consolidated financial statements for the quarter ended December 31, 2018.

Consolidated Statement of Income:
 
Three Months Ended December 31, 2018
 
As Reported
 
Adjustments Due to ASC 606
 
Balances without Adoption
Net revenue
$
410.3

 
$
(1.0
)
 
$
409.3

Cost of goods sold
263.3

 
(0.9
)
 
262.4

Gross profit
147.0

 
(0.1
)
 
146.9

Operating expenses
90.7

 

 
90.7

Income before income taxes
43.5

 
(0.1
)
 
43.4

Income tax expense
14.5

 

 
14.5

Consolidated net income
$
29.0

 
$
(0.1
)
 
$
28.9


Consolidated Balance Sheet:
 
December 31, 2018
 
As Reported
 
Adjustments Due to ASC 606
 
Balances without Adoption
Assets
 
 
 
 


Receivables from long-term manufacturing contracts
$
134.2

 
$
(2.0
)
 
$
132.2

Inventories
182.3

 
1.9

 
184.2

 
 
 
 
 
 
Shareholder’s Equity
 
 
 
 
 
Retained earnings
$
546.3

 
$
(0.1
)
 
$
546.2


The Company has elected the following as a result of adopting the new standard on revenue recognition:

Hillenbrand elected not to adjust the promised amount of consideration for the effects of the time value of money for contracts in which the anticipated period between when Hillenbrand transfers the goods or services to the customer and when the customer pays is equal to one year or less.

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

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

Recently Issued Accounting Standards
 
In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 requires lessees to recognize a right of use asset and related lease liability for leases that have terms of more than twelve months. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance, with the classifications based on criteria that are similar to those applied under the current lease guidance, without the explicit bright lines. ASU 2016-02 will be effective for our fiscal year beginning on October 1, 2019, with early adoption permitted. We are currently evaluating the impact that ASU 2016-02 will have on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Statements. ASU 2016-13 replaces the current incurred loss impairment model with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. ASU 2016-13 will be effective for our fiscal year beginning on October 1, 2020, with early adoption permitted for our fiscal year beginning October 1, 2019. We are currently evaluating the impact that ASU 2016-13 will have on our consolidated financial statements.
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block]
Beginning in 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASC 606”), plus a number of related ASUs designed to clarify and interpret ASC 606. The new standard requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard supersedes U.S. GAAP guidance on
revenue recognition and requires the use of more estimates than the previously effective standards. It also requires significant
disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows
arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers,
significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The new standard became effective for our fiscal year beginning on October 1, 2018 and was adopted on a modified retrospective basis. The Company elected the practical expedient and only evaluated contracts for which substantially all revenue had not been recognized under ASC Topic 605, with the cumulative effect of the new guidance recorded as of the date of initial application.

The primary changes from the adoption of ASC 606 resulted from certain performance obligations that were previously recognized at a point in time that are now recognized over time. The cumulative effect of the changes made to the Consolidated Balance Sheet as of October 1, 2018 for the adoption of ASC 606 was as follows:
 
Balance at September 30, 2018
 
Adjustments due to ASC 606
 
Balance at October 1, 2018
Assets
 
 
 
 
 
Receivables from long-term manufacturing contracts
$
120.3

 
$
1.9

 
$
122.2

Inventories
172.5

 
(1.6
)
 
$
170.9

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Deferred income taxes
76.4

 
0.1

 
76.5

 
 
 
 
 
 
Shareholders’ Equity
 
 
 
 
 
Retained earnings
531.0

 
0.2

 
531.2


The following tables summarize the impacts of adopting ASC 606 on the Company’s consolidated financial statements for the quarter ended December 31, 2018.

Consolidated Statement of Income:
 
Three Months Ended December 31, 2018
 
As Reported
 
Adjustments Due to ASC 606
 
Balances without Adoption
Net revenue
$
410.3

 
$
(1.0
)
 
$
409.3

Cost of goods sold
263.3

 
(0.9
)
 
262.4

Gross profit
147.0

 
(0.1
)
 
146.9

Operating expenses
90.7

 

 
90.7

Income before income taxes
43.5

 
(0.1
)
 
43.4

Income tax expense
14.5

 

 
14.5

Consolidated net income
$
29.0

 
$
(0.1
)
 
$
28.9


Consolidated Balance Sheet:
 
December 31, 2018
 
As Reported
 
Adjustments Due to ASC 606
 
Balances without Adoption
Assets
 
 
 
 


Receivables from long-term manufacturing contracts
$
134.2

 
$
(2.0
)
 
$
132.2

Inventories
182.3

 
1.9

 
184.2

 
 
 
 
 
 
Shareholder’s Equity
 
 
 
 
 
Retained earnings
$
546.3

 
$
(0.1
)
 
$
546.2


The Company has elected the following as a result of adopting the new standard on revenue recognition:

Hillenbrand elected not to adjust the promised amount of consideration for the effects of the time value of money for contracts in which the anticipated period between when Hillenbrand transfers the goods or services to the customer and when the customer pays is equal to one year or less.

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

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

v3.10.0.1
Supplemental Balance Sheet Information
3 Months Ended
Dec. 31, 2018
Balance Sheet Related Disclosures [Abstract]  
Supplemental Balance Sheet Information
Supplemental Balance Sheet Information
 
 
December 31,
2018
 
September 30,
2018
Trade accounts receivable reserves
$
21.0

 
$
22.2

 
 
 
 
Accumulated depreciation on property, plant, and equipment
$
308.2

 
$
303.8

 
 
 
 
Inventories:
 

 
 

Raw materials and components
$
71.5

 
$
68.3

Work in process
47.1

 
44.7

Finished goods
63.7

 
59.5

Total inventories
$
182.3

 
$
172.5

v3.10.0.1
Intangible Assets and Goodwill (Notes)
3 Months Ended
Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Disclosure [Text Block]
Intangible Assets and Goodwill

Intangible Assets

The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of December 31, 2018 and September 30, 2018.
 

 
December 31, 2018
 
September 30, 2018
 
Cost
 
Accumulated
Amortization
 
Cost
 
Accumulated
Amortization
Finite-lived assets:
 

 
 

 
 

 
 

Trade names
$
0.2

 
$
(0.2
)
 
$
0.2

 
$
(0.2
)
Customer relationships
473.1

 
(153.9
)
 
464.5

 
(148.4
)
Technology, including patents
79.1

 
(46.4
)
 
79.6

 
(45.1
)
Software
58.2

 
(49.7
)
 
58.0

 
(48.9
)
Other
2.5

 
(0.5
)
 
0.2

 
(0.2
)
 
613.1

 
(250.7
)
 
602.5

 
(242.8
)
Indefinite-lived assets:
 

 
 

 
 

 
 

Trade names
128.2

 

 
127.6

 

 
 
 
 
 
 
 
 
Total
$
741.3

 
$
(250.7
)
 
$
730.1

 
$
(242.8
)


The net change in intangible assets during the three months ended December 31, 2018 was driven primarily by the acquisition of BM&M in November 2018, which included intangible assets of approximately $14, normal amortization, and foreign currency adjustments. See Note 4 for further detail on the acquisition of BM&M.

Goodwill

Goodwill is not amortized, but is subject to annual impairment tests.  Goodwill has been assigned to reporting units.  We assess the carrying value of goodwill annually, or more often if events or changes in circumstances indicate there may be impairment.  Impairment testing is performed at a reporting unit level.

 
Process
Equipment
Group
 
Batesville
 
Total
Balance September 30, 2018
$
573.6

 
$
8.3

 
$
581.9

Acquisition
8.8

 

 
8.8

Foreign currency adjustments
(3.4
)
 

 
(3.4
)
Balance December 31, 2018
$
579.0

 
$
8.3

 
$
587.3

v3.10.0.1
Financing Agreements
3 Months Ended
Dec. 31, 2018
Debt Disclosure [Abstract]  
Financing Agreements
Financing Agreements
 
December 31,
2018
 
September 30,
2018
$900 revolving credit facility (excluding outstanding letters of credit)
$
115.8

 
$
95.7

$150 senior unsecured notes, net of discount (1)
149.4

 
149.3

$100 Series A Notes (2)
99.6

 
99.6

Total debt
364.8

 
344.6

Less: current portion

 

Total long-term debt
$
364.8

 
$
344.6

 
 
 
 
(1) Includes debt issuance costs of $0.3 and $0.4 at December 31, 2018 and September 30, 2018.
(2) Includes debt issuance costs of $0.4 and $0.4 at December 31, 2018 and September 30, 2018.


With respect to the revolving credit facility, as of December 31, 2018, we had $7.2 in outstanding letters of credit issued and $777.0 of maximum borrowing capacity. $757.0 of this borrowing capacity was immediately available based on our leverage covenant at December 31, 2018, with additional amounts available in the event of a qualifying acquisition. The weighted-average interest rates on borrowings under the Facility were 2.37% for the three months ended December 31, 2018, and 1.44% for the same period in the prior year. The weighted average facility fee was 0.11% for the three months ended December 31, 2018, and 0.21% for the same period in the prior year. We have employed derivative instruments to hedge the interest rate associated with $150.0 of ten-year, fixed-rate financing we expect to issue in the future. These derivative instruments terminate in December 2020, if not settled earlier in connection with the underlying future financing.
 
In the normal course of business, the Process Equipment Group provides to certain customers bank guarantees and other credit arrangements in support of performance, warranty, advance payment, and other contractual obligations. This form of trade finance is customary in the industry and, as a result, we maintain adequate capacity to provide the guarantees. As of December 31, 2018, we had credit arrangements totaling $293.8, under which $226.4 was utilized, for this purpose. These arrangements include our €150.0 Syndicated Letter of Guarantee Facility (as amended, the “LG Facility”) and other ancillary credit facilities.

The Facility, the LG Facility, and the Private Shelf Agreement, dated as of December 6, 2012, among the Company, Prudential Investment Management, Inc. and each Prudential Affiliate (as amended, the “Shelf Agreement”) (as defined therein), require us to meet certain conditions including compliance with covenants, absence of default, and continued accuracy of certain representations and warranties. Financial covenants include a maximum ratio of Indebtedness to EBITDA (as defined in the agreements, “Leverage Ratio”) of 3.5 to 1.0 including the application of cash as a reduction of Indebtedness (subject to certain limitations); a maximum Leverage Ratio resulting from an acquisition in excess of $75.0 of 4.0 to 1.0 for a period of three consecutive quarters following such acquisition; and a minimum ratio of EBITDA (as defined in the agreements) to interest expense of 3.0 to 1.0. As of December 31, 2018, we were in compliance with all covenants.

The Facility, senior unsecured notes, 4.60% Series A unsecured notes issued under the Shelf Agreement (“Series A Notes”), and LG Facility are fully and unconditionally, and jointly and severally, guaranteed by certain of the Company’s domestic subsidiaries.
v3.10.0.1
Retirement Benefits
3 Months Ended
Dec. 31, 2018
Defined Benefit Plan [Abstract]  
Retirement Benefits
Retirement Benefits
 
Defined Benefit Plans
 
 
U.S. Pension Benefits
 
Non-U.S. Pension Benefits
 
Three Months Ended December 31,
 
Three Months Ended December 31,
 
2018
 
2017
 
2018
 
2017
Service costs
$
0.6

 
$
0.7

 
$
0.3

 
$
0.6

Interest costs
2.6

 
2.2

 
0.3

 
0.3

Expected return on plan assets
(3.3
)
 
(3.5
)
 
(0.1
)
 
(0.2
)
Amortization of unrecognized prior service costs, net

 

 

 

Amortization of net loss
0.2

 
0.8

 
0.2

 
0.2

Net pension costs
$
0.1

 
$
0.2

 
$
0.7

 
$
0.9

 
Postretirement Healthcare Plans — Net postretirement healthcare costs were not significant for the three months ended December 31, 2018 and 2017.

Defined Contribution Plans — Expenses related to our defined contribution plans were $2.8 and $2.7 for the three months ended December 31, 2018 and 2017.
v3.10.0.1
Income Taxes
3 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
 
The effective tax rates for the three months ended December 31, 2018 and 2017 were 33.3% and 55.4%. The decrease in the effective tax rate during the three months ended December 31, 2018 was primarily due the impact of the 2017 Tax Cuts and Jobs Act (“Tax Act”), partially offset by an increase in reserve for uncertain tax positions. The Tax Act was enacted on December 22, 2017. The majority of the provisions of the Tax Act were to be effective for tax years beginning after December 31, 2017 (which corresponds to Hillenbrand’s fiscal year ended September 30, 2019). As a non-calendar year end company, certain of the provisions of the Tax Act were effective for us for the fiscal year ended September 30, 2018, while others became effective for our fiscal year ended September 30, 2019. The Tax Act reduced the federal corporate tax rate from 35% to 21%, which became effective on January 1, 2018. The Internal Revenue Code provides that our fiscal year ended September 30, 2018 had a blended U.S. corporate tax rate of 24.5%, which is based on a proration of the applicable tax rates before and after effective date of the Tax Act. The statutory tax rate of 21% applies to fiscal year ending September 30, 2019 and future years. Shortly after the Tax Act was enacted, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which provides guidance on accounting for the Tax Act’s impact. SAB 118 provides a measurement period, which in no case should extend beyond one year from the Tax Act enactment date, during which a company acting in good faith may complete the accounting for the impacts of the Tax Act under Accounting Standards Codification Topic 740 (“ASC 740”). Per SAB 118, the Company must reflect the income tax effects of the Tax Act in the reporting period in which the accounting under ASC 740 is complete.

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

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

Furthermore, Hillenbrand is subject to a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries (the “Transition Tax”) as enacted pursuant to the Tax Act. This Transition Tax was imposed on the deferred accumulated earnings of foreign subsidiaries at an effective rate of 15.5% of foreign earnings attributable to cash and cash equivalents, and 8% of the residual foreign earnings. During the fiscal year ended September 30, 2018, we recorded a provisional net expense for the Transition Tax of $24.6. During the quarter ended December 31, 2018, we completed our determination of the effect of the Transition Tax and, pursuant to SAB 118, we recognized a $0.5 increase to the Transition Tax liability, resulting in a Transition Tax liability of $25.1. Hillenbrand elected to pay the Transition Tax over eight years and made the first installment payment of $2.0 during the quarter ended December 31, 2018. The remaining Transition Tax liability is included in other current liabilities ($2.0) and other long-term liabilities ($21.1) in the Consolidated Balance Sheet at December 31, 2018.

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

As noted above, the enactment dates for many of the provisions within the Tax Act were for tax years beginning after December 31, 2017, and as a result, certain provisions were not effective until our current fiscal year ending September 30, 2019. These provisions have been incorporated into the current period tax provision, and include recognizing global intangible low-taxed income and foreign derived intangible income, eliminating U.S. federal income taxes on dividends from foreign subsidiaries, eliminating the domestic production activity deduction, limiting the amount of deductible interest expense, limiting the use of foreign tax credits to reduce the U.S. income tax liability, and limiting the deduction of executive compensation, as well as other provisions.
v3.10.0.1
Earnings Per Share
3 Months Ended
Dec. 31, 2018
Earnings Per Share [Abstract]  
Earnings Per Share

The dilutive effects of performance-based stock awards were included in the computation of diluted earnings per share at the level the related performance criteria were met through the respective balance sheet date.  At December 31, 2018 and 2017, potential dilutive effects, representing approximately 400,000 shares at each period, were excluded from the computation of diluted earnings per share as the related performance criteria were not yet met, although we expect to meet various levels of criteria in the future.

 
Three Months Ended
December 31,
 
2018
 
2017
Net income(1)
$
28.3

 
$
18.1

Weighted average shares outstanding (basic - in millions)
62.9

 
63.6

Effect of dilutive stock options and other unvested equity awards (in millions)
0.6

 
0.5

Weighted average shares outstanding (diluted - in millions)
63.5

 
64.1

 
 
 
 
Basic earnings per share
$
0.45

 
$
0.28

Diluted earnings per share
$
0.45

 
$
0.28

 
 
 
 
Shares with anti-dilutive effect excluded from the computation of diluted earnings per share (in millions)
0.7

 
0.2

 
(1) Net income attributable to Hillenbrand
v3.10.0.1
Other Comprehensive Income (Loss)
3 Months Ended
Dec. 31, 2018
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Schedule of reclassifications of AOCI
Other Comprehensive Income (Loss)
 
Pension and
Postretirement
 
Currency
Translation
 
Net
Unrealized
Gain (Loss)
on Derivative
Instruments
 
Total
Attributable
to
Hillenbrand,
Inc.
 
Noncontrolling
Interests
 
Total
Balance at September 30, 2017
$
(45.3
)
 
$
(36.9
)
 
$
1.0

 
$
(81.2
)
 
 

 
 

Other comprehensive income before reclassifications
 

 
 

 
 

 
 

 
 

 
 

Before tax amount

 
6.2

 
0.2

 
6.4

 
$
0.1

 
$
6.5

Tax expense

 

 
(0.1
)
 
(0.1
)
 

 
(0.1
)
After tax amount

 
6.2

 
0.1

 
6.3

 
0.1

 
6.4

Amounts reclassified from accumulated other comprehensive income(1)
0.7

 

 
(0.3
)
 
0.4

 

 
0.4

Net current period other comprehensive income (loss)
0.7

 
6.2

 
(0.2
)
 
6.7

 
$
0.1

 
$
6.8

Balance at December 31, 2017
$
(44.6
)
 
$
(30.7
)
 
$
0.8

 
$
(74.5
)
 
 

 
 

 (1)  Amounts are net of tax.
 
Pension and
Postretirement
 
Currency
Translation
 
Net
Unrealized
Gain (Loss)
on Derivative
Instruments
 
Total
Attributable
to
Hillenbrand,
Inc.
 
Noncontrolling
Interests
 
Total
Balance at September 30, 2018
$
(41.0
)
 
$
(44.1
)
 
$
0.9

 
$
(84.2
)
 
 

 
 

Other comprehensive income before reclassifications
 

 
 

 
 

 
 

 
 

 
 

Before tax amount

 
(5.1
)
 
(6.8
)
 
(11.9
)
 
$
0.2

 
$
(11.7
)
Tax expense

 

 
1.6

 
1.6

 

 
1.6

After tax amount

 
(5.1
)
 
(5.2
)
 
(10.3
)
 
0.2

 
(10.1
)
Amounts reclassified from accumulated other comprehensive income(1)
0.2

 

 

 
0.2

 

 
0.2

Net current period other comprehensive income (loss)
0.2

 
(5.1
)
 
(5.2
)
 
(10.1
)
 
$
0.2

 
$
(9.9
)
Balance at December 31, 2018
$
(40.8
)
 
$
(49.2
)
 
$
(4.3
)
 
$
(94.3
)
 
 

 
 

(1)  Amounts are net of tax.
 
Reclassifications out of Accumulated Other Comprehensive Income include: 
 
Three Months Ended December 31, 2017
 
Amortization of Pension and
Postretirement (1)
 
(Gain)/Loss on
 
 
 
Net Loss
Recognized
 
Prior Service Costs
Recognized
 
Derivative
Instruments
 
Total
Affected Line in the Consolidated Statement of Operations:
 

 
 

 
 

 
 

Net revenue
$

 
$

 
$
(0.4
)
 
$
(0.4
)
Cost of goods sold

 

 

 

Operating expenses

 

 

 

Other income (expense), net
1.1

 

 

 
1.1

Total before tax
$
1.1

 
$

 
$
(0.4
)
 
$
0.7

Tax expense
 

 
 

 
 

 
(0.3
)
Total reclassifications for the period, net of tax
 

 
 

 
 

 
$
0.4



 
Three Months Ended December 31, 2018
 
Amortization of Pension and
Postretirement (1)
 
(Gain)/Loss on
 
 
 
Net Loss
Recognized
 
Prior Service Costs
Recognized
 
Derivative
Instruments
 
Total
Affected Line in the Consolidated Statement of Operations:
 

 
 

 
 

 
 

Net revenue
$

 
$

 
$
0.1

 
$
0.1

Cost of goods sold

 

 
(0.1
)
 
(0.1
)
Operating expenses

 

 

 

Other income (expense), net
0.3

 

 

 
0.3

Total before tax
$
0.3

 
$

 
$

 
$
0.3

Tax expense
 
 
 
 
 
 
(0.1
)
Total reclassifications for the period, net of tax
 
 
 
 
 
 
$
0.2


(1) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 8).
Reclassifications out of Accumulated Other Comprehensive Income include: 
 
Three Months Ended December 31, 2017
 
Amortization of Pension and
Postretirement (1)
 
(Gain)/Loss on
 
 
 
Net Loss
Recognized
 
Prior Service Costs
Recognized
 
Derivative
Instruments
 
Total
Affected Line in the Consolidated Statement of Operations:
 

 
 

 
 

 
 

Net revenue
$

 
$

 
$
(0.4
)
 
$
(0.4
)
Cost of goods sold

 

 

 

Operating expenses

 

 

 

Other income (expense), net
1.1

 

 

 
1.1

Total before tax
$
1.1

 
$

 
$
(0.4
)
 
$
0.7

Tax expense
 

 
 

 
 

 
(0.3
)
Total reclassifications for the period, net of tax
 

 
 

 
 

 
$
0.4



 
Three Months Ended December 31, 2018
 
Amortization of Pension and
Postretirement (1)
 
(Gain)/Loss on
 
 
 
Net Loss
Recognized
 
Prior Service Costs
Recognized
 
Derivative
Instruments
 
Total
Affected Line in the Consolidated Statement of Operations:
 

 
 

 
 

 
 

Net revenue
$

 
$

 
$
0.1

 
$
0.1

Cost of goods sold

 

 
(0.1
)
 
(0.1
)
Operating expenses

 

 

 

Other income (expense), net
0.3

 

 

 
0.3

Total before tax
$
0.3

 
$

 
$

 
$
0.3

Tax expense
 
 
 
 
 
 
(0.1
)
Total reclassifications for the period, net of tax
 
 
 
 
 
 
$
0.2


(1) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 8).
v3.10.0.1
Share-Based Compensation
3 Months Ended
Dec. 31, 2018
Compensation Related Costs [Abstract]  
Share-Based Compensation
Share-Based Compensation
 
 
Three Months Ended
December 31,
 
2018
 
2017
Share-based compensation costs
$
1.9

 
$
2.3

Less impact of income tax benefit
0.4

 
0.6

Share-based compensation costs, net of tax
$
1.5

 
$
1.7


 
We have share-based compensation with long-term performance-based metrics that are contingent upon our relative total shareholder return and the creation of shareholder value. Relative total shareholder return is determined by comparing our total shareholder return during a three-year period to the respective total shareholder returns of companies in a designated performance peer group. Creation of shareholder value is measured by the cumulative cash returns and final period net operating profit after tax compared to the established hurdle rate over a three-year period.  For the performance-based awards contingent upon the creation of shareholder value, compensation expense is adjusted each quarter based upon actual results to date and any changes to forecasted information on each of the separate grants. 
 
During the three months ended December 31, 2018, we made the following grants:
 
 
Number of
Units
Stock options
426,821

Time-based stock awards
23,058

Performance-based stock awards (maximum that can be earned)
330,446


 
Stock options granted during fiscal 2019 had a weighted-average exercise price of $41.32 and a weighted-average grant date fair value of $10.16.  Our time-based stock awards and performance-based stock awards granted during the first quarter of fiscal 2019 had weighted-average grant date fair values of $41.31 and $41.77.  Included in the performance-based stock awards granted during the first quarter of fiscal 2019 are 179,957 units whose payout level is based upon the Company’s relative total shareholder return over the three-year measurement period, as described above.  These units will be expensed on a straight-line basis over the measurement period and are not subsequently adjusted after the grant date.
 
v3.10.0.1
Other Income (Expense), Net
3 Months Ended
Dec. 31, 2018
Other Nonoperating Income (Expense) [Abstract]  
Other Income and Other Expense
Other Income (Expense), Net
 
Three Months Ended
December 31,
 
2018
 
2017
Equity in net income (loss) of affiliates
$
(0.1
)
 
$

Foreign currency exchange gain (loss), net
0.4

 
(0.3
)
Other, net
0.2

 
(0.1
)
Other income (expense), net
$
0.5

 
$
(0.4
)
v3.10.0.1
Commitments and Contingencies
3 Months Ended
Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
 
Like most companies, we are involved from time to time in claims, lawsuits, and government proceedings relating to our operations, including environmental, patent infringement, business practices, commercial transactions, product and general liability, workers’ compensation, auto liability, employment, and other matters.  The ultimate outcome of these matters cannot be predicted with certainty.  An estimated loss from these contingencies is recognized when we believe it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated; however, it is difficult to measure the actual loss that might be incurred related these matters.  If a loss is not considered probable and/or cannot be reasonably estimated, we are required to make a disclosure if there is at least a reasonable possibility that a significant loss may have been incurred.  Legal fees associated with claims and lawsuits are generally expensed as incurred.
 
Claims covered by insurance have in most instances deductibles and self-funded retentions up to $0.5 per occurrence or per claim, depending upon the type of coverage and policy period.  For auto, workers compensation, and general liability, outside insurance companies and third-party claims administrators generally assist in establishing individual claim reserves. An independent outside actuary provides estimates of ultimate projected losses, including incurred but not reported claims, which are used to establish reserves for losses.  For all other types of claims, reserves are established based upon advice from internal and external counsel and historical settlement information for claims when such amounts are considered probable of payment.
 
The recorded amounts represent our best estimate of the costs we will incur in relation to such exposures, but it is possible that actual costs will differ from those estimates.

Aldrees Litigation
 
In April 2016, Hamad M. Aldrees & Partners Holding Co. for Industry and Mining (Closed Joint Company) (“Aldrees”) filed a lawsuit against Company subsidiary Rotex Europe Limited (“Rotex”) in the High Court of Justice, Queen’s Bench Division, Technology and Construction Court in London, England (the “Aldrees Litigation”). The Aldrees Litigation arises as a result of an agreement made in 2010 for Rotex to supply, among other things, five mineral separating machines. Aldrees has alleged breach of contract and misrepresentation by Rotex and is seeking damages of approximately £38.5.
 
The Company is defending this matter vigorously.  The trial concluded in the third quarter of fiscal 2018. A final result has not been announced, but we expect such result in the coming months. The Company does not believe that the outcome of this lawsuit will have a material adverse effect on the Company’s financial statements. If Aldrees prevails at trial, however, the outcome could be materially adverse to the Company’s financial statements for the particular period, depending, in part, upon the operating results or cash flows for such period.
v3.10.0.1
Fair Value Measurements
3 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements
 
Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.  The authoritative guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.  Observable inputs are from sources independent of the Company.  Unobservable inputs reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability, developed based upon the best information available in the circumstances.  The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  The hierarchy is broken down into three levels:
 
Level 1:
Inputs are quoted prices in active markets for identical assets or liabilities.
Level 2:
Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly.
Level 3:
Inputs are unobservable for the asset or liability.
 
 
Carrying
 
 
 
 
 
 
 
Value at
December 31,
 
Fair Value at December 31, 2018
Using Inputs Considered as:
 
2018
 
Level 1
 
Level 2
 
Level 3
Assets:
 

 
 

 
 

 
 

Cash and cash equivalents
$
64.8

 
$
64.8

 
$

 
$

Investments in rabbi trust
4.6

 
4.6

 

 

Derivative instruments
1.5

 

 
1.5

 

 
 
 
 
 
 
 
 
Liabilities:
 

 
 

 
 

 
 

$150 senior unsecured notes
149.7

 
153.6

 

 

Revolving credit facility
115.8

 

 
115.8

 

$100 Series A Notes
100.0

 

 
100.8

 

Derivative instruments
7.5

 

 
7.5

 


 
The fair value of the amounts outstanding under the revolving credit facility approximated carrying value at December 31, 2018.  The fair values of the revolving credit facility and Series A Notes were estimated based on internally developed models, using current market interest rate data for similar issues, as there is no active market for our revolving credit facility or Series A Notes.

The fair values of the Company’s derivative instruments were based upon pricing models using inputs derived from third-party pricing services or observable market data such as currency spot and forward rates.  These values are periodically validated by comparing to third-party broker quotes.  The aggregate notional value of derivatives was $283.1 at December 31, 2018. The derivatives are included in Other current assets, Other current liabilities, and Other long-term liabilities on the Consolidated Balance Sheets.
v3.10.0.1
Segment and Geographical Information
3 Months Ended
Dec. 31, 2018
Segment Reporting [Abstract]  
Segment and Geographical Information
Segment and Geographical Information
 
 
Three Months Ended December 31,
 
2018
 
2017
Net revenue
 

 
 

Process Equipment Group
$
282.2

 
$
264.3

Batesville
128.1

 
132.9

Total
$
410.3

 
$
397.2

 
 
 
 
Adjusted EBITDA
 

 
 

Process Equipment Group
$
46.2

 
$
45.6

Batesville
26.7

 
27.9

Corporate
(8.8
)
 
(8.3
)
 
 
 
 
Net revenue (1)
 

 
 

United States
$
214.8

 
$
218.8

Germany
111.3

 
110.4

All other foreign business units
84.2

 
68.0

Total
$
410.3

 
$
397.2

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


 
December 31,
2018
 
September 30,
2018
Total assets assigned
 

 
 

Process Equipment Group
$
1,649.5

 
$
1,638.8

Batesville
187.8

 
191.8

Corporate
32.9

 
34.0

Total
$
1,870.2

 
$
1,864.6

 
 
 
 
Tangible long-lived assets, net
 

 
 

United States
$
75.5

 
$
76.6

Germany
39.7

 
40.7

All other foreign business units
25.0

 
24.7

Total
$
140.2

 
$
142.0



The following schedule reconciles segment adjusted EBITDA to consolidated net income.
 
 
Three Months Ended
December 31,