10-Q

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o



	Three Months Ended March 31,						Six Months Ended March 31,
	2016			2015			2016			2015
Net revenue	$	387.0		$	404.6		$	738.7		$	806.1
Cost of goods sold	244.3			256.0			467.8			519.1
Gross profit	142.7			148.6			270.9			287.0
Operating expenses	87.3			84.4			169.4			167.9
Amortization expense	8.6			7.3			18.4			15.0
Interest expense	6.4			6.4			12.3			12.1
Other income (expense), net	(0.9		)	(5.0		)	(1.6		)	(5.0		)
Income before income taxes	39.5			45.5			69.2			87.0
Income tax expense	12.3			14.3			21.0			26.1
Consolidated net income	27.2			31.2			48.2			60.9
Less: Net income attributable to noncontrolling interests	1.1			0.5			2.1			0.7
Net income(1)	$	26.1		$	30.7		$	46.1		$	60.2

Net income(1) — per share of common stock:
Basic earnings per share	$	0.41		$	0.49		$	0.73		$	0.95
Diluted earnings per share	$	0.41		$	0.48		$	0.72		$	0.94
Weighted average shares outstanding (basic)	63.3			63.3			63.3			63.2
Weighted average shares outstanding (diluted)	63.8			63.9			63.8			63.8

Cash dividends declared per share	$	0.2025		$	0.2000		$	0.4050		$	0.4000



	Three Months Ended March 31,						Six Months Ended March 31,
	2016			2015			2016		2015
Consolidated net income	$	27.2		$	31.2		$	48.2	$	60.9
Changes in other comprehensive income (loss), net of tax
Currency translation adjustment	19.6			(36.5		)	4.4		(56.6		)
Pension and postretirement (net of quarter-to-date tax of $0.8 and $ — and year-to-date tax of $1.2 and $0.5)	(0.2		)	1.0			0.5		1.8
Change in net unrealized gain (loss) on derivative instruments (net of quarter-to-date tax of ($1.1) and $1.4 and year-to-date tax of ($1.1) and $1.6)	0.4			(3.8		)	1.0		(4.3		)
Total changes in other comprehensive income (loss), net of tax	19.8			(39.3		)	5.9		(59.1		)
Consolidated comprehensive income	47.0			(8.1		)	54.1		1.8
Less: Comprehensive income attributable to noncontrolling interests	1.1			0.5			2.0		0.6
Comprehensive income (2)	$	45.9		$	(8.6	)	$	52.1	$	1.2



	March 31, 2016			September 30, 2015
ASSETS
Current Assets
Cash and cash equivalents	$	43.2		$	48.3
Trade receivables, net	196.0			187.9
Unbilled receivables from long-term manufacturing contracts	122.4			144.9
Inventories	162.1			153.6
Deferred income taxes	21.5			21.9
Prepaid expenses	24.2			23.8
Other current assets	18.0			23.7
Total current assets	587.4			604.1
Property, plant, and equipment, net	158.5			158.3
Intangible assets, net	563.9			459.6
Goodwill	642.6			544.0
Other assets	38.6			42.1
Total Assets	$	1,991.0		$	1,808.1

LIABILITIES
Current Liabilities
Trade accounts payable	$	105.6		$	104.3
Liabilities from long-term manufacturing contracts and advances	71.9			79.7
Current portion of long-term debt	12.0			9.4
Accrued compensation	49.5			62.3
Deferred income taxes	23.1			25.4
Other current liabilities	115.4			123.1
Total current liabilities	377.5			404.2
Long-term debt	700.0			518.7
Accrued pension and postretirement healthcare	218.8			218.7
Deferred income taxes	32.7			29.4
Other long-term liabilities	28.8			31.3
Total Liabilities	1,357.8			1,202.3

Commitments and contingencies

SHAREHOLDERS’ EQUITY
Common stock, no par value (63.7 and 63.6 shares issued, 63.0 and 62.9 shares outstanding)	—			—
Additional paid-in capital	351.3			350.9
Retained earnings	392.2			372.1
Treasury stock (0.7 and 0.7 shares)	(21.0		)	(21.0		)
Accumulated other comprehensive loss	(101.9		)	(107.9		)
Hillenbrand Shareholders’ Equity	620.6			594.1
Noncontrolling interests	12.6			11.7
Total Shareholders’ Equity	633.2			605.8

Total Liabilities and Equity	$	1,991.0		$	1,808.1



	Six Months Ended March 31,
	2016			2015
Operating Activities
Consolidated net income	$	48.2		$	60.9
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	31.9			28.4
Deferred income taxes	(0.8		)	4.2
Share-based compensation	3.7			6.3
Net loss on investments	0.5			1.4
Trade accounts receivable and receivables on long-term manufacturing contracts	30.1			5.6
Inventories	5.0			(16.8		)
Prepaid expenses and other current assets	6.2			1.2
Trade accounts payable	(1.8		)	(60.7		)
Accrued expenses and other current liabilities	(27.8		)	(19.2		)
Income taxes payable	(4.5		)	3.6
Defined benefit plan and postretirement funding	(5.9		)	(5.2		)
Defined benefit plan and postretirement expense	6.1			7.3
Other, net	(3.7		)	(6.8		)
Net cash provided by operating activities	87.2			10.2

Investing Activities
Capital expenditures	(9.1		)	(11.9		)
Proceeds from sales of property, plant, and equipment	0.9			0.5
Acquisition of business, net of cash acquired	(237.0		)	—
Other, net	—			(1.1		)
Net cash used in investing activities	(245.2		)	(12.5		)

Financing Activities
Repayments on term loan	(4.5		)	(4.5		)
Proceeds from revolving credit facilities	387.5			254.4
Repayments on revolving credit facilities	(199.1		)	(332.0		)
Proceeds from Series A Notes, net of financing costs	—			99.6
Payments of dividends on common stock	(25.4		)	(25.2		)
Repurchases of common stock	(4.0		)	(9.2		)
Net (payments) proceeds on stock plans	(0.5		)	3.4
Other, net	0.5			1.2
Net cash provided by (used in) financing activities	154.5			(12.3		)

Effect of exchange rates on cash and cash equivalents	(1.6		)	(0.4		)

Net cash flows	(5.1		)	(15.0		)

Cash and cash equivalents:
At beginning of period	48.3			58.0
At end of period	$	43.2		$	43.0

Hillenbrand, Inc. (“Hillenbrand”) is a global diversified industrial company that makes and sells premium business-to-business products and services for a wide variety of industries. We strive to provide superior return for our shareholders, exceptional value for our customers, and great professional opportunities for our people through deployment of the Hillenbrand Operating Model (the “HOM”). The HOM is a consistent and repeatable framework designed to produce sustainable and predictable results. The HOM defines our mission, vision, values, and leader’s mindset; applies our management practices in Strategy Management, Segmentation, Lean, Talent Development, and Acquisitions; and prescribes three steps (Understand, Focus and Grow) to make our businesses both bigger and better. Our goal is to continue developing Hillenbrand as a world-class global diversified industrial company. Hillenbrand is composed of two 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 North American death care industry. “Hillenbrand,” “the Company,” “we,” “us,” “our,” and similar words refer to Hillenbrand and its subsidiaries.

The accompanying unaudited consolidated financial statements include the accounts of Hillenbrand and its subsidiaries. They also include two minor 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. Certain prior period amounts have been reclassified to conform to the fiscal 2016 presentation.

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, 2015, as filed with the SEC. The September 30, 2015 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 certain assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expense during the period. Actual results could differ from those estimates. Examples of such estimates include, 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 the incentive compensation programs.

In April 2014, the FASB issued ASU 2014-8, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which includes amendments that change the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under ASU 2014-8, only disposals representing a strategic shift in operations should be presented as discontinued operations. ASU 2014-8 became effective and was adopted for our fiscal year beginning October 1, 2015. The adoption of this standard did not have a significant impact on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 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. ASU 2014-09 will be effective for our fiscal year beginning October 1, 2018, including interim periods within that reporting period, and allows for either full retrospective adoption or modified retrospective adoption, with early adoption permitted on October 1, 2017. We are currently evaluating the impact that ASU 2014-09 will have on our consolidated financial statements.

In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. ASU 2014-12 states that a performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition. ASU 2014-12 will be effective for our fiscal year beginning October 1, 2016, with early adoption permitted. We do not expect the adoption of ASU 2014-12 to have a material impact on our consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern. ASU 2014-15 provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. ASU 2014-15 will be effective for our fiscal year beginning October 1, 2016, with early adoption permitted. We do not expect the adoption of ASU 2014-15 to have a material impact on our consolidated financial statements.

In January 2015, the FASB issued ASU 2015-01, Income Statement—Extraordinary and Unusual Items. ASU 2015-01 eliminates from GAAP the concept of extraordinary items. ASU 2015-01 will be effective for our fiscal year beginning October 1, 2016, with early adoption permitted. We do not expect the adoption of ASU 2015-01 to have a material impact on our consolidated financial statements.

In February 2015, the FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis. The new standard amends the consolidation guidance in ASC 810 and significantly changes the consolidation analysis required under current generally accepted accounting principles. ASU 2015-02 will be effective for our fiscal year beginning October 1, 2016, with early adoption permitted. We are currently evaluating the impact that ASU 2015-02 will have on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest. ASU 2015-03 simplifies 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 ASU 2015-15, Interest - Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. This standard permits an entity to defer and present debt issuance costs related to line-of-credit arrangements as an asset and to subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. These new standards do not affect the recognition and measurement of debt issuance costs. ASU 2015-03 and ASU 2015-15 will be effective for our fiscal year beginning October 1, 2016, with early adoption permitted. We do not expect the adoption of ASU 2015-03 and ASU 2015-15 to have a material impact on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software. ASU 2015-05 helps entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement by providing guidance as to whether an arrangement includes the sale or license of software. ASU 2015-05 will be effective for our fiscal year beginning October 1, 2016, with early adoption permitted. We are currently evaluating the impact that ASU 2015-05 will have on our consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330). Under current FASB standards, an entity is required to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 requires an entity to measure inventory within the scope of this update at the lower of cost and net realizable value. Subsequent measurement is unchanged for inventory measured using last-in, first-out (LIFO) or the retail inventory method. ASU 2015-11 will be effective for our fiscal year beginning October 1, 2017, with early adoption permitted. We do not expect the adoption of ASU 2015-11 to have a material impact on our consolidated financial statements.

In September 2015, the FASB issued ASU 2015-16, Business Combinations. ASU 2015-16 simplifies the accounting for adjustments made to provisional amounts. The amendments in ASU 2015-16 require that the acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amount is determined. The acquirer is also required to record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. In addition, an entity is required to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 will be effective for our fiscal year beginning on October 1, 2016, with early adoption permitted. We are currently evaluating the impact that ASU 2015-16 will have on our consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes. ASU 2015-17 requires that deferred income tax liabilities and assets be classified as noncurrent in a classified statement of financial position in order to simplify the presentation of deferred income taxes. ASU 2015-17 will be effective for our fiscal year beginning on October 1, 2017, with early adoption permitted. We expect that ASU 2015-17 will have a financial statement presentation impact only, as all deferred income tax assets and liabilities will be classified as noncurrent on the consolidated balance sheet.

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 lease 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 March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging: Contingent Put and Call Options in Debt Instruments. ASU 2016-06 clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under the amendments is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. ASU 2016-06 will be effective for our fiscal year beginning on October 1, 2017, with early adoption permitted. We are currently evaluating the impact that ASU 2016-06 will have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 reduces complexity in the accounting for several aspects of share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification of certain share-based payment transactions on the statement of cash flows.

We completed the acquisition of Abel Pumps LP and Abel GmbH & Co. KG and certain of their affiliates (collectively “Abel”) on October 2, 2015 for €95 in cash. We utilized borrowings under our $700.0 revolving credit facility and $180.0 term loan (the “Facility”), to fund this acquisition. Based in Büchen, Germany, Abel is a globally-recognized leader in positive displacement pumps. Abel specializes in designing, developing, and manufacturing piston and piston diaphragm pumps as well as pumping solutions and in providing related parts and service. This equipment is sold under the ABEL^® Pump Technologybrand into the power generation, wastewater treatment, mining, general industry, and marine markets. The results of Abel are reported in our Process Equipment Group segment.

Based on the preliminary purchase allocation, we recorded goodwill of $36, and acquired identifiable intangible assets of $58 which consisted of $5 of trade names not subject to amortization, $9 of developed technology, $3 of backlog, and $41 of customer relationships. Goodwill is expected to be deductible for tax purposes in Germany. Supplemental proforma information has not been provided as the acquisition did not have a material impact on consolidated results of operations.

On February 1, 2016, we completed the acquisition of Red Valve Company, Inc. (“Red Valve”) for $131.9 in cash. We utilized borrowings under our Facility, to fund this acquisition. Based in Carnegie, Pennsylvania, Red Valve is a global leader in highly-engineered valves designed to operate in the harshest municipal and industrial wastewater environments. Its products support mission critical applications in water/wastewater, power and mining, and other general industrial markets. The results of Red Valve are reported in our Process Equipment Group segment.

Based on the preliminary purchase allocation, we recorded goodwill of $60, and acquired identifiable intangible assets of $61 which consisted of $4 of trade names not subject to amortization, $8 of developed technology, $1 of backlog, and $48 of customer relationships. Supplemental proforma information has not been provided as the acquisition did not have a material impact on consolidated results of operations.



	March 31, 2016		September 30, 2015
Trade accounts receivable reserves	$	21.6	$	20.0

Accumulated depreciation on property, plant, and equipment	$	303.0	$	295.2

Accumulated amortization on intangible assets	$	165.4	$	144.8

Inventories:
Raw materials and components	$	52.6	$	40.1
Work in process	60.8		63.9
Finished goods	48.7		49.6
Total inventories	$	162.1	$	153.6



	March 31, 2016		September 30, 2015
$700 revolving credit facility (excluding outstanding letters of credit)	$	295.6	$	107.6
$180 term loan	166.5		171.0
$150 senior unsecured notes, net of discount	149.2		149.1
$100 Series A Notes	100.0		100.0
Other	0.7		0.4
Total debt	712.0		528.1
Less: current portion	12.0		9.4
Total long-term debt	$	700.0	$	518.7

With respect to the Facility, as of March 31, 2016, we had $10.6 in outstanding letters of credit issued and $393.8 of maximum borrowing capacity. $282.6 of borrowing capacity is immediately available based on our leverage covenant at March 31, 2016, with additional amounts available in the event of a qualifying acquisition. The weighted-average interest rates on borrowings under the Facility were 1.46% and 1.35% for the three and six months ended March 31, 2016, and 1.30% and 1.29% for the same periods in the prior year. The weighted average facility fee was 0.21% and 0.19% for the three and six months ended March 31, 2016, and 0.23% and 0.24% for the same periods in the prior year. The weighted average interest rate on the Facility’s term loan was 1.76% and 1.61% for the three and six months ended March 31, 2016, and 1.55% and 1.54% for the same periods in the prior year. We have interest rate swaps on $50.0 outstanding under the Facility in order to manage exposure to our variable rate interest payments.

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 are required to maintain adequate capacity to provide the guarantees. As of March 31, 2016, we had credit arrangements totaling $219.9, under which $124.8 was utilized for this purpose. These arrangements included our €150.0 Syndicated Letter of Guarantee Facility (as amended, the “LG Facility”) and other ancillary credit facilities.

In March 2016, the Company entered into an amendment (the “Third Amendment”) to the Private Shelf Agreement, dated as of December 6, 2012 (as amended, the “Shelf Agreement”), among the Company, Prudential Investment Management (“PIM”) and each Prudential Affiliate (as defined thereunder), governing the 4.60% Series A unsecured notes (the “Series A Notes”). The Third Amendment extends the maturity date of the Shelf Agreement to March 24, 2019, and increases the aggregate principal amount available under the private shelf facility from $150.0 to $200.0, of which $100.0 has been drawn. The Shelf Agreement is an uncommitted facility; the issuance of notes under the facility is subject to successful placement by PIM.

The availability of borrowings under the Facility, the LG Facility, and the Shelf Agreement governing the Series A Notes, is subject to our ability 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) of 3.5 to 1.0 and a minimum ratio of EBITDA to interest expense of 3.5 to 1.0. As of March 31, 2016, we were in compliance with all covenants.



	U.S. Pension Benefits						Non-U.S. Pension Benefits
	Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2016			2015
Service costs	$	1.0		$	1.1		$	0.5		$	0.5
Interest costs	2.3			3.6			0.3			0.6
Expected return on plan assets	(2.4		)	(3.7		)	(0.2		)	(0.2		)
Amortization of unrecognized prior service costs, net	0.2			0.3			—			—
Amortization of net loss	0.9			1.4			0.2			—
Net pension costs	$	2.0		$	2.7		$	0.8		$	0.9

	U.S. Pension Benefits						Non-U.S. Pension Benefits
	Six Months Ended March 31,						Six Months Ended March 31,
	2016			2015			2016			2015
Service costs	$	2.0		$	2.2		$	1.1		$	0.9
Interest costs	4.7			7.2			0.9			1.4
Expected return on plan assets	(4.8		)	(7.2		)	(0.5		)	(0.5		)
Amortization of unrecognized prior service costs, net	0.3			0.5			—			—
Amortization of net loss	1.8			2.6			0.4			—
Net pension costs	$	4.0		$	5.3		$	1.9		$	1.8

The effective tax rates for the three months ended March 31, 2016 and 2015 were 31.1% and 31.4%. The decrease in the effective tax rate during the three months ended March 31, 2016 was primarily due to a favorable geographic mix of pre-tax income, partially offset by an increase in the reserve for unrecognized tax benefits. The effective tax rates for the six months ended March 31, 2016 and 2015 were 30.3% and 30.0%. The increase in the effective tax rate during the six months ended March 31, 2016 was primarily due to an increase in the reserve for unrecognized tax benefits, partially offset by a favorable geographic mix of pre-tax income.

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 March 31, 2016 and 2015, potential dilutive effects, representing approximately 800,000 and 1,400,000 shares, 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 March 31,				Six Months Ended March 31,
	2016		2015		2016		2015
Net income(1)	$	26.1	$	30.7	$	46.1	$	60.2
Weighted average shares outstanding (basic - in millions)	63.3		63.3		63.3		63.2
Effect of dilutive stock options and other unvested equity awards (in millions)	0.5		0.6		0.5		0.6
Weighted average shares outstanding (diluted - in millions)	63.8		63.9		63.8		63.8

Basic earnings per share	$	0.41	$	0.49	$	0.73	$	0.95
Diluted earnings per share	$	0.41	$	0.48	$	0.72	$	0.94

Shares with anti-dilutive effect excluded from the computation of diluted earnings per share (in millions)	1.3		0.7		0.7		0.7

During the six months ended March 31, 2016, we paid approximately $25.4 of cash dividends. We also repurchased approximately 145,000 shares of our common stock during the six months ended March 31, 2016, for a total cost of approximately $4.0. In connection with our share-based compensation plans discussed further in Note 11, we also issued approximately 241,000 shares of common stock, of which approximately 136,000 shares were treasury stock.



	Pension and Postretirement			Currency Translation			Net Unrealized Gain (Loss) on Derivative Instruments			Total Attributable to Hillenbrand, Inc.			Noncontrolling Interests			Total
Balance at September 30, 2014	$	(46.0	)	$	(4.9	)	$	(1.3	)	$	(52.2	)
Other comprehensive income before reclassifications
Before tax amount	—			(56.5		)	(8.5		)	(65.0		)	$	(0.1	)	$	(65.1	)
Tax expense	—			—			2.5			2.5			—			2.5
After tax amount	—			(56.5		)	(6.0		)	(62.5		)	(0.1		)	(62.6		)
Amounts reclassified from accumulated other comprehensive income(1)	1.8			—			1.7			3.5			—			3.5
Net current period other comprehensive income (loss)	1.8			(56.5		)	(4.3		)	(59.0		)	$	(0.1	)	$	(59.1	)
Balance at March 31, 2015	$	(44.2	)	$	(61.4	)	$	(5.6	)	$	(111.2	)



	Pension and Postretirement			Currency Translation			Net Unrealized Gain (Loss) on Derivative Instruments			Total Attributable to Hillenbrand, Inc.			Noncontrolling Interests			Total
Balance at September 30, 2015	$	(54.4	)	$	(52.1	)	$	(1.4	)	$	(107.9	)
Other comprehensive income before reclassifications
Before tax amount	—			4.5			1.3			5.8			$	(0.1	)	$	5.7
Tax expense	—			—			(0.6		)	(0.6		)	—			(0.6		)
After tax amount	—			4.5			0.7			5.2			(0.1		)	5.1
Amounts reclassified from accumulated other comprehensive income(1)	0.5			—			0.3			0.8			—			0.8
Net current period other comprehensive income (loss)	0.5			4.5			1.0			6.0			$	(0.1	)	$	5.9
Balance at March 31, 2016	$	(53.9	)	$	(47.6	)	$	(0.4	)	$	(101.9	)



	Three Months Ended March 31, 2015
	Amortization of Pension and Postretirement (1)				(Gain)/Loss on Derivative Instruments
	Net Loss Recognized		Prior Service Costs Recognized		(Gain)/Loss on Derivative Instruments		Total
Affected Line in the Consolidated Statement of Operations:
Net revenue	$	—	$	—	$	0.8	$	0.8
Cost of goods sold	0.8		0.2		0.1		1.1
Operating expenses	0.4		—		—		0.4
Other income (expense), net	—		—		0.8		0.8
Total before tax	$	1.2	$	0.2	$	1.7	$	3.1
Tax expense							(0.9		)
Total reclassifications for the period, net of tax							$	2.2



	Six Months Ended March 31, 2015
	Amortization of Pension and Postretirement (1)				(Gain)/Loss on Derivative Instruments
	Net Loss Recognized		Prior Service Costs Recognized		(Gain)/Loss on Derivative Instruments		Total
Affected Line in the Consolidated Statement of Operations:
Net revenue	$	—	$	—	$	1.3	$	1.3
Cost of goods sold	1.7		0.3		—		2.0
Operating expenses	0.7		0.1		—		0.8
Other income (expense), net	—		—		1.1		1.1
Total before tax	$	2.4	$	0.4	$	2.4	$	5.2
Tax expense							(1.7		)
Total reclassifications for the period, net of tax							$	3.5



	Three Months Ended March 31, 2016
	Amortization of Pension and Postretirement (1)				(Gain)/Loss on Derivative Instruments
	Net Loss Recognized		Prior Service Costs Recognized		(Gain)/Loss on Derivative Instruments			Total
Affected Line in the Consolidated Statement of Operations:
Net revenue	$	—	$	—	$	(0.2	)	$	(0.2	)
Cost of goods sold	0.6		—		—			0.6
Operating expenses	0.2		0.1		—			0.3
Other income (expense), net	—		—		(0.1		)	(0.1		)
Total before tax	$	0.8	$	0.1	$	(0.3	)	$	0.6
Tax expense								(1.1		)
Total reclassifications for the period, net of tax								$	(0.5	)



	Six Months Ended March 31, 2016
	Amortization of Pension and Postretirement (1)				(Gain)/Loss on Derivative Instruments
	Net Loss Recognized		Prior Service Costs Recognized		(Gain)/Loss on Derivative Instruments		Total
Affected Line in the Consolidated Statement of Operations:
Net revenue	$	—	$	—	$	0.3	$	0.3
Cost of goods sold	1.2		0.1		—		1.3
Operating expenses	0.4		0.1		—		0.5
Other income (expense), net	—		—		0.2		0.2
Total before tax	$	1.6	$	0.2	$	0.5	$	2.3
Tax expense							(1.5		)
Total reclassifications for the period, net of tax							$	0.8

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 as measured by the cumulative cash returns and final period net operating profit after tax compared to the performance-based targets for each grant 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.

Stock options granted during fiscal 2016 had a weighted-average exercise price of $31.11 and a weighted-average grant date fair value of $7.80. Our time-based stock awards and performance-based stock awards granted during fiscal 2016 had weighted-average grant date fair values of $30.54 and $33.03. Included in the performance-based stock awards granted during 2016 are 199,372 units whose payout level is based upon the Company’s total shareholder return as it relates to the performance of companies in its compensation peer group over a three-year measurement period. These units will be expensed on a straight-line basis over the measurement period and are not subsequently adjusted after the grant date.

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 to litigation. 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 other than employment and related matters have deductibles and self-funded retentions up to $0.5 per occurrence or per claim, depending upon the type of coverage and policy period. Outside insurance companies and third-party claims administrators assist in establishing individual claim reserves, and an independent outside actuary provides estimates of ultimate projected losses, including incurred but not reported claims, which are used to establish reserves for losses. Claim reserves for employment-related matters are established based upon advice from internal and external counsel and historical settlement information for claims and related fees when such amounts are considered probable of payment.

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 March 31, 2016
			Fair Value at March 31, 2016 Using Inputs Considered as:
			Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	43.2	$	43.2	$	—	$	—
Investments in rabbi trust	3.7		3.7		—		—
Derivative instruments	3.2		—		3.2		—

Liabilities:
$150 senior unsecured notes	149.2		162.0		—		—
Revolving credit facility	295.6		—		295.6		—
Term loan	166.5		—		166.5		—
$100 Series A Notes	100.0		—		107.0		—
Derivative instruments	5.0		—		5.0		—

The fair values of the Facility’s revolving credit facility and term loan approximated carrying value at March 31, 2016. The fair values of the Facility’s revolving credit facility, and term loan, and the Series A Notes are estimated based on the Facility’s internally developed models, using current market interest rate data for similar issues as there is no active market for our revolving credit facility, and term loan, or the Series A Notes.

The fair values of the Company’s derivative instruments are 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 the derivative instruments was $209.6 at March 31, 2016. The derivatives are included in other current assets and other current liabilities on the balance sheet.



	Three Months Ended March 31,						Six Months Ended March 31,
	2016			2015			2016			2015
Net revenue
Process Equipment Group	$	235.8		$	240.8		$	449.8		$	497.2
Batesville	151.2			163.8			288.9			308.9
Total	$	387.0		$	404.6		$	738.7		$	806.1

Adjusted EBITDA
Process Equipment Group	$	35.0		$	34.6		$	67.9		$	72.7
Batesville	43.0			44.0			74.9			76.6
Corporate	(10.2		)	(13.1		)	(17.2		)	(20.4		)

Net revenue (1)
United States	$	220.0		$	236.2		$	419.0		$	452.8
International	167.0			168.4			319.7			353.3
Total	$	387.0		$	404.6		$	738.7		$	806.1



	Three Months Ended March 31,						Six Months Ended March 31,
	2016			2015			2016			2015
Adjusted EBITDA:
Process Equipment Group	$	35.0		$	34.6		$	67.9		$	72.7
Batesville	43.0			44.0			74.9			76.6
Corporate	(10.2		)	(13.1		)	(17.2		)	(20.4		)
Less:
Interest income	(0.2		)	(0.4		)	(0.5		)	(0.7		)
Interest expense	6.4			6.4			12.3			12.1
Income tax expense	12.3			14.3			21.0			26.1
Depreciation and amortization	15.9			13.4			31.9			28.4
Business acquisition and integration	1.1			(0.1		)	2.8			0.2
Inventory step-up	1.1			—			2.5			—
Restructuring and restructuring related	4.0			0.7			7.4			1.4
Litigation	—			—			—			0.5
Consolidated net income	$	27.2		$	31.2		$	48.2		$	60.9

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



	Three Months Ended March 31, 2016														Three Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors		Eliminations			Consolidated			Parent			Guarantors			Non- Guarantors			Eliminations			Consolidated
Net revenue	$	—		$	217.8		$	218.3	$	(49.1	)	$	387.0		$	—		$	235.7		$	220.0		$	(51.1	)	$	404.6
Cost of goods sold	—			108.6			159.1		(23.4		)	244.3			—			119.2			162.2			(25.4		)	256.0
Gross profit	—			109.2			59.2		(25.7		)	142.7			—			116.5			57.8			(25.7		)	148.6
Operating expenses	7.7			63.7			41.6		(25.7		)	87.3			10.6			60.9			38.6			(25.7		)	84.4
Amortization expense	—			4.5			4.1		—			8.6			0.1			2.9			4.3			—			7.3
Interest expense	5.6			0.1			0.7		—			6.4			5.2			0.4			0.8			—			6.4
Other income (expense), net	(0.3		)	(1.1		)	0.5		—			(0.9		)	(1.7		)	(0.6		)	(2.7		)	—			(5.0		)
Equity in net income (loss) of subsidiaries	32.0			2.7			—		(34.7		)	—			40.9			3.0			—			(43.9		)	—
Income (loss) before income taxes	18.4			42.5			13.3		(34.7		)	39.5			23.3			54.7			11.4			(43.9		)	45.5
Income tax expense (benefit)	(7.7		)	15.9			4.1		—			12.3			(7.4		)	19.2			2.5			—			14.3
Consolidated net income (loss)	26.1			26.6			9.2		(34.7		)	27.2			30.7			35.5			8.9			(43.9		)	31.2
Less: Net income attributable to
noncontrolling interests	—			—			1.1		—			1.1			—			—			0.5			—			0.5
Net income (loss) (1)	$	26.1		$	26.6		$	8.1	$	(34.7	)	$	26.1		$	30.7		$	35.5		$	8.4		$	(43.9	)	$	30.7
Consolidated comprehensive income (loss)	$	45.9		$	27.2		$	29.3	$	(55.4	)	$	47.0		$	(8.6	)	$	36.4		$	(32.7	)	$	(3.2	)	$	(8.1	)
Less: Comprehensive income attributable
to noncontrolling interests	—			—			1.1		—			1.1			—			—			0.5			—			0.5
Comprehensive income (loss) (2)	$	45.9		$	27.2		$	28.2	$	(55.4	)	$	45.9		$	(8.6	)	$	36.4		$	(33.2	)	$	(3.2	)	$	(8.6	)



	Six Months Ended March 31, 2016														Six Months Ended March 31, 2015
	Parent			Guarantors			Non- Guarantors		Eliminations			Consolidated			Parent			Guarantors			Non- Guarantors			Eliminations			Consolidated
Net revenue	$	—		$	415.1		$	423.5	$	(99.9	)	$	738.7		$	—		$	452.4		$	453.5		$	(99.8	)	$	806.1
Cost of goods sold	—			210.8			305.8		(48.8		)	467.8			—			233.5			335.0			(49.4		)	519.1
Gross profit	—			204.3			117.7		(51.1		)	270.9			—			218.9			118.5			(50.4		)	287.0
Operating expenses	14.9			123.8			81.8		(51.1		)	169.4			18.5			120.9			78.9			(50.4		)	167.9
Amortization expense	—			6.8			11.6		—			18.4			0.3			5.8			8.9			—			15.0
Interest expense	10.8			0.1			1.4		—			12.3			10.1			0.4			1.6			—			12.1
Other income (expense), net	(0.2		)	(2.1		)	0.7		—			(1.6		)	(1.7		)	(0.6		)	(2.7		)	—			(5.0		)
Equity in net income (loss) of subsidiaries	58.4			4.9			—		(63.3		)	—			75.0			5.2			—			(80.2		)	—
Income (loss) before income taxes	32.5			76.4			23.6		(63.3		)	69.2			44.4			96.4			26.4			(80.2		)	87.0
Income tax expense (benefit)	(13.6		)	27.9			6.7		—			21.0			(15.8		)	34.1			7.8			—			26.1
Consolidated net income (loss)	46.1			48.5			16.9		(63.3		)	48.2			60.2			62.3			18.6			(80.2		)	60.9
Less: Net income attributable to



Indiana (State of incorporation)		26-1342272 (I.R.S. Employer Identification No.)

One Batesville Boulevard
Batesville, IN		47006
(Address of principal executive offices)		(Zip Code)



Large accelerated filer ý	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o



		Page
	PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Statements of Income for the Three and Six Months Ended March 31, 2016 and 2015	2

	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended March 31, 2016 and 2015	3

	Consolidated Balance Sheets at March 31, 2016, and September 30, 2015	4

	Consolidated Statements of Cash Flow for the Six Months Ended March 31, 2016 and 2015	5

	Condensed Notes to Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risks	34

Item 4.	Controls and Procedures	34

	PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	34

Item 1A.	Risk Factors	34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 6.	Exhibits	35

SIGNATURES



	Number of Units
Stock options	497,774
Time-based stock awards	42,262
Performance-based stock awards (maximum that can be earned)	378,158



	March 31, 2016		September 30, 2015
Total assets assigned
Process Equipment Group	$	1,746.3	$	1,537.3
Batesville	217.8		224.9
Corporate	26.9		45.9
Total	$	1,991.0	$	1,808.1

Tangible long-lived assets, net
United States	$	94.1	$	95.7
International	64.4		62.6
Total	$	158.5	$	158.3


1.	Background and Basis of Presentation


2.	Summary of Significant Accounting Policies


3.	Business Acquisitions


5.	Financing Agreements