Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies

Commitments and Contingencies
12 Months Ended
Sep. 30, 2014
Commitments and Contingencies.  
Commitments and Contingencies

11.Commitments and Contingencies


Lease Commitments — We lease certain manufacturing facilities, warehouse distribution centers, service centers, and sales offices under operating leases.  Rental expense for 2014, 2013, and 2012 was $26.2, $23.7, and $9.5.  The aggregate future minimum lease payments for operating leases, excluding renewable periods, as of September 30, 2014, were as follows:






































General — Like most companies, we are involved on an ongoing basis 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.


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.


Matthews Litigation — In August 2010, the York Group, Inc., Milso Industries Corporation, and Matthews International Corporation (collectively “Matthews”) filed a lawsuit against Scott Pontone and Batesville Casket Company, Inc. (“Batesville”) in the U.S. District Court, Western District of Pennsylvania, which was subsequently amended by Matthews in February 2011 to include two additional defendants, Harry Pontone and Pontone Casket Company, LLC (the “Matthews Litigation”).


Subsequent to the end of the year, on November 14, 2014, all parties to the Matthews Litigation entered into a Release, Settlement Agreement, and Covenant Not to Sue (the “Agreement”). The Agreement, which provides for a $17 payment by Batesville to Matthews and payment by Batesville of up to $1.75 in unpaid attorney fees of Scott Pontone, Harry Pontone, and Pontone Casket Company, LLC, releases all claims in the Matthews Litigation as to all parties without any finding or admission of liability or wrongdoing and provides certain future covenants not to sue among the parties. The Agreement accordingly brings this matter to a close and allows the parties to compete freely in the funeral industry, including the New York metro area.  The aggregate amount of $18.8 is recorded in operating expenses for the year ended September 30, 2014 and is included in other current liabilities at September 30, 2014.  The amount is required to be paid in the first quarter of 2015. 


Horstmann Litigation — As previously disclosed, on March 18, 2013, a joint and several judgment was entered by the Higher Regional Court (OLG) Hamm, Germany, in favor of plaintiff, Jürgen Horstmann, and against defendants, Atlas-Vermögensverwaltungs GmbH, ThyssenKrupp Technologies Beteiligungen (“ThyssenKrupp”), and Hillenbrand subsidiary, Coperion, in the amount of €10.3, plus interest, for a total estimated judgment of €18.5 to €19.6 (the “Horstmann Litigation”).


In February 2014, the Federal Court of Justice rejected an appeal of that judgment filed by the defendants, therefore making the judgment final and non-appealable.  On April 28, 2014, Hillenbrand received confirmation that ThyssenKrupp paid the judgment amount specified by the court (including interest) to plaintiff Jürgen Horstmann.  Prior to receipt of this confirmation of payment by ThyssenKrupp, Hillenbrand’s balance sheet at September 30, 2013, included a long-term liability of $8.7 and a corresponding indemnification receivable, recorded in other assets of $8.7.  The long-term liability and corresponding indemnification receivable were reversed from the consolidated balance sheet during 2014.