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Form 8-K Hill-Rom Holdings, Inc. For: Aug 03

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August 4, 2016 5:09 PM EDT
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 3, 2016

HILL-ROM HOLDINGS, INC.
(Exact name of registrant as specified in its charter)


Indiana
(State or other jurisdiction of
 incorporation)
1-6651
(Commission File Number)
35-1160484
(IRS Employer Identification No.)
 
Two Prudential Plaza
Suite 4100
Chicago, IL
(Address of principal executive
 offices)
  
60601
(Zip Code)
 
(312) 819-7200
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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Item 1.01.  ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

Please see Item 5.02 below.

Item 1.02.  TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.

Please see Item 5.02 below.

Item 2.02.   RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On August 4, 2016, Hill-Rom Holdings, Inc. (the “Corporation”) announced its earnings for the third quarter ended June 30, 2016.  Please see the press release filed as Exhibit 99.1 to this Current Report on Form 8-K, which is incorporated herein by reference.

In the announcement, the Corporation uses various non-GAAP measures, including adjusted operating margin, income before taxes, income tax expense, and diluted earnings per share results, because it uses these measures internally for planning, forecasting, and evaluating the performance of the business.  In addition, the Corporation analyzes net revenue on a constant currency basis to better measure the comparability of results between periods.  The Corporation believes that evaluating growth in net revenue on a constant currency basis provides an additional and meaningful assessment to both management and investors.  These measures should not, however, be considered in isolation, as a substitute for, or as superior to measures of financial performance prepared in accordance with GAAP.


Item 5.02.  DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

On August 3, 2016, the Corporation and Carlyn D. Solomon, the Corporation’s Chief Operating Officer, agreed that Mr. Solomon will depart from the Corporation, effective November 19, 2016.

In connection with his departure, the Corporation and Mr. Solomon entered into a Separation and Release Agreement dated August 3, 2016, pursuant to which Mr. Solomon agreed to a customary release of claims and restrictive covenants.  Mr. Solomon will continue to be subject to the non-compete, trade secret and confidentiality provisions of his employment agreement with the Corporation.  The Separation and Release Agreement entitles Mr. Solomon to: (1) continued payment of Mr. Solomon’s base salary at the effective time of termination for a period of 12 months; (2) full vesting of certain restricted stock units granted to Mr. Solomon at the time of his employment with the Company; (3) immediate vesting in the Supplemental Executive Retirement Plan; and (4) continued participation in the Corporation’s health and other welfare benefits for a period of 12 months.

The foregoing description of the Separation and Release Agreement is qualified in its entirety by reference to the Separation and Release Agreement, a copy of which is attached hereto as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.

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Item 9.01.          FINANCIAL STATEMENTS AND EXHIBITS.

(d)          Exhibits.

10.1
Separation and Release Agreement by and between Carlyn D. Solomon and Hill-Rom Holdings, Inc., dated August 3, 2016.
   
99.1
Press release, dated August 4, 2016, issued by Hill-Rom Holdings, Inc.
 
 
 
 
 
 
SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



       
HILL-ROM HOLDINGS, INC.
       
(Registrant)
         
         
DATE:  August 4, 2016
By:
    
/s/ Steven J. Strobel
 
Name:
Title:
    
Steven J. Strobel
Senior Vice President and Chief Financial Officer
(duly authorized officer and principal financial officer)
 
 
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EXHIBIT INDEX

Exhibit Number
  
Exhibit Description
10.1
  
Separation and Release Agreement by and between Carlyn D. Solomon and Hill-Rom Holdings, Inc., dated August 3, 2016.
     
99.1
  
Press release, dated August 4, 2016, issued by Hill-Rom Holdings, Inc.

 
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EXHIBIT 10.1

SEPARATION AND RELEASE AGREEMENT

THIS SEPARATION and RELEASE AGREEMENT (“Agreement”) is entered into by and between Carlyn D. Solomon (“Executive”) and Hill-Rom Holdings, Inc. (together with its subsidiaries and affiliates, the “Company”).  To wit, the Parties agree as follows:

1. Executive’s active employment by the Company shall terminate effective November 19, 2016 (Executive’s “Effective Termination Date”).  Except as specifically provided by this Agreement, any indemnification, insurance, benefits or equity plan or agreement or in any other non-employment agreement that may exist between the Company and Executive, Executive agrees that the Company shall have no other obligations or liabilities to him following his Effective Termination Date and that his receipt of the severance benefits provided herein (“Severance Benefits”) shall constitute a complete settlement, satisfaction and waiver of any and all claims he may have against the Company.

2. Executive further submits, and the Company hereby accepts, his resignation as an employee, officer and director, as of his Effective Termination Date for any position he may hold.  The Parties agree that this resignation shall apply to all such positions Executive may hold with the Company or any parent, subsidiary or affiliated entity thereof.  Executive agrees to execute any documents needed to effectuate such resignation.  Executive further agrees to take whatever steps as are necessary to facilitate and ensure the smooth transition of his duties and responsibilities to others.
 
 
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3. Subject to the terms of this Agreement, the Employment Agreement between Executive and the Company dated October 3, 2014 (“Employment Agreement”), and provided that Executive (a) signs and returns this Agreement to the Company within twenty-one (21) days after the Executive’s receipt thereof, (b) signs and returns to the Company the Supplemental Release attached as Exhibit A to this Agreement (the “Supplemental Release”) within twenty-one (21) days after (but not before) the Effective Termination Date,  (c) does not revoke this Agreement or the Supplemental Release, and (d) does not accept another offer of employment or otherwise enter into an employment agreement with another employer prior to the Effective Termination Date, the Company agrees to pay Executive the severance payments set forth in Paragraph 16 of the Employment Agreement, payable in accordance with Paragraph 17 of the Employment Agreement.

4. The Company further agrees to provide Executive with limited out-placement counseling with a company of the Company’s choice provided that Executive participates in such counseling immediately following termination of employment.  Notwithstanding anything in this Section 4 to the contrary, the out-placement counseling shall not be provided after December 31, 2017.

5. Starting from the Effective Termination Date, the Company shall arrange for Executive to continue to participate (through COBRA or otherwise), on substantially the same terms and conditions as in effect for Executive (including any required active employee contribution) immediately prior to such Effective Termination Date, in the health and similar welfare benefits provided to Executive until the earlier of (i) the end of the 12 month period beginning on the Effective Termination Date, or (ii) such time as Executive is eligible to be covered by comparable benefits of a subsequent employer.  Executive agrees to notify the Company promptly if and when he begins employment with another employer and if and when he becomes eligible to participate in any health or welfare plans of another employer.  Provided that Executive timely elects COBRA coverage, the Company shall pay the Executive as an additional monthly severance benefit an amount equal to the Company portion of the health premiums for, and during the period of, such coverage.
 
 
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6. It is contemplated by the parties that Executive will perform services prior to the Effective Termination Date such that he will not have a “separation from service” for purposes of Code Section 409A prior to November 19, 2016.

7. In exchange for the foregoing Severance Benefits, Carlyn D. Solomon on behalf of himself, his heirs, representatives, agents and assigns hereby RELEASES, INDEMNIFIES, HOLDS HARMLESS, and FOREVER DISCHARGES (i) Hill-Rom Holdings, Inc., (ii) its parent, subsidiary or affiliated entities, (iii) in such capacity, all of their present or former directors, officers, employees, shareholders, and agents, as well as, (iv) all predecessors, successors and assigns thereof, from any and all actions, charges, claims, demands, damages or liabilities of any kind or character whatsoever, known or unknown, which Executive now has or may have had through the effective date of this Agreement.

8. Without limiting the generality of the foregoing release, it shall include:  (i) all claims or potential claims arising under any federal, state or local laws relating to the Parties’ employment relationship, including any claims Executive may have under the Civil Rights Acts of 1866 and 1964, as amended, 42 U.S.C. §§ 1981 and 2000(e) et seq.; the Civil Rights Act of 1991; the Age Discrimination in Employment Act, as amended, 29 U.S.C. §§ 621 et seq.; the Americans with Disabilities Act of 1990, as amended, 42 U.S.C §§ 12,101 et seq.; the Fair Labor Standards Act 29 U.S.C. §§ 201 et seq.; the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101, et seq.; the Sarbanes-Oxley Act of 2002, specifically including the Corporate and Criminal Fraud Accountability Act, 18 U.S.C. §1514,A et seq.; and any other federal, state or local law governing the Parties’ employment relationship; (ii) any claims on account of, arising out of or in any way connected with Executive’s employment with the Company or termination of that employment; (iii) any claims alleged or which could have been alleged in any charge or complaint against the Company; (iv) any claims relating to the conduct of any employee, officer, director, agent or other representative of the Company; (v) any claims of discrimination, harassment or retaliation on any basis; (vi) any claims arising from any legal restrictions on an employer’s right to separate its employees; (vii) any claims for personal injury, compensatory or punitive damages or other forms of relief; and (viii) all other causes of action sounding in contract, tort or other common law basis, including (a) the breach of any alleged oral or written contract, (b) negligent or intentional misrepresentations, (c) wrongful discharge, (d) just cause dismissal, (e) defamation, (f) interference with contract or business relationship or (g) negligent or intentional infliction of emotional distress.
 
 
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9. Intentionally Omitted.

10. Executive agrees that with his release of claims in this Agreement and notwithstanding his rights set forth in Section 24 below, he has waived any right he may have to recover monetary or other personal relief in any proceeding based in whole or in part on claims released by him in this Agreement.  For example, Executive waives any right to monetary damages or reinstatement if an administrative charge is brought against the Company whether by Executive, the EEOC, or any other person or entity, including but not limited to any federal, state, or local agency.
 
 
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11. The Parties acknowledge that it is their mutual and specific intent that the above waiver fully complies with the requirements of the Older Workers Benefit Protection Act (29 U.S.C. § 626) and any similar law governing release of claims.  Accordingly, Executive hereby acknowledges that:

(a) He has carefully read and fully understands all of the provisions of this Agreement and that he has entered into this Agreement and releases and waives claims hereunder knowingly and voluntarily;

(b) The Severance Benefits offered in exchange for Executive’s release of claims exceed in kind and scope that to which he would have otherwise been legally entitled;

(c) Prior to signing this Agreement, Executive had been advised, and is being advised by this Agreement, to consult with an attorney of his choice (at his cost) concerning its terms and conditions before signing it; and

(d) He has been offered at least twenty-one (21) days within which to review and consider this Agreement.

12. The Parties agree that this Agreement shall not become effective and enforceable until the date this Agreement is signed by both Parties or seven (7) calendar days after its execution by Executive, whichever is later.  Executive may revoke this Agreement for any reason by providing written notice of such intent to the Company within seven (7) days after he has signed this Agreement, thereby forfeiting Executive’s right to receive any Severance Benefits provided hereunder and rendering this Agreement null and void in its entirety.  Executive further understands and agrees that his execution of the Supplemental Release within twenty-one (21) days after (but not before) the Effective Termination Date, without revocation thereof as provided therein, is among the conditions precedent to the Company’s obligation to pay the Severance Benefits under this Agreement and the Employment Agreement.
 
 
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13. The Parties agree that nothing contained herein shall purport to waive or otherwise affect any of Executive’s rights or claims that may arise after he signs this Agreement.  It is further understood by the Parties that nothing in this Agreement shall affect any rights Executive may have under any Company sponsored Deferred Compensation Program, Executive Life Insurance Bonus Plan, Stock Grant Award, Stock Option Grant, Restricted Stock Unit Award, Pension Plan and/or Savings Plan (i.e., 401(k) plan) provided by the Company as of the date of his termination, such items to be governed exclusively by the terms of the applicable agreements or plan documents.

14. Similarly, notwithstanding any provision contained herein to the contrary, this Agreement shall not constitute a waiver or release or otherwise affect Executive’s rights with respect to any vested benefits, any rights he has to benefits which cannot be waived by law, any coverage provided under any Directors and Officers (“D&O”) policy, any rights Executive may have under any indemnification agreement he has with the Company prior to the date hereof, any rights he has as a shareholder, or any claim for breach of this Agreement, including, but not limited to the benefits promised by the terms of this Agreement.

15. Executive acknowledges that his termination and the Severance Benefits offered hereunder were based on an individual determination and were not offered in conjunction with any group termination or group severance program.
 
 
6

 
16. Executive hereby affirms and acknowledges his continued obligations to comply with the post-termination covenants contained in the Employment Agreement, including but not limited to, the non-compete, trade secret and confidentiality provisions.  Executive acknowledges that a copy of the Employment Agreement has been attached to this Agreement as Exhibit B or has otherwise been provided to him and, to the extent not inconsistent with the terms of this Agreement or applicable law, the terms thereof (including, for the avoidance of doubt, but not limited to, Paragraphs 2 and 44) shall be incorporated herein by reference.  Executive acknowledges that the restrictions contained therein are valid and reasonable in every respect and are necessary to protect the Company’s legitimate business interests.  Executive hereby affirmatively waives any claim or defense to the contrary.

17. Executive acknowledges that the Company as well as its parent, subsidiary and affiliated companies (“Companies” herein) possess, and he has been granted access to, certain trade secrets as well as other confidential and proprietary information that they have acquired at great effort and expense.  Such information includes, without limitation, confidential information regarding products and services, marketing strategies, business plans, operations, costs, current or, prospective customer information (including customer contacts, requirements, creditworthiness and like matters), product concepts, designs, prototypes or specifications, regulatory compliance issues, research and development efforts, technical data and know-how, sales information, including pricing and other terms and conditions of sale, financial information, internal procedures, techniques, forecasts, methods, trade information, trade secrets, software programs, project requirements, inventions, trademarks, trade names, and similar information regarding the Companies’ business (collectively referred to herein as “Confidential Information”).
 
 
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18. Executive agrees that all such Confidential Information is and shall remain the sole and exclusive property of the Company.  Except as may be expressly authorized by the Company in writing, as provided in Section 24 below, or as may be required by law after providing due notice thereof to the Company, Executive agrees not to disclose, or cause any other person or entity to disclose, any Confidential Information to any third party for as long thereafter as such information remains confidential (or as limited by applicable law) and agrees not to make use of any such Confidential Information for Executive’s own purposes or for the benefit of any other entity or person.  The Parties acknowledge that Confidential Information shall not include any information that is otherwise made public through no fault of Executive or other wrongdoing.  The foregoing shall not apply to information that the Executive is required to disclose by applicable law, regulation or legal process (provided that except as otherwise provided in Section 24 below, the Executive provides the Company with prior notice of the contemplated disclosure and cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information).

19. On or before Executive’s Effective Termination Date or per the Company’s request, and except as otherwise provided in Section 24 below, Executive agrees to return the original and all copies of all things in his possession or control relating to the Company or its business, including but not limited to any and all contracts, reports, memoranda, correspondence, manuals, forms, records, designs, budgets, contact information or lists (including customer, vendor or supplier lists), ledger sheets or other financial information, drawings, plans (including, but not limited to, business, marketing and strategic plans), personnel or other business files, computer hardware, software, or access codes, door and file keys, identification, credit cards, pager, phone, and any and all other physical, intellectual, or personal property of any nature that he received, prepared, helped prepare, or directed preparation of in connection with his employment with the Company.  Nothing contained herein shall be construed to require the return of any non-confidential and de minimis items regarding Executive’s pay, benefits or other rights of employment such as pay stubs, W-2 forms, 401(k) plan summaries, benefit statements, etc.  Additionally, Executive may retain his address books to the extent they only contain contact information.
 
 
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20. Executive hereby consents and authorizes the Company to deduct as an offset from the above-referenced severance payments, so long as the deduction is not taken from nonqualified deferred compensation under the definition of Code Section 409A, the value of any Company property not returned or returned in a damaged condition as well as any monies paid by the Company on Executive’s behalf (e.g., payment of any outstanding credit card bill).

21. Except as otherwise provided in Section 24 below, Executive agrees to cooperate with the Company in connection with any pending or future litigation, proceeding or other matter which has been or may be brought against or by the Company before any agency, court, or other tribunal and concerning or relating in any way to any matter falling within Executive’s knowledge or former area of responsibility (including after the Effective Termination Date).  Executive agrees to immediately notify the Company, through the Office of the General Counsel, in the event he is contacted by any outside attorney (including paralegals or other affiliated parties) with regard to matters related to his employment with the Company unless (i) the Company is represented by the attorney, (ii) Executive is represented by the attorney for the purpose of protecting his personal interests, (iii) except as otherwise provided in Section 24 below, or (iv) the Company has been advised of and has approved such contact.  Executive agrees to provide reasonable assistance and completely truthful testimony in such matters including, without limitation, facilitating and assisting in the preparation of any underlying defense, responding to discovery requests, preparing for and attending deposition(s) as well as appearing in court to provide truthful testimony.  The Company agrees to reimburse Executive for all reasonable out of pocket expenses incurred at the request of the Company associated with such assistance and testimony.
 
 
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22. Except as otherwise provided in Section 24 below, Executive agrees not to make any written or oral statement that may defame, disparage or cast in a negative light so as to do harm to the personal or professional reputation of (a) the Company, (b) its employees, officers, directors or trustees or (c) the services and/or products provided by the Company and its subsidiaries or affiliate entities.  Similarly, in response to any written inquiry from any prospective employer or in connection with a written inquiry in connection with any future business relationship involving Executive, the Company agrees not to provide any information, and the senior officers shall not make any written or oral statement, that may defame, disparage or cast in a negative light so as to do harm to the personal or professional reputation of Executive.  The Parties acknowledge, however, that nothing contained herein shall be construed to prevent or prohibit the Company or the Executive from providing truthful information in response to any court order, discovery request, subpoena or other lawful request, rebutting statements by others or making normal competitive-type statements.

23. Intentionally omitted.
 
 
10

 
24. Notwithstanding anything in this Agreement or in the Employment Agreement to the contrary, nothing in this Agreement or the Employment Agreement prohibits the Executive from confidentially or otherwise communicating or filing a charge or complaint with a governmental or regulatory entity, participating in a governmental or regulatory entity investigation, or giving truthful testimony or statements to a governmental or regulatory entity, or from responding if properly subpoenaed or otherwise required to do so under applicable law. For the avoidance of doubt, nothing contained herein or in the Employment Agreement is intended, or shall be construed, to limit Executive’s ability to initiate communications directly with, or to respond to any inquiry from, or provide testimony before, the SEC, FINRA, any other self-regulatory organization or any other state or federal regulatory authority. In addition, U.S. federal law provides that an individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made (1) in confidence to a Federal, State, or local government official (either directly or indirectly) or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law; or (2) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Nothing in this Agreement or in the Employment Agreement limits or otherwise affects any such rights.

25. In the event that Executive breaches or threatens to breach any provision of this Agreement, he agrees that the Company shall be entitled to seek any and all equitable and legal relief provided by law, specifically including immediate and permanent injunctive relief.  Executive hereby waives any claim that the Company has an adequate remedy at law.  In addition, and to the extent not prohibited by law, Executive agrees that the Company shall be entitled to discontinue providing any additional Severance Benefits upon such breach. Executive agrees that the foregoing relief shall not be construed to limit or otherwise restrict the Company’s ability to pursue any other remedy provided by law, including the recovery of any actual, compensatory or punitive damages.  Moreover, if Executive pursues any claims against the Company subject to the foregoing General Release, Executive agrees to immediately reimburse the Company for the value of all benefits received under this Agreement to the fullest extent permitted by law.
 
 
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26. Similarly, in the event that the Company breaches or threatens to breach any provision of this Agreement, Executive shall be entitled to seek any and all equitable or other available relief provided by law, specifically including immediate and permanent injunctive relief.  In the event Executive is wholly unsuccessful, the Company shall be entitled to an award of its costs and attorneys’ fees.

27. Both Parties acknowledge that this Agreement is entered into solely for the purpose of terminating Executive’s employment relationship with the Company on an amicable basis and shall not be construed as an admission of liability or wrongdoing by the Company or Executive, both Parties having expressly denied any such liability or wrongdoing.

28. Each of the promises and obligations shall be binding upon and shall inure to the benefit of the heirs, executors, administrators, assigns and successors in interest of each of the Parties.

29. The Parties agree that each and every paragraph, sentence, clause, term and provision of this Agreement is severable and that, if any portion of this Agreement should be deemed not enforceable for any reason, such portion shall be stricken and the remaining portion or portions thereof should continue to be enforced to the fullest extent permitted by applicable law.
 
 
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30. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Indiana without regard to any applicable state’s choice of law provisions.

31. Executive represents and acknowledges that in signing this Agreement he does not rely, and has not relied, upon any representation or statement made by the Company or by any of the Company’s Executives, officers, agents, stockholders, directors or attorneys with regard to the subject matter, basis or effect of this Agreement other than those specifically contained herein.

32. This Agreement represents the entire agreement between the Parties concerning the subject matter hereof, shall supersede any and all prior agreements which may otherwise exist between them concerning the subject matter hereof (specifically excluding, however, the post-termination or any other surviving obligations contained in the Employment Agreement, any obligations contained in an existing and valid Indemnity Agreement or Change in Control Agreement or any obligation contained in any other legally-binding document), and shall not be altered, amended, modified or otherwise changed except by a writing executed by both Parties.

PLEASE READ CAREFULLY.  THIS SEPARATION AND RELEASE
AGREEMENT INCLUDES A COMPLETE RELEASE OF ALL
 KNOWN AND UNKNOWN CLAIMS.
 
 
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IN WITNESS WHEREOF, the Parties have themselves signed, or caused a duly authorized agent thereof to sign, this Agreement on their behalf and thereby acknowledge their intent to be bound by its terms and conditions.

Carlyn D. Solomon
Hill-Rom Holdings, Inc.
   
   
Signed:  /s/ Carlyn Solomon
 
Printed:  Carlyn Solomon
 
Dated:  8/3/2016
By:  /s/ John Greisch
 
Title:  President & Chief Executive Officer
 
Dated:  8/3/2016
 
 
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Exhibit A

SUPPLEMENTAL RELEASE

THIS SUPPLEMENTAL RELEASE (“Release”) is entered into by and between Carlyn D. Solomon (“Executive”) and Hill-Rom Holdings, Inc. (together with its subsidiaries and affiliates, the “Company”) in accordance with the Separation and Release Agreement between the Company and the Executive dated as of August 3, 2016 (the “Agreement”). Capitalized terms not expressly defined in this Release shall have the meanings set forth in the Agreement. To wit, the Parties agree as follows:

1.
Executive understands and agrees that the Executive’s execution of this Release within twenty-one (21) days after (but not before) the Effective Termination Date, without revocation thereof as provided herein, is among the conditions precedent to the Company’s obligation to provide any of the Severance Benefits set forth in the Agreement. The Company will provide such payments or benefits in accordance with the terms of the Agreement once the conditions set forth therein and in this Release have been met.

2.
In exchange for the Severance Benefits, Carlyn D. Solomon on behalf of himself, his heirs, representatives, agents and assigns hereby RELEASES, INDEMNIFIES, HOLDS HARMLESS, and FOREVER DISCHARGES (i) Hill-Rom Holdings, Inc., (ii) its parent, subsidiary or affiliated entities, (iii) in such capacity, all of their present or former directors, officers, employees, shareholders, and agents, as well as, (iv) all predecessors, successors and assigns thereof, from any and all actions, charges, claims, demands, damages or liabilities of any kind or character whatsoever, known or unknown, which Executive now has or may have had through the effective date of this Release.

3.
Without limiting the generality of the foregoing release, it shall include: (i) all claims or potential claims arising under any federal, state or local laws relating to the Parties’ employment relationship, including any claims Executive may have under the Civil Rights Acts of 1866 and 1964, as amended, 42 U.S.C. §§ 1981 and 2000(e) et seq.; the Civil Rights Act of 1991; the Age Discrimination in Employment Act, as amended, 29 U.S.C. §§ 621 et seq.; the Americans with Disabilities Act of 1990, as amended, 42 U.S.C §§ 12,101 et seq.; the Fair Labor Standards Act 29 U.S.C. §§ 201 et seq.; the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101, et seq.; the Sarbanes-Oxley Act of 2002, specifically including the Corporate and Criminal Fraud Accountability Act, 18 U.S.C. §1514A et seq.; and any other federal, state or local law governing the Parties’ employment relationship; (ii) any claims on account of, arising out of or in any way connected with Executive’s employment with the Company or termination of that employment; (iii) any claims alleged or which could have been alleged in any charge or complaint against the Company; (iv) any claims relating to the conduct of any employee, officer, director, agent or other representative of the Company; (v) any claims of discrimination, harassment or retaliation on any basis; (vi) any claims arising from any legal restrictions on an employer’s right to separate its employees; (vii) any claims for personal injury, compensatory or punitive damages or other forms of relief; and (viii) all other causes of action sounding in contract, tort or other common law basis, including (a) the breach of any alleged oral or written contract, (b) negligent or intentional misrepresentations, (c) wrongful discharge, (d) just cause dismissal, (e) defamation, (f) interference with contract or business relationship or (g) negligent or intentional infliction of emotional distress.
 
 
i


4.
The Parties acknowledge that it is their mutual and specific intent that the above waiver fully complies with the requirements of the Older Workers Benefit Protection Act (29 U.S.C. § 626) and any similar law governing release of claims. Accordingly, Executive hereby acknowledges that:

 
(a)
He has carefully read and fully understands all of the provisions of this Agreement and that he has entered into this Agreement and releases and waives claims hereunder knowingly and voluntarily;

 
(b)
The Severance Benefits offered in exchange for Executive’s release of claims exceed in kind and scope that to which he would have otherwise been legally entitled;

 
(c)
Prior to signing this Release, Executive had been advised, and is being advised by this Release, to consult with an attorney of his choice (at his cost) concerning its terms and conditions before signing it; and

 
(d)
He has twenty-one (21) days within which to review and consider this Release.

5.
The Parties agree that this Release shall not become effective and enforceable until seven (7) calendar days after its execution by Executive. Executive may revoke this Agreement for any reason by providing written notice of such intent to the Company within seven (7) days after he has signed this Release, thereby forfeiting Executive’s right to receive any Severance Benefits provided under the Agreement and rendering this Release and the Agreement null and void in its entirety.

6.
The Parties agree that nothing contained herein shall purport to waive or otherwise affect any of Executive’s rights or claims that may arise after he signs this Release. It is further understood by the Parties that nothing in this Release shall affect any rights Executive may have under any Company sponsored Deferred Compensation Program, Executive Life Insurance Bonus Plan, Stock Grant Award, Stock Option Grant, Restricted Stock Unit Award, Pension Plan and/or Savings Plan (i.e., 401(k) plan) provided by the Company as of the date of his termination, such items to be governed exclusively by the terms of the applicable agreements or plan documents.

7.
Similarly, notwithstanding any provision contained herein to the contrary, this Release shall not constitute a waiver or release or otherwise affect Executive’s rights with respect to any vested benefits, any rights he has to benefits which cannot be waived by law, any coverage provided under any Directors and Officers (“D&O”) policy, any rights Executive may have under any indemnification agreement he has with the Company prior to the date hereof, or any rights he has as a shareholder.
 
 
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8.
Notwithstanding anything in this Release to the contrary, nothing in this Release prohibits the Executive from confidentially or otherwise communicating or filing a charge or complaint with a governmental or regulatory entity, participating in a governmental or regulatory entity investigation, or giving truthful testimony or statements to a governmental or regulatory entity, or from responding if properly subpoenaed or otherwise required to do so under applicable law.

IN WITNESS WHEREOF, the Parties have themselves signed, or caused a duly authorized agent thereof to sign, this Release on their behalf and thereby acknowledge their intent to be bound by its terms and conditions.

Carlyn D. Solomon
  
Hill-Rom Holdings, Inc.
  
           
Signed:
    
Signed:
    
Printed:
    
Title:
    
Dated:
    
Dated:
    
           
 
 
iii

 
Exhibit B

Copy of Employment Agreement
 
 
i
Exhibit 99.1


 
 
CONTACT INFORMATION


Investor Relations
Contact: Mary Kay Ladone, Vice President, Investor Relations
Phone: 312-819-9387

Media
Contact: Howard Karesh, Vice President, Corporate Communications
Phone:
312-819-7268
 
HILL-ROM REPORTS STRONG FISCAL THIRD QUARTER RESULTS AND RAISES FULL-YEAR ADJUSTED EARNINGS PER DILUTED SHARE OUTLOOK
 
· Third quarter revenue of $655 million advances 38 percent
· Operating margin expands 230 basis points to 8.9 percent; adjusted operating margin expands 370 basis points to 15.2 percent
· Third quarter GAAP earnings of $0.68 per diluted share increases 106 percent;  adjusted earnings of $0.81 per diluted share exceeds guidance
· Year-to-date operating cash flow improves $81 million to $205 million
· Company raises 2016 full-year adjusted earnings guidance to $3.32 to $3.34 per diluted share
 
CHICAGO, August 4, 2016 /PRNewswire/ -- Hill-Rom Holdings, Inc., (NYSE: HRC) today announced financial results for its fiscal third quarter ended June 30, 2016, and updated its full-year 2016 financial outlook. During the quarter, Hill-Rom reported earnings of $0.68 per diluted share, an increase of 106 percent, compared to $0.33 per diluted share in the prior-year period.

On an adjusted basis, earnings of $0.81 per diluted share rose 31 percent from $0.62 per diluted share in the prior-year period, and exceeded the company’s previously-issued guidance of $0.75 to $0.77 per diluted share. These results reflect strong revenue, particularly in North America, and management’s continued focus on operational execution and margin expansion. Adjustments to reported earnings are detailed in the reconciliation schedules provided.

“We delivered a strong quarter of revenue and earnings growth that exceeded our expectations, and as a result we have raised our full-year adjusted earnings outlook,” said John J. Greisch, president and Chief Executive Officer of Hill-Rom. “This performance reflects the value of our diversified portfolio, our disciplined focus on commercial and operational execution, and our commitment to cost management and margin improvement across our businesses.”
 
 
 
 
Third Quarter Financial Highlights

Hill-Rom’s third quarter worldwide revenue of $655 million grew 38 percent (or 39 percent on a constant currency basis) compared to the prior-year period. On a pro-forma constant currency basis, revenue increased 2 percent. Domestic revenue of $451 million advanced 47 percent (or 6 percent on a pro forma basis), while revenue outside the United States of $204 million increased 23 percent (but declined 4 percent on a pro forma constant currency basis). Pro-forma revenue reflects the inclusion of Welch Allyn in both the current and prior-year periods.

Business highlights below reflect revised reporting segments as disclosed by Hill-Rom in the fiscal 2016 second quarter. Please refer to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, for additional details.

-- North America: North America revenue of $268 million advanced 6 percent on a reported and constant currency basis.

-- Front Line Care: Front Line Care, which includes Welch Allyn and Respiratory Care, generated revenue of $193 million. On a pro-forma constant currency basis, Front Line Care revenue increased approximately 2 percent.

-- Surgical Solutions: Surgical revenue of $102 million increased 3 percent on a reported and constant currency basis.

-- International: International revenue of $93 million declined 8 percent on a reported and constant currency basis.
 
-- Gross margin improved by 390 basis points to 48.1 percent; adjusted gross margin expanded by 340 basis points to 48.1 percent.
 
-- Operating margin improved by 230 basis points to 8.9 percent; adjusted operating margin expanded by 370 basis points to 15.2 percent.
 
-- Year-to-date operating cash flow increased $81 million, or 65 percent, to $205 million compared to the prior year.

Recent Highlights

· During the third quarter, the company introduced the VisiVestTM Airway Clearance System, a connected therapeutic solution for patients with chronic lung disease. The VisiVest System provides therapy adherence data that may help inform decisions caregivers make for their patients, resulting in reduced risk of respiratory infections, hospitalizations and medical costs.

· In continuation of Hill-Rom’s global footprint optimization strategy, the company announced the closure of two European manufacturing facilities, which will be completed during 2017. In total, the company has now initiated or completed five facility closures.
 
Financial Outlook
 
For fiscal 2016, Hill-Rom now expects reported revenue to be approximately $2.65 billion, compared to $2.64 and $2.67 billion previously. This reflects:

· 2% to 3% pro forma constant currency growth, and
· Negative currency impact of approximately 2 percent at current rates

In addition, the company now expects full-year 2016 adjusted earnings to be $3.32 to $3.34 per diluted share, compared to the previous guidance range of $3.26 to $3.30 per diluted share. Cash flow from operations for the full year is now expected to be approximately $320 million, compared to $315 million previously, which includes outflows related to our ongoing restructuring and integration activities. Capital expenditures are now expected to be approximately $90 million, compared to $110 to $120 million previously.
 
 
 
 
For the fourth quarter of fiscal 2016, Hill-Rom expects reported revenue to be between $695 and $705 million. This reflects:

· Approximately flat pro forma constant currency growth, and
· Negative currency impact of approximately 1 percent at current rates

In addition, the company expects fourth quarter adjusted earnings to be $1.12 to $1.14 per diluted share.


Discussion of Adjusted Financial Measures

Hill-Rom Holdings, Inc. routinely provides earnings per share results and guidance on an adjusted basis because the company’s management believes this measures contributes to an understanding of our financial performance and provides an additional analytical tool to understand our results from core operations and reveal underlying trends. This measure excludes strategic developments, acquisition and integration costs, special charges or other unusual events. The company also excludes expenses associated with the amortization of intangible assets associated with prior business acquisitions. This adjustment is made to allow investors to evaluate and understand operating trends excluding the non-cash impact of acquired intangible amortization on operating income and earnings per share.

Management uses these measures internally for planning, forecasting and evaluating the performance of the business. Investors should consider non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.

Reconciliations of GAAP measures to adjusted measures appear in the financial tables of this release.  Management does not include adjusted items in forward looking measures because some of these items can be highly variable and cannot be reasonably predicted. As such, prospective quantification of such items is not feasible and a reconciliation of non-GAAP earnings per share guidance to GAAP earnings per share has not been provided.

Conference Call Webcast and Dial-in Information

As previously announced, the company will host a conference call and webcast today at 8:00 a.m. ET.

Webcast: To join the live webcast with audio on August 4, visit http://edge.media-server.com/m/p/6zke9akd. The webcast slide deck will be posted to the Hill-Rom website prior to the webcast.

Conference Call Audio Only Dial-in information:  To join the live conference call, dial 877-868-1829 domestic callers / 631-291-4543 international callers.  The following Confirmation Code is required for both: 43058042.  Callers will need to provide their name, company affiliation and telephone number to the conference operator.

A recording of the webcast/call audio will be available for telephone replay through August 9, 2016.  To access the replay, dial 855-859-2056 domestic callers / 404-537-3406 international callers.  For the replay, callers will need to use Confirmation Code 43058042.  If you are unable to listen to the live webcast or the telephone replay, the webcast will be archived at http://ir.hill-rom.com/events.cfm.

ABOUT HILL-ROM HOLDINGS, INC.
Hill-Rom is a leading global medical technology company with 10,000 employees worldwide. We partner with health care providers in more than 100 countries by focusing on patient care solutions that improve clinical and economic outcomes in five core areas: Advancing Mobility, Wound Care and Prevention, Clinical Workflow, Surgical Safety and Efficiency and Respiratory Health. Around the world, Hill-Rom's people, products, and programs work towards one mission: Every day, around the world, we enhance outcomes for patients and their caregivers. Visit www.hill-rom.com for more information.
 
 
 
 
Disclosure Regarding Forward Looking Statements

Certain statements herein contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the company’s future plans, objectives, beliefs, expectations, representations and projections. It is important to note that forward-looking statements are not guarantees of future performance, and the company’s actual results could differ materially from those set forth in any forward-looking statements. For a more in depth discussion of factors that could cause actual results to differ from those contained in forward-looking statements, see the discussions under the heading “Risk Factors” in the company’s previously filed most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. The company assumes no obligation to update or revise any forward-looking statements.
 
 
Hill-Rom Holdings, Inc. and Subsidiaries
 Condensed Consolidated Statements of Income
 (Dollars in millions, except per share data)

     
Quarter Ended June 30
    
Year To Date Ended June 30
  
   
2016
    
2015
    
2016
    
2015
  
Net revenue
                        
Product sales and service
  
$
556.0
    
$
376.8
    
$
1,650.4
    
$
1,125.9
  
Rental revenue
    
99.4
      
97.7
      
298.8
      
288.4
  
Total revenue
    
655.4
      
474.5
      
1,949.2
      
1,414.3
  
Cost of revenue
                                
Cost of goods sold
    
293.6
      
217.9
      
896.0
      
652.3
  
Rental expenses
    
46.4
      
47.1
      
142.9
      
138.4
  
Total cost of revenue
    
340.0
      
265.0
      
1,038.9
      
790.7
  
Gross profit
                                
Product sales and service
    
262.4
      
158.9
      
754.4
      
473.6
  
Rental
    
53.0
      
50.6
      
155.9
      
150.0
  
Total gross profit
    
315.4
      
209.5
      
910.3
      
623.6
  
As a percentage of sales
    
48.1
%
    
44.2
%
    
46.7
%
    
44.1
%
                                 
Research and development expenses
    
33.6
      
23.3
      
101.5
      
67.3
  
Selling and administrative expenses
    
209.9
      
150.5
      
640.5
      
455.5
  
Special charges
    
13.7
      
4.4
      
31.5
      
11.9
  
                                 
Operating profit
    
58.2
      
31.3
      
136.8
      
88.9
  
                                 
Other income/(expense), net
    
(22.9
)
    
(3.3
)
    
(67.6
)
    
(7.3
)
                                 
Income tax (benefit) expense
    
(9.7
)
    
9.3
      
(2.2
)
    
24.7
  
                                 
Net income
    
45.0
      
18.7
      
71.4
      
56.9
  
                                 
Less:  Net loss attributable to noncontrolling interests
    
(0.3
)
    
(0.4
)
    
(1.0
)
    
(0.4
)
                                 
Net income attributable to common shareholders
  
$
45.3
    
$
19.1
    
$
72.4
    
$
57.3
  
                                 
Diluted earnings per share:
  
$
0.68
    
$
0.33
    
$
1.09
    
$
0.99
  
                                 
Average common shares outstanding - diluted (thousands)
    
66,552
      
57,899
      
66,402
      
57,943
  
                                 
Dividends per common share
  
$
0.1700
    
$
0.1600
    
$
0.5000
    
$
0.4725
  
 
 
 
 
Non-GAAP Financial Disclosures and Reconciliations

While Hill-Rom reports financial results in accordance with U.S. GAAP, this press release includes non-GAAP measures. Hill-Rom uses non-GAAP measures to evaluate and manage its operations and provides the information to assist investors in performing financial analysis that is consistent with financial models developed by research analysts. Investors should consider non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.
 
 
Hill-Rom Holdings, Inc. and Subsidiaries
 Revenue Constant Currency
 (Dollars in millions)
 
                           
U.S.
    
OUS
  
   
Quarter Ended June 30
    
Change As
    
Constant
    
Change As
    
Change As
    
Constant
  
   
2016
    
2015
    
Reported
    
Currency
    
Reported
    
Reported
    
Currency
  
                                           
Product sales and service
  
$
556.0
    
$
376.8
      
47.6
%
    
48.1
%
    
63.4
%
    
24.8
%
    
26.1
%
Rental revenue
    
99.4
      
97.7
      
1.7
%
    
1.9
%
    
2.7
%
    
(4.8
%)
    
(3.2
%)
Total revenue
  
$
655.4
    
$
474.5
      
38.1
%
    
38.6
%
    
46.6
%
    
22.5
%
    
23.9
%
                                                         
                                                         
North America
  
$
267.8
    
$
252.4
      
6.1
%
    
6.3
%
    
8.0
%
    
(28.9
%)
    
(24.2
%)
Front Line Care
    
192.7
      
22.1
      
N/
M
    
N/
M
    
N/
M
    
N/
M
    
N/
M
Surgical Solutions
    
101.7
      
98.6
      
3.1
%
    
3.3
%
    
13.2
%
    
(6.0
%)
    
(5.6
%)
International
    
93.2
      
101.4
      
(8.1
%)
    
(7.8
%)
    
N/
 A     
(8.1
%)
    
(7.8
%)
Total revenue
  
$
655.4
    
$
474.5
      
38.1
%
    
38.6
%
    
46.6
%
    
22.5
%
    
23.9
%
 
                                   
U.S.
    
OUS
  
   
Year To Date Ended June 30
    
Change As
    
Constant
    
Change As
    
Change As
    
Constant
  
    2016     2015    
Reported
    
Currency
    
Reported
    
Reported
    
Currency
  
                                                         
Product sales and service
  
$
1,650.4
    
$
1,125.9
      
46.6
%
    
49.2
%
    
67.0
%
    
19.7
%
    
25.9
%
Rental revenue
    
298.8
      
288.4
      
3.6
%
    
4.3
%
    
6.0
%
    
(11.1
%)
    
(6.0
%)
Total revenue
  
$
1,949.2
    
$
1,414.3
      
37.8
%
    
40.1
%
    
49.9
%
    
17.4
%
    
23.4
%
                                                         
                                                         
North America
  
$
786.5
    
$
724.5
      
8.6
%
    
8.9
%
    
9.9
%
    
(18.4
%)
    
(10.2
%)
Front Line Care
    
598.2
      
66.6
      
N/
M
    
N/
M
    
N/
M
    
N/
M
    
N/
M
Surgical Solutions
    
296.1
      
303.0
      
(2.3
%)
    
0.1
%
    
8.7
%
    
(11.2
%)
    
(6.9
%)
International
    
268.4
      
320.2
      
(16.2
%)
    
(12.5
%)
    
N/
 A     
(16.2
%)
    
(12.5
%)
Total revenue
  
$
1,949.2
    
$
1,414.3
      
37.8
%
    
40.1
%
    
49.9
%
    
17.4
%
    
23.4
%
 
N/A = Not applicable
N/M = Not meaningful
OUS = Outside of the U.S.
 
 
 
 
Hill-Rom Holdings, Inc. and Subsidiaries
Reconciliation: Earnings Per Share
(Dollars in millions, except per share data)
 
 
  
Quarter Ended June 30, 2016
    
Quarter Ended June 30, 2015
  
 
  
Operating
Margin
    
Income
Before
Income
Taxes
    
Income
Tax
Expense
    
Diluted
EPS
    
Operating
Margin1
    
Income
Before
Income
Taxes
    
Income
Tax Expense
    
Diluted
EPS
  
 
                                                
GAAP Basis
    
8.9
%
  
$
35.3
    
$
(9.7
)
  
$
0.68
      
6.6
%
  
$
28.0
    
$
9.3
    
$
0.33
  
Adjustments:
                                                                
Acquisition and integration costs
    
0.5
%
    
3.5
      
0.7
      
0.04
      
1.4
%
    
6.8
      
2.3
      
0.08
  
Acquisition-related intangible asset amortization
    
3.7
%
    
24.1
      
8.2
      
0.24
      
1.6
%
    
7.7
      
2.1
      
0.10
  
FDA remediation expenses
    
-
      
-
      
-
      
-
      
0.3
%
    
1.3
      
0.4
      
0.02
  
Field corrective actions
    
-
      
-
      
-
      
-
      
0.5
%
    
2.6
      
0.8
      
0.03
  
Litigation settlements and expenses
    
-
      
-
      
-
      
-
      
0.1
%
    
0.3
      
0.1
      
-
  
Special charges
    
2.1
%
    
13.7
      
4.7
      
0.13
      
0.9
%
    
4.4
      
0.9
      
0.06
  
Foreign valuation allowance and acquisition dividends
    
-
      
-
      
18.8
      
(0.28
)
    
-
      
-
      
-
      
-
  
Adjusted Basis
    
15.2
%
  
$
76.6
    
$
22.7
    
$
0.81
      
11.5
%
  
$
51.1
    
$
15.9
    
$
0.62
  
 
 
  
Year to Date Ended June 30, 2016
    
Year To Date Ended June 30, 2015
  
 
  
Operating
Margin1
    
Income
Before
Income
Taxes
    
Income
Tax
Expense
    
Diluted
EPS
    
Operating
Margin
    
Income
Before
Income
Taxes
    
Income
Tax
Expense
    
Diluted
EPS1
  
 
                                                                
GAAP Basis
    
7.0
%
  
$
69.2
    
$
(2.2
)
  
$
1.09
      
6.3
%
  
$
81.6
    
$
24.7
    
$
0.99
  
Adjustments:
                                                                
Acquisition and integration costs
    
1.7
%
    
33.7
      
9.7
      
0.36
      
1.4
%
    
19.5
      
6.3
      
0.23
  
Acquisition-related intangible asset amortization
    
3.7
%
    
72.1
      
24.7
      
0.71
      
1.7
%
    
23.4
      
6.5
      
0.29
  
FDA remediation expenses
    
-
      
-
      
-
      
-
      
0.2
%
    
3.0
      
1.0
      
0.03
  
Field corrective actions
    
-
      
0.1
      
(0.1
)
    
-
      
0.3
%
    
4.9
      
1.5
      
0.06
  
Litigation settlements and expenses
    
-
      
-
      
-
      
-
      
-
      
(0.6
)
    
(0.2
)
    
(0.01
)
Special charges
    
1.6
%
    
31.5
      
10.5
      
0.32
      
0.8
%
    
11.9
      
1.2
      
0.18
  
Foreign valuation allowance and acquisition dividends
    
-
      
-
      
18.8
      
(0.28
)
    
-
      
-
      
1.9
      
(0.03
)
Adjusted Basis
    
14.1
%
  
$
206.6
    
$
61.4
    
$
2.20
      
10.7
%
  
$
143.7
    
$
42.9
    
$
1.75
  

1 Total does not add due to rounding.
 
 
 
 
Hill-Rom Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in millions)
 
 
  
June 30, 2016
    
September 30, 2015
  
Assets
            
Current Assets
            
Cash and cash equivalents
  
$
199.6
    
$
192.8
  
Trade accounts receivable, net of allowances
    
459.0
      
494.7
  
Inventories, net
    
254.4
      
267.4
  
Other current assets
    
92.7
      
186.1
  
Total current assets
    
1,005.7
      
1,141.0
  
 
                
Property, plant and equipment, net
    
356.3
      
378.4
  
Intangible assets:
                
Goodwill
    
1,606.7
      
1,610.5
  
Software and other, net
    
1,173.0
      
1,247.7
  
Other assets
    
94.8
      
80.0
  
 
                
Total Assets
  
$
4,236.5
    
$
4,457.6
  
 
                
Liabilities
                
Current Liabilities
                
Trade accounts payable
  
$
117.8
    
$
136.3
  
Short-term borrowings
    
76.8
      
58.0
  
Other current liabilities
    
309.6
      
384.5
  
Total current liabilities
    
504.2
      
578.8
  
 
                
Long-term debt
    
2,054.6
      
2,175.2
  
Other long-term liabilities
    
480.0
      
546.7
  
 
                
Total Liabilities
    
3,038.8
      
3,300.7
  
 
                
Total Shareholders' Equity Attributable to Common Shareholders
    
1,188.7
      
1,146.9
  
 
                
Noncontrolling interests
    
9.0
      
10.0
  
 
                
Total Shareholders' Equity
    
1,197.7
      
1,156.9
  
 
                
Total Liabilities and Shareholders' Equity
  
$
4,236.5
    
$
4,457.6
  
 
 
 
 
Hill-Rom Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Dollars in millions)
 
     
Year to Date Ended June 30
  
   
2016
    
2015
  
Operating Activities
            
Net income
  
$
71.4
    
$
56.9
  
Adjustments to reconcile net income to net cash provided by
                
   operating activities:
                
Depreciation
    
71.9
      
53.1
  
Amortization
    
12.9
      
8.3
  
Acquisition-related intangible asset amortization
    
72.1
      
23.4
  
Provision for deferred income taxes
    
(7.9
)
    
(12.3
)
Loss on disposal of property, equipment leased to others,
                
       intangible assets and impairments
    
1.4
      
-
  
Stock compensation
    
18.1
      
14.0
  
Excess tax benefits from employee stock plans
    
(1.3
)
    
(1.7
)
Change in working capital excluding cash, current debt,
                
acquisitions and dispositions:
                
Trade accounts receivable
    
33.5
      
4.7
  
Inventories
    
11.8
      
(3.4
)
Other current assets
    
16.5
      
(5.1
)
Trade accounts payable
    
(15.3
)
    
(18.1
)
Accrued expenses and other liabilities
    
(79.0
)
    
0.3
  
Other, net
    
(0.7
)
    
4.3
  
Net cash provided by operating activities
    
205.4
      
124.4
  
                 
Investing Activities
                
Capital expenditures and purchases of intangibles
    
(60.7
)
    
(102.6
)
Proceeds on sales of property and equipment leased to others
    
1.5
      
1.2
  
Payment for acquisition of businesses, net of cash acquired
    
0.5
      
(5.1
)
Other
    
(1.6
)
    
2.1
  
Net cash used in investing activities
    
(60.3
)
    
(104.4
)
                 
Financing Activities
                
Net change in short-term debt
    
-
      
(0.7
)
Proceeds from borrowing on long-term debt
    
2.5
      
-
  
Borrowings on revolving credit facility
    
20.0
      
95.0
  
Payments on revolver
    
(20.0
)
    
-
  
Payment of long-term debt
    
(109.9
)
    
(11.5
)
Deb issuance costs
    
-
      
(1.6
)
Purchase of noncontrolling interest of former joint venture
    
(0.4
)
    
(1.6
)
Payment of cash dividends
    
(32.6
)
    
(26.7
)
Proceeds on exercise of stock options
    
3.8
      
10.2
  
Proceeds from stock issuance
    
2.7
      
2.1
  
Excess tax benefits from employee stock plans
    
1.3
      
1.7
  
Treasury stock acquired
    
(3.5
)
    
(57.4
)
Net cash (used in) provided by financing activities
    
(136.1
)
    
9.5
  
                 
Effect of exchange rate changes on cash
    
(2.2
)
    
(5.4
)
                 
Net Cash Flows
    
6.8
      
24.1
  
                 
Cash and Cash Equivalents:
                
At beginning of period
    
192.8
      
99.3
  
At end of period
  
$
199.6
    
$
123.4
  
 
 
 

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