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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended November 27, 1993 Commission File No. 1-6651
HILLENBRAND INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-1160484
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 STATE ROUTE 46 EAST
BATESVILLE, INDIANA 47006-9166
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (812) 934-7000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of Each Class Name of Each Exchange on Which Registered
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COMMON STOCK, WITHOUT PAR VALUE NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
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 TWELVE 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 ____X____ No ________
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. (X)
STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES
OF THE REGISTRANT.
Common Stock, without par value - $1,307,544,000 as of February 9,
1994 (excluding stock held by persons deemed affiliates).
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
Common Stock, without par value - 71,515,261 as of February 9, 1994.
DOCUMENTS INCORPORATED BY REFERENCE.
Portions of the 1994 Proxy Statement furnished to Shareholders - Parts
I and III.
Portions of the 1992 Proxy Statement furnished to Shareholders - Part
IV.
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HILLENBRAND INDUSTRIES, INC.
ANNUAL REPORT ON FORM 10-K
NOVEMBER 27, 1993
TABLE OF CONTENTS
PAGE
PART I
Item 1. Business 1
Item 2. Properties 7
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote
of Security Holders 7
PART II
Item 5. Market for Registrant's Common
Equity and Related Stockholder
Matters 8
Item 6. Selected Financial Data 8
Item 7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9
Item 8. Financial Statements and Supplementary
Data 15
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 35
PART III
Item 10. Directors and Executive Officers
of the Registrant 35
Item 11. Executive Compensation 35
Item 12. Security Ownership of Certain
Beneficial Owners and Management 35
Item 13. Certain Relationships and Related
Transactions 35
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 35
SIGNATURES 42
PART I
ITEM 1. BUSINESS
Hillenbrand Industries, Inc., an Indiana corporation headquartered in
Batesville, Indiana, is a diversified, public holding company and the owner of
100% of the capital stock of its six major operating companies. Unless the
context otherwise requires, the terms "Hillenbrand" and the "Company" refer to
Hillenbrand Industries, Inc. and its consolidated subsidiaries. Hillenbrand is
organized into two business segments: Funeral Services and Health Care. The
Funeral Services Segment consists of Batesville Casket Company, Inc., a
manufacturer of caskets, and Forecorp, Inc., a provider of funeral planning
insurance products. The Health Care Segment consists of Hill-Rom Company, Inc.
a manufacturer of equipment for hospitals; SSI Medical Services, Inc., a
provider of wound care, pulmonary/trauma and incontinence management services;
Block Medical, Inc., a provider of home infusion therapy products; and Medeco
Security Locks, Inc., a manufacturer of high security locks and access control
products for commercial and residential use. (Medeco does not directly serve
the health care industry but is included in the Health Care Segment due to its
relative size.)
FUNERAL SERVICES
Batesville Casket Company, Inc. ("Batesville") an Indiana corporation
headquartered in Batesville, Indiana, was founded in 1884 and acquired by the
Hillenbrand family in 1906. Batesville manufactures and sells several types of
steel, copper, bronze and hardwood caskets, including caskets for the cremation
market. In addition to caskets, Batesville sells a line of urns used in
cremations. All Batesville metal caskets are protective caskets which are
electrically welded and made resistant to the entry of air, water and gravesite
substances through the use of rubber gaskets and a locking bar mechanism.
Batesville Monoseal-R- steel caskets also employ a magnesium alloy bar to
cathodically protect the casket from rust and corrosion. The Company believes
that this system of Cathodic Protection is featured only on Batesville caskets.
Batesville hardwood caskets are made from walnut, mahogany, cherry, maple,
pine, oak and poplar. Except for a limited line of hardwood caskets with a
protective copper liner, the majority of hardwood caskets are not protective.
Batesville caskets are marketed by Batesville's direct sales force to
licensed funeral directors operating licensed funeral homes throughout the
United States, Australia, Canada and Puerto Rico. Batesville maintains an
inventory of caskets at 68 company-operated Customer Service Centers in
North America. Batesville caskets are delivered in specially equipped vehicles
owned by Batesville.
In December 1993, Batesville acquired Industrias Arga, S.A. de C.V., a
casket manufacturer in Mexico.
Forecorp, Inc., which was founded in 1985, and its subsidiaries,
Forethought Life Insurance Company and The Forethought Group, Inc., are
headquartered in Batesville, Indiana. These companies serve the country's
largest network of funeral planning professionals with marketing support for
Forethought-R- funeral plans funded by life insurance policies. This
specialized funeral planning product is offered through licensed funeral
homes. Customers choose the funeral home, type of service and merchandise
they want. The selected funeral home contracts to provide the funeral
services and merchandise when needed. With funds provided by a life insurance
policy from Forethought Life Insurance Company, the Forethought program offers
inflation protection by enabling the funeral home to guarantee that the
planned funeral will be available as specified.
Certificates of authority to sell life insurance have been obtained in
forty-eight (48) states, Puerto Rico and the District of Columbia. Forethought
Life Insurance products are available through a network of over 5,000
independent funeral homes in forty-one (41) of these jurisdictions.
HEALTH CARE
Hill-Rom Company, Inc. ("Hill-Rom"), an Indiana corporation headquartered
in Batesville, Indiana, has been in the hospital equipment business since its
founding in 1929. Hill-Rom is a leading producer of mechanically, electrically
and hydraulically controlled adjustable hospital beds,
-1-
hospital procedural stretchers, hospital patient room furniture and
architectural systems specifically designed to meet the needs of
medical-surgical, critical care and perinatal providers.
The Hill-Rom line of electrically and manually adjustable hospital beds
includes models which, through sideguard controls, can be raised and lowered,
retracted and adjusted to varied orthopedic and therapeutic contours and
positions. Hill-Rom also produces beds for special departments such as
intensive care, emergency, recovery rooms and labor and delivery rooms. Other
Hill-Rom products include sideguard communications, wood finished bedside
cabinets, adjustable height overbed tables, mattresses and wood upholstered
chairs. Its architectural products include customized, prefabricated modules,
either wall-mounted or on freestanding columns, enabling medical gases,
communications and electrical services to be distributed in patient rooms.
Hill-Rom products are sold directly to hospitals throughout the United
States and Canada by Hill-Rom account executives. Most Hill-Rom products sold
in the United States are delivered by trucks owned by Hill-Rom. Hill-Rom also
operates a Canadian division which distributes Hill-Rom products, principally in
Canada, and a German subsidiary which distributes Hill-Rom products throughout
Europe. Hill-Rom also sells its domestically produced products through
distributorships throughout the world.
In 1991, Hill-Rom acquired Le Couviour, a French company which manufactures
a variety of mechanically, hydraulically and electrically controlled beds and
patient room furniture. Its products are sold directly to hospitals and nursing
homes throughout Europe.
In February 1994, Hill-Rom completed the acquisition of L. & C. Arnold
A.G., of Schorndorf/Kempen in western Germany. Arnold is one of the oldest and
largest manufacturers of hospital beds in Germany.
SSI Medical Services, Inc. ("SSI"), headquartered in Charleston, South
Carolina, was acquired by Hillenbrand in 1985 and is known to the medical
community as Support Systems International.
SSI is engaged in the manufacture of therapy beds and support surfaces and
the rental of these products in the wound care, pulmonary/trauma and
incontinence management markets. Clinical support for SSI products is provided
by a sales force composed of nurses and physician assistants. Technical support
is made available by technicians and service personnel who provide maintenance
and technical assistance from SSI Service Centers.
Within the wound care market, CLINITRON-R- Air Fluidized Therapy is
provided as a therapeutic adjunct in the treatment of advanced pressure sores,
flaps, grafts and burns. The CLINITRON unit achieves its support
characteristics from the fluid effect created by forcing air up and through
medical-grade ceramic microspheres contained in the unit's fluidization
chamber.
SSI also offers low airloss therapy through its RESTCUE-R- and
FLEXICAIR-R- units. Low airloss support is achieved by distributing air
through cushions specially designed to allow some of the air to escape
slowly. The advent of the RESTCUE bed in 1989 marked SSI's entry into the
pulmonary/trauma market by incorporating three low airloss modes of operation
into an integrated system. In 1992, SSI introduced the RESTCUE-R- CC-TM-
therapy unit which provides two additional modes of operation. The RESTCUE-R-
CC-TM- is the only unit on the market with five modes of operation on one
self-contained hospital bed. FLEXICAIR low airloss therapy is provided for
pressure sore prevention and wound treatment when ambulation is a priority or
continuous head elevation is desired. The FLEXICAIR unit, which includes a
Hill-Rom bed frame unit, regulates air pressure in five zones corresponding to
patient body areas.
Also in 1992, SSI introduced the CLENSICAIR-R- Incontinence Management
System. This innovative unit combines SSI's pressure-relieving low airloss
therapy with a breakthrough design for managing incontinence and patient
cleansing needs.
Other SSI wound care products include the ACUCAIR-R- Continuous Air Flow
System and the CLINISERT-R- Pressure Relief System. Both are offered as more
effective alternatives to conventional overlays and mattresses.
SSI therapy systems are made available to hospitals, long-term care
facilities and the home environment on a rental basis through over 150 Service
Centers located in the United States, Canada and Western Europe.
In May 1993, SSI purchased certain assets of The Mediscus Group, Inc. of
Akron, Ohio, which was engaged in business similar to SSI.
-2-
Block Medical, Inc. ("Block"), a Delaware corporation, is headquartered in
Carlsbad, California and was acquired by Hillenbrand in 1991. Its manufacturing
operations were moved to Mexico in December of 1993. Block is a manufacturer of
home infusion products for antibiotic, nutritional, chemotherapy and other drug
therapies, including HOMEPUMP-TM-, a disposable infusion pump, and
VERIFUSE-TM-, an ambulatory electronic infusion pump. HOMEPUMP, which can be
carried in a pocket or specially designed pouch, provides a simple and
convenient way for patients to administer their medication with minimum
disruption of their lives. VERIFUSE is a computerized electronic infusion
pump that is designed to handle more complex infusion medications while
enabling the patient to be ambulatory. It is programmed through the use of a
built-in bar-code scanner and is capable of delivering four infusion therapies.
Block's products are sold to homecare providers throughout the United
States and internationally by a direct sales force and through distributors.
Medeco Security Locks, Inc. ("Medeco"), founded in 1968, was purchased by
Hillenbrand in 1984. Medeco manufactures and sells a wide variety of deadbolts,
padlocks, switch locks, camlocks, electro-mechanical and other special purpose
locks for the high security market. Medeco's double locking mechanism provides
a higher level of security than is achievable by more common, single locking
devices. Medeco locks are primarily constructed of brass and hardened steel and
are manufactured in its Salem, Virginia plant.
In 1991, Medeco created the Medeco Security Electronics (MSE) division and
entered the electronic high security market with two innovative products.
INSITE VLS-TM- replaces the thousands of mechanical keys used in pay telephone
and vending machine collection. The INSITE SITEKEY-TM- provides the
state-of-the-art in electronic door security.
Medeco products are sold domestically and internationally by its sales
organization to locksmith supply distributors, original equipment manufacturers
and government agencies. Original equipment applications include vending
machines, pay telephones, safe and lock boxes, computer equipment, coin-operated
laundry machines and communications security devices.
Hill-Rom and SSI generate the predominant share of the Health Care
segment's revenues and operating profit. Hill-Rom is the larger of these two
companies. Medeco and Block had an immaterial effect on the operating results
of this segment in 1992 and 1993.
OTHER
On August 30, 1993, the Company sold its luggage business, American
Tourister, Inc., to Astrum International Corp. The results of American
Tourister, Inc., representing a substantial portion of the previously reported
Durables Segment, have been reported separately as discontinued operations in
the Statement of Consolidated Income, with prior periods restated to conform to
the current presentation.
BUSINESS SEGMENT INFORMATION
The amounts of net revenues, operating profit and identifiable assets
attributable to each of the industry segments of the Company are set forth in
tables relating to operations by business segment in Note 6 to Consolidated
Financial Statements, which statements are included under Item 8.
RAW MATERIALS
FUNERAL SERVICES
Batesville employs carbon and stainless steel, copper and bronze sheet,
wood, fabrics, finishing materials, rubber gaskets, zinc and magnesium alloy in
the manufacture of its caskets. These materials are available from several
sources.
-3-
HEALTH CARE
Principal materials used in Hill-Rom and SSI products include steel,
aluminum, stainless steel, wood, high pressure laminates, fabrics,
silicone-coated soda-lime glass beads and other materials, substantially all of
which are available from several sources. Motors for electrically operated beds
and certain other components are purchased from one or more manufacturers.
Block uses thermo-plastic materials, elastomeric membranes, electronic
components, miniature electric motors, machined metal parts and other materials,
substantially all of which are available from multiple sources.
Medeco uses brass, hardened steel and other metals, substantially all of
which are available from several sources.
COMPETITION
FUNERAL SERVICES
Batesville believes its dollar volume of sales of finished caskets is the
largest in the United States. Batesville competes on the basis of product
quality, service to its customers and price, and believes that there are
approximately two (2) other companies that also manufacture and/or sell caskets
over a wide geographic area. There are, however, throughout the United States
many enterprises that manufacture, assemble, or distribute caskets for sale
within a limited geographic area.
Forecorp, Inc. competes on the basis of service to its customers and
products offered. Forethought Life sells its products in competition with local
and state trusts for pre-need funeral planning as well as other life insurance
companies. Forethought Life believes it is the leading provider of insurance
funded pre-arranged funerals in the United States.
HEALTH CARE
Hill-Rom competes on the basis of product quality and performance, service
to its customers and price. Hill-Rom believes it is the market share leader of
electrically operated hospital beds. Hill-Rom sells its products in competition
with products of approximately ten (10) other manufacturers, some of which have
larger financial resources and sell a broader line of products.
SSI competes on the basis of service to its customers and product quality.
There are other companies which provide low airloss and other methods of patient
support and patient relief.
Block competes on the basis of product innovation and quality coupled with
attention to customer service. Block believes it is the market leader in
providing new innovations to the alternative site health care market, even
though several competitors have larger financial resources.
Medeco competes on the basis of product quality and performance, and
service to its customers. Medeco believes it is the market share leader in the
mechanical high security lock market; however, other lock manufacturers produce
a broader product line and have larger financial resources. Medeco believes
that its patents and channels of distribution are important to its business.
RESEARCH
Each of the Company's operating subsidiaries devotes research efforts to
develop and improve its products as well as its manufacturing and production
methods. All research and development expenses are Company sponsored and, for
new products, amounted to approximately $22,270,000 in 1993, $20,321,000 in
1992, and $14,634,000 in 1991. Additionally, $8,089,000 was spent in 1993,
$7,689,000 in 1992, and $7,974,000 in 1991 on research and development
pertaining to the improvement of existing products. The above amounts exclude
expenditures relative to discontinued operations.
-4-
PATENTS AND TRADEMARKS
The Company owns a number of patents on its products and manufacturing
processes which are of importance to it, but it does not believe that any single
patent or related group of patents are of material significance to the business
of the Company as a whole.
The Company also owns a number of trademarks and service marks relating to
its products and product services which are of importance to it, but it does not
believe that any single trademark or service mark is of material significance to
the business of the Company as a whole.
EMPLOYEES
As of January 18, 1994, the Company employed approximately 9,800 persons in
its operations in the United States, Canada and Europe.
ENVIRONMENTAL PROTECTION
Hillenbrand Industries, Inc. is committed to operating all of its
businesses in a way that protects the environment. The Company has voluntarily
entered into remediation agreements with environmental authorities, and has been
issued Notices of Violation alleging violations of certain permit conditions.
Accordingly, the Company is in the process of implementing plans of abatement in
compliance with agreements and regulations. The Company has also been notified
as a potentially responsible party in investigations of certain offsite disposal
facilities. The cost of all plans of abatement and waste site cleanups in which
the Company is currently involved is not expected to exceed $5,000,000. The
Company has provided adequate reserves in its financial statements for these
matters. Compliance with other current governmental provisions relating to
protection of the environment also does not materially affect the Company's
capital expenditures, earnings or competitive position. Recent changes in
environmental law might affect the Company's future operations, capital
expenditures and earnings. The cost of complying with these provisions is not
known.
FOREIGN OPERATIONS AND EXPORT SALES
Information about the Company's foreign operations is set forth in tables
relating to geographic information in Note 6 to Consolidated Financial
Statements, which statements are included under Item 8.
The Company's export revenues constituted less than 10% of consolidated
revenues in 1993 and prior years.
ORDER BACKLOG
Order backlogs are immaterial to the Company and there was no material
change in backlogs during 1993.
-5-
EXECUTIVE OFFICERS OF THE REGISTRANT
W August Hillenbrand, 53, was elected Chief Executive Officer of the
Company on April 11, 1989 and has been President since October 21, 1981. Prior
to that he had been a Vice President of the Company since 1972 and has been
employed by the Company throughout his business career.
Lonnie M. Smith, 49, was elected Senior Executive Vice President, effective
January 1, 1982. From 1978 through 1981, he held the position of Executive Vice
President of American Tourister, Inc. From 1976 to 1978, he was Senior Vice
President of Strategic Planning for the Company. Prior to that he was employed
by the Boston Consulting Group, business consultants.
Tom E. Brewer, 55, has been employed by the Company since May 16, 1983, and
was elected Senior Vice President and Chief Financial Officer on May 23, 1983
and Treasurer on September 6, 1991. He had been employed by the Firestone Tire
and Rubber Company for the prior 22 years, where he served as Corporate Vice
President and Treasurer.
George E. Brinkmoeller, 58, was elected Vice President, Corporate Services
on December 2, 1979, had been Director of Corporate Services since January 1,
1975, and had been Manager of Affiliated Operations since January 1, 1971.
Mark R. Lindenmeyer, M.D., 47, was elected Vice President, General Counsel
and Secretary of the Company on October 7, 1991. He has been employed by the
Company since August 18, 1986 as Litigation Counsel. Prior to joining the
Company, Dr. Lindenmeyer served in the U.S. Army as a military trial attorney
and judge and was a partner in a Batesville, Indiana law firm. He has been a
practicing physician since 1986 and a licensed attorney since 1972.
Brian J. Leitten, 44, was elected Vice President, Corporate Development and
Technology on November 4, 1991. He has been employed by the Company since
September 1, 1983, serving as Intellectual Property Counsel and, since 1986,
Director, Corporate Development and Technology. Prior to joining the Company he
was a partner with the Washington, D.C. law firm of Burns, Doane, Swecker &
Mathis.
David L. Robertson, 48, has been employed by the Company since November 15,
1982, and was elected Vice President of Human Resources on January 25, 1983.
For the prior ten years, he was employed by the Olin Corporation, most recently
as Corporate Director of Human Resources.
Bradley K. Reedstrom, 32, was elected Vice President, Corporate Planning on
December 1, 1991. He has been employed by the Company since June 13, 1985,
serving in various capacities in the Corporate Planning department, most
recently as Director.
James D. Van De Velde, 47, was elected Vice President, Controller on May
13, 1991. He joined the Company on September 1, 1980 as Director, Taxes. Prior
to that he was employed by the public accounting firm of Price Waterhouse.
Robyn P. Washburn, 38, was elected Vice President, Continuous Improvement
on April 9, 1991. Prior to that, he served as Vice President, Corporate
Planning, and has been employed by the Company since May 10, 1982.
-6-
ITEM 2. PROPERTIES
The principal properties of the Company and its subsidiaries are listed
below, and are owned by the Company or its subsidiaries subject to no material
encumbrances except for those facilities (*) which were constructed with funds
obtained through Government Issued Bonds (see Note 3 to the Consolidated
Financial Statements). All facilities are suitable for their intended purpose,
are being efficiently utilized and are believed to provide adequate capacity to
meet demand for the next several years.
LOCATION DESCRIPTION PRIMARY USE
-------- ----------- -----------
HEALTH CARE AND OTHER:
* Batesville, IN Manufacturing plant and Manufacture of hospital
distribution facility equipment
Office facilities Administration
Charleston, SC Office facility and Administration and
assembly plant assembly of therapy
units
Kempen and Schorndorf, Manufacturing plants and Manufacture of hospital and
Germany office facilities nursing home equipment
Pluvigner, France Manufacturing plant and Manufacture of hospital
office facility equipment
Salem, VA Manufacturing plant and Manufacture of mechanical
office facility and electronic locks
FUNERAL SERVICES:
Batesville, IN Manufacturing plants Manufacture of metal
caskets
Office facilities Administration
Manchester, TN Manufacturing plants Manufacture of metal
caskets
Campbellsville, KY Manufacturing plant Manufacture of metal
caskets
Vicksburg, MS Kiln drying and lumber Drying and dimensioning
cutting plant lumber
* Batesville, MS Manufacturing plant Manufacture of hardwood
caskets
Nashua, NH Manufacturing plant Manufacture of hardwood
caskets
In addition to the foregoing, the Company leases or owns a number of
warehouse distribution centers and sales offices throughout the United States
and Europe.
ITEM 3. LEGAL PROCEEDINGS
Hill-Rom was recently notified that it is part of an investigation into the
hospital bed industry by the Antitrust Division of the Department of Justice
(the "DOJ"). As a result, the Company was issued a Civil Investigation Demand
by the DOJ and served with a subpoena to allow review of internal Hill-Rom files
and business practices to determine any irregularities. The Company is
cooperating with the DOJ in its investigation. Although the Company believes
that it is not in violation of any antitrust law or statute and expects no
material, adverse financial effect, it is impossible to predict with
certainty when the investigation will be concluded, what the outcome of the
investigation will be and what effect, if any, the outcome might have on the
Company's financial condition or results of operations.
There is no other pending litigation of a material nature in which the
Company or its subsidiaries are involved.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders for the
quarter ended November 27, 1993.
-7-
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
MARKET INFORMATION
Hillenbrand Industries' common stock is traded on the New York Stock
Exchange under the ticker symbol "HB". The following table reflects the range
of high and low selling prices of the Company's common stock by quarter for 1993
and 1992.
1993 1992
----------------- -----------------
High Low High Low
---- --- ---- ---
First Quarter $43 1/2 $38 1/2 $39 1/4 $29 1/4
Second Quarter $48 5/8 $41 7/8 $43 5/8 $34 3/8
Third Quarter $45 1/2 $38 1/4 $42 $34 3/8
Fourth Quarter $41 7/8 $36 1/2 $42 $37 1/2
HOLDERS
On January 18, 1994, there were approximately 27,000 holders of the
Company's common stock.
DIVIDENDS
The Company has paid cash dividends on its common stock every quarter
since its first public offering in 1971, and those dividends have increased each
year since 1972. Dividends are paid near the end of February, May, August and
November to shareholders of record near the end of January, April, July and
October. Cash dividends of $.45 ($.1125 per quarter) in 1993 and $.35 ($.0875
per quarter) in 1992 were paid on each share of common stock outstanding. Cash
dividends will be $.57 ($.1425 per quarter) in 1994.
ITEM 6. SELECTED FINANCIAL DATA
The following table presents selected consolidated financial data of
Hillenbrand Industries, Inc. for fiscal years 1989 through 1993.
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
(IN THOUSANDS EXCEPT PER SHARE DATA)
Net revenues $1,447,913 $1,303,062 $1,084,487 $981,928 $872,003
Income from continuing
operations $132,486 $111,165 $89,985 $72,081 $63,629
Income from continuing
operations per share $1.86 $1.55 $1.23 $.97 $.86
Total assets $2,270,747 $1,935,207 $1,532,160 $1,268,885 $1,044,799
Long-term debt $107,887 $185,081 $103,589 $108,119 $113,440
Cash dividends per share $.45 $.35 $.29 $.28 $.25
-8-
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Company's consolidated financial statements and notes thereto. The discussion
of results of operations excludes the results of the Company's luggage business,
American Tourister, Inc., which was sold on August 30, 1993. The results of
American Tourister, previously combined with Medeco Security Locks to form the
Durables segment, have been reported separately as discontinued operations in
the Statement of Consolidated Income. Results for American Tourister
represented a substantial portion of the Durables segment as previously
reported. Results for Medeco are now included in the Health Care segment (which
also includes Hill-Rom, SSI and Block) due to Medeco's relative size. The
Funeral Services segment includes Batesville Casket and Forethought. Results
for prior years have been restated to conform to the current presentation.
RESULTS OF OPERATIONS
1993 COMPARED WITH 1992
Net revenues increased $144.9 million, or 11.1%, to $1.4 billion in 1993. This
represents the twenty-second consecutive annual increase in revenues since the
Company's initial public offering in 1971. Operating profit of $234.3 million
and income from continuing operations of $132.5 million were, respectively,
19.0% and 19.2% higher than in 1992. Fourth quarter 1993 results reflect the
$11.6 million net gain on the sale of American Tourister and the $14.0 million
write-down of goodwill relative to the acquisition of Block Medical in 1991.
First quarter 1992 net income includes the $10.7 million favorable effect of the
change in method of accounting for income taxes. Excluding these non-recurring
items, total year net income (including the net income (loss) from discontinued
operations in both years) increased 40.5% in 1993.
Net revenues in the Health Care segment increased $84.7 million, or 10.7%,
to $875.7 million in 1993. This growth was lead by Hill-Rom, which recorded
increased sales of electric beds (primarily the Advance-R- series), the
Affinity-TM- birthing bed and refurbished hospital equipment, as well as
higher sales in Europe and Canada. Revenue growth at SSI was driven by
increased units in use in its acute care, long-term care and home care
markets. SSI's European revenues were down, despite growth in units in use,
due to strong price competition in that market. The acquisition of certain
assets of The Mediscus Group in May 1993 contributed marginally to SSI's
overall revenue growth. Although Block Medical's sales continue to be
disappointing, sales of the Verifuse-R- ambulatory electronic pump and its
disposable administration sets increased in 1993. Sales of Homepump-R-
disposable infusion pumps were down slightly in 1993, but improved steadily
during the second half of the year. At Medeco, sales of telephone locks
(mechanical and electric) and door security products increased due to strong
market acceptance of new product offerings and positive consumer spending.
Net revenues in the Funeral Services segment increased $60.2 million, or
11.8%, to $572.2 million in 1993. Net sales at Batesville Casket were higher
due to increased unit shipments (including the marginal effect of acquired
distributors), successful new product introductions (including a line of
cremation products), improved product mix, and a moderate price increase.
Forethought's revenue continued its strong growth pattern in 1993 although, as
anticipated, at a rate slightly lower than in prior years. Investment income
was up due to a larger invested asset base, partially offset by lower yields.
Earned premium revenue was higher due to increased policies in force, year over
year.
The growth in consolidated operating profit of 19.0% compared with
consolidated revenue growth of 11.1% reflects the improvement in cost of
revenues as a percentage of revenues from 51.8% in 1992 to 51.6% in 1993, and
the improvement in administrative, distribution and selling expenses as a
percentage of revenues from 33.1% in 1992 to 32.2% in 1993. Operating profit in
the Health Care segment of $132.7 million in 1993 was $16.3 million, or 14.0%,
higher than in 1992. Hill-Rom's profit margins were negatively affected by
continued growth in European operations (which generally realize lower margins),
increased refurbished equipment sales and higher sales
-9-
discounts in the U.S. and Canada. These factors were largely offset by improved
efficiency, productivity and cost control in all operations. Improved operating
results at SSI reflected increased therapy unit utilization, the benefits of the
field operations reorganization in 1991, and lower depreciation expense
associated with the Company's acquisition of SSI in 1985. The results of SSI's
international operations were negatively affected by a very strong competitive
environment. While Block is not currently contributing to the profitability of
the Health Care segment, it continues to improve its products and operations.
In the fourth quarter of 1993 the Company reassessed its investment in Block,
which was acquired at the end of fiscal year 1991. Based on Block's operating
results in 1992 and 1993 and management's current expectations regarding Block's
future earnings and cash flow, the Company recorded a charge of $14.0 million to
reduce the carrying value of the goodwill related to the Block acquisition.
This charge is reflected in administrative, distribution and selling expenses.
Without this non-recurring charge, operating profit in the Health Care segment
would have increased $30.3 million, or 26.0%, in 1993. Medeco's margins
continue to improve due to increases in productivity and efficiency.
Operating profit in the Funeral Services segment of $114.6 million was up
$16.5 million, or 16.9%, from 1992. Batesville Casket's results were enhanced
by improved manufacturing, distribution and administrative efficiencies.
Increased sales of higher value products also contributed to Batesville's
improved margins. Forethought's profitability was favorably affected by higher
investment income, higher insurance in force and the leveraging of fixed
administrative expenses.
Unassigned corporate administrative expenses declined $4.6 million, or
26.1%, due primarily to lower incentive compensation accruals. Compensation
earned under provisions of the performance compensation plan (approved by
shareholders on April 7, 1992) in 1992 and 1993, based on the performance of
certain subsidiaries and the Company in those years, was accrued primarily in
1992. This factor also positively affected the comparative operating results of
both business segments.
Other expense, net, of $276 thousand was $6.0 million less than in 1992.
This change was due to favorable foreign currency transaction experience in 1993
relative to 1992 and lower net expenses associated with the Company's
corporate-owned life insurance program.
The effective income tax rate on income from continuing operations
increased from 37.5% in 1992 to 40.2% in 1993 primarily as the result of a
corporate income tax rate increase enacted retroactive to January 1, 1993 as
part of the 1993 tax legislation and the write-down of Block goodwill, which
cannot be deducted for tax purposes. This increase was partially offset by
decreases in both the state and foreign effective income tax rates.
1992 COMPARED WITH 1991
Net revenues increased $218.6 million, or 20.2%, to $1.3 billion in 1992.
Operating profit of $196.8 million and income from continuing operations of
$111.2 million were, respectively, 23.7% and 23.5% higher than in 1991. Net
income in 1992 of $116.3 million reflected the $10.7 million favorable effect of
the change in method of accounting for income taxes. Excluding this
non-recurring item, net income increased 18.3% in 1992.
Net revenues in the Health Care segment increased $165.5 million, or 26.4%,
to $791.0 million. Hill-Rom's sales growth was driven by increased shipments of
new and enhanced products and expansion in Europe, including sales by Le
Couviour which was acquired in the fourth quarter of 1991. In 1992, SSI
achieved revenue growth in its acute care, long-term care, home care and
European markets as an expanded product offering and increased service improved
the Company's competitive position. The revenues of Block Medical (acquired on
the last day of fiscal 1991) contributed only marginally to the year-to-year
growth of the Health Care segment. Medeco's sales growth was due to successful
new product introductions and improved economic conditions.
Net revenues in the Funeral Services segment increased $53.1 million, or
11.6%, to $512.0 million in 1992. Batesville Casket's sales were up due to
improved product mix, higher unit volume and a moderate price increase.
Forethought's earned premium revenue grew primarily as a result of increased
business in force, and investment income growth was driven by a higher invested
asset base, partially offset by marginally lower yields.
Consolidated operating profit increased 23.7% compared to the revenue
growth of 20.2%. Cost of revenues as a percentage of revenues improved from
52.8% in 1991 to 51.8% in 1992. Administrative, distribution and selling
expenses as a percentage of revenues increased from 32.6%
-10-
in 1991 to 33.1% in 1992. Operating profit in the Health Care segment of $116.4
million was $26.0 million, or 28.7%, higher than in 1991. This growth reflected
higher revenues, improved profitability on new products, increased efficiency
and European expansion. Additionally, depreciation and amortization expense
relative to the SSI acquisition peaked in 1990 and has declined in each
subsequent year. Hill-Rom's profit margins were negatively affected by the
inclusion of results for Le Couviour. The benefits of a major manufacturing
realignment and other efficiency improvements favorably affected fixed costs and
productivity at Medeco.
Operating profit in the Funeral Services segment of $98.1 million was $16.7
million, or 20.6%, higher than in 1991. Batesville Casket's profitability
improved as a result of improved product mix and increased manufacturing
efficiencies. Forethought's operating profit growth reflected increased
insurance in force, higher investment income and economies of scale in fixed
operating expenses.
Unassigned corporate administrative expenses of $17.7 million were $5.0
million higher than in 1991. Incentive compensation was higher at corporate and
both business segments due to compensation accrued relative to the performance
compensation plan approved in 1992. Compensation relative to the performance of
certain subsidiaries and the Company in 1992 and 1993 under provisions of this
plan was accrued primarily in 1992.
Interest expense of $21.2 million in 1992 was $8.0 million higher than in
1991 due to the issuance of debentures in December of 1991 and debt associated
with the acquisition of Le Couviour, partially offset by lower imputed interest
on the SSI earn-out payments and the retirement in January 1992 of the remaining
balance on a 9-1/8% promissory note. Investment income of $8.4 million was $2.1
million lower than in 1991. Higher average levels of interest-earning assets
were offset by significantly lower yields. Other expense, net, of $6.2 million
was $3.3 million lower than in 1991 due primarily to the discontinuation of the
sale of SSI accounts receivable.
The effective income tax rate on income from continuing operations was
37.5% in 1992 compared with 38.7% in 1991. This decrease resulted from
implementation of various Federal and state planning strategies.
INFLATION
Changing prices had a negligible effect on results of operations in 1993,
1992 and 1991. Improvements in manufacturing and administrative efficiency
continue to minimize the effect of price increases.
LIQUIDITY AND CAPITAL RESOURCES
Net cash generated from operating activities and selected borrowings represent
the Company's primary sources of funds for growth of the business, including
capital expenditures and acquisitions. Cash and cash equivalents (excluding
investments of the insurance operation) grew from $150.0 million at the end of
1992 to $210.2 million at the end of 1993, an increase of $60.2 million.
Net cash flows from operating activities of $218.5 million compares with
$200.4 million and $199.3 million generated in 1992 and 1991, respectively. The
decline in depreciation and amortization expense in 1993 reflects lower expense
associated with the SSI acquisition, partially offset by the write-down of
goodwill relative to the Block acquisition. The $19.6 million increase in
accounts receivable was largely a function of higher sales volume, especially in
the Health Care segment in the fourth quarter. The $50.6 million increase in
1992, as well as the increase in days sales outstanding (DSO) from 64 to 68, was
attributable to the unwinding of the SSI accounts receivable sales program
($37.0 million effect). Strong fourth quarter shipments at Hill-Rom also
contributed to the higher receivables balance at year-end 1992. DSO increased
from 68 at year-end 1992 to 70 at year-end 1993 due primarily to the sale of
American Tourister, which had DSO considerably below that of the Company as a
whole. This factor was mostly offset by the significant success realized by SSI
over the past year in the improvement of third party collections. Accrued
expenses were essentially unchanged between 1993 and 1992 as lower income taxes
payable (due to higher payments) was offset by higher accrued compensation. The
$48.7 million increase in accrued expenses in 1992 reflected higher
compensation, including the effect of the performance compensation plan adopted
in 1992, and interest expense.
Capital spending in 1993 was $112.7 million compared to $98.3 million in
1992 and $59.0
-11-
million in 1991. The production of therapy units at SSI increased from $17.4
million in 1992 to $31.8 million in 1993 as new products and enhanced existing
products were placed in service. The $39.3 million increase in 1992 was due to
new products and expansion of facilities in the Health Care segment and upgrade
of the aircraft fleet which is utilized primarily for the Company's customer
visitation programs. There were no material commitments for capital spending at
year-end 1993.
Acquisition payments in 1993 were primarily for the purchase of certain
assets of The Mediscus Group, a provider of specialized therapeutic beds and
related services. Its operations have been fully integrated into SSI.
Acquisition payments in 1992 were for Le Couviour, and payments in 1991 were for
Le Couviour and Block.
Proceeds (net of disposition costs) on the sale of American Tourister were
$55.3 million in 1993.
The Company's long-term debt-to-equity ratio decreased from 33.8% at
year-end 1992 to 16.9% at year-end 1993. An unsecured promissory note in the
amount of $75.0 million due in annual installments in 1994, 1995 and 1996 was
reclassified to current liabilities. It is the Company's intent to prepay this
note in full in 1994 without penalty. The Company's long-term debt agreement
with an insurance company permits a debt-to-tangible net worth ratio of up to
90%. With that ratio at 36.7% at year-end 1993, this debt capacity, combined
with existing cash and other working capital, affords the Company considerable
flexibility in the funding of internal and external growth. In the fourth
quarter of 1993, the Company filed a registration statement with the Securities
and Exchange Commission for the future issuance of up to $200 million of
debentures. The proceeds will be used for general corporate purposes, including
working capital, capital expenditures, possible future acquisitions, refinancing
of indebtedness and redemption of securities.
Insurance assets of $1,212.4 million grew 32.9% over the past year. Cash
and invested assets of $934.0 million constitute 77.0% of the assets. The
investments are concentrated in the highest grade, Federal Government, Federal
agency and corporate bond securities. The invested assets are more than
adequate to fund the insurance reserves and other liabilities of $846.9 million.
Statutory reserves represent 65% of the face value of insurance in force. This
percentage is far greater than the 1992 national average of 6% for all U.S. life
insurance companies. The statutory capital and surplus as a percent of
statutory liabilities of the life insurance subsidiary of Forethought was 8.6%
at December 31, 1993, up from 7.4% on December 31, 1992. The long-term deferred
tax benefit relative to insurance operations results from differences in
recognition of insurance policy revenues and expenses for financial accounting
and tax reporting purposes. Financial accounting rules require ratable
recognition of insurance product revenues over the lives of the respective
policies. These revenues are recognized in the year of policy issue for tax
purposes. This results in a deferred future tax benefit. Insurance policy
acquisition expenses must be capitalized and amortized for both financial
accounting and tax purposes. Financial accounting rules require a greater
amount to be capitalized and amortized than for tax reporting. This results in
a deferred future tax cost, which partially offsets the deferred future tax
benefit. The net deferred future tax benefit increased $11.0 million in 1993,
compared to $13.0 million in 1992. The reduction in the year to year net
increase was attributable to favorable final regulations issued by the
Department of the Treasury which reduced the amount of policy acquisition
expenses required to be capitalized for tax purposes. The net effect of the
temporary differences discussed above is expected to cause the net deferred tax
benefit to increase in the future.
Cumulative treasury stock acquired increased to 10,213,272 shares in 1993,
up from 9,872,446 shares in 1992. The Company currently has Board of Directors'
authorization to repurchase up to a total of 14,000,000 shares. Repurchased
shares are used for general business purposes. From the cumulative shares
acquired, 28,287 shares were reissued in 1993 to individuals under the
provisions of the Senior Executive Compensation Program. A total of 4,700
restricted stock shares were forfeited in 1993.
Under the restricted stock plan approved by the shareholders of the Company
on April 14, 1987, 324,600 shares have been awarded, 268,132 shares have been
distributed and/or deferred, and 56,468 shares have been forfeited to date. No
additional awards are contemplated at this time.
Under the performance compensation plan approved by the shareholders of the
Company on April 7, 1992, 386,096 shares were earned in 1993 based on each
subsidiary's and the Company's performance in 1992 and 1993.
Quarterly cash dividends were raised 28.6% from 8.75 cents per share in
1992 to 11.25 cents in 1993. An additional increase of 26.7% to 14.25 cents
per share was announced in January 1994. The Company expects to continue to
share its growth with its shareholders.
-12-
FACTORS THAT MAY AFFECT FUTURE RESULTS
Changes in the health care delivery system will continue to impact the Company's
U.S. customers in the Health Care segment and, therefore, the products and
services the Company provides. The uncertainty and extent of future health care
reform legislation may also affect the purchasing patterns of these customers.
Batesville Casket competes in an essentially flat market. Its future growth
will depend in part on its ability to continue to gain market share by offering
innovative products and services. The Company believes that the investments it
has made in new products and services and process improvements, coupled with its
leadership position in the markets it serves, will enable it to successfully
compete in this changing environment.
REPORTING
The Financial Accounting Standards Board has recently issued two Statements of
Financial Accounting Standards (SFAS) which apply to the Company. SFAS No. 112,
"Employers' Accounting for Post Employment Benefits," was issued in November
1992, and establishes standards of financial accounting and reporting for the
estimated cost of benefits which will be provided by an employer to former or
inactive employees after employment but before retirement. Adoption of this
standard, which will occur no later than fiscal year 1995, is not expected to
have a material effect on the financial condition or results of operations of
the Company.
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," was issued in May 1993. SFAS 115 requires that investments in debt
and equity securities be accounted for and classified as follows: debt
securities that the Company has the positive intent and ability to hold to
maturity are classified as "held-to-maturity" and reported at amortized cost;
debt and equity securities that are bought and held principally for resale in
the near term are classified as "trading securities" and reported at fair value,
with unrealized gains and losses included in earnings; and debt and equity
securities not classified as either of the above are classified as
"available-for-sale" and reported at fair value, with unrealized gains and
losses charged or credited directly to a separate component of shareholders'
equity. This Statement will primarily affect the carrying value and
presentation of Forethought's investment assets and will be adopted by the
Company no later than fiscal year 1995.
-13-
KEY FINANCIAL DATA (A)
1993 1992 1991 1990 1989
INCOME STATEMENT
% Pretax, preinterest expense,
income to revenues 16.8 15.3 14.8 13.9 14.5
% Net income to revenues 10.1 8.9 8.2 7.7 8.2
% Income taxes to pretax income 40.2 37.5 38.7 40.1 41.4
---- ---- ---- ---- ----
BALANCE SHEET
% Long-term debt to total capital 14.4 25.3 17.4 19.9 22.2
% Total debt to total capital 26.5 31.9 25.0 21.6 24.5
Current assets/current liabilities (b) 2.0 2.1 1.7 2.2 2.3
Working capital turnover (b) 4.7 5.1 7.6 5.6 5.7
---- ---- ---- ---- ----
PROFITABILITY
% Return on total capital 19.5 15.9 15.0 13.9 14.0
% Return on average shareholders' equity 25.2 23.1 19.7 18.2 19.5
---- ---- ---- ---- ----
Revenues/inventories (b) 14.7 14.1 11.3 12.2 11.6
Revenues/receivables (b) 5.2 5.3 5.4 5.7 5.5
---- ---- ---- ---- ----
STOCK MARKET
Year-end price/earnings (P/E) 20.4 25.5 24.4 17.9 22.2
Year-end price/book value 4.6 5.4 4.4 3.1 4.0
---- ---- ---- ---- ----
(A) RESTATED, WHERE APPLICABLE, TO EXCLUDE THE RESULTS OF THE DISCONTINUED
OPERATION.
(B) EXCLUDES INSURANCE OPERATIONS.
CONSOLIDATED INCOME STATEMENT COMPARISON
Fiscal Year Percent Change
(DOLLARS IN MILLIONS) 1993 1992 1991 1993/92 1992/91 1991/90
Net revenues $1,447.9 $1,303.1 $1,084.5 11.1% 20.2% 10.4%
Cost of revenues 747.5 674.4 572.3 10.8% 17.8% 9.9%
------- ------- ------- ---- ---- ----
Gross profit 700.4 628.7 512.2 11.4% 22.7% 11.1%
Administrative, distribution and
selling expenses 466.1 431.9 353.1 7.9% 22.3% 7.0%
------- ------- ------- ---- ---- ----
Operating profit 234.3 196.8 159.1 19.0% 23.7% 21.2%
Other expense, net (12.7) (19.0) (12.2) (33.1%) 56.2% 11.8%
------- ------- ------- ---- ---- ----
Income from continuing operations
before income taxes 221.6 177.8 146.9 24.6% 21.0% 22.1%
Income taxes 89.1 66.6 56.9 33.8% 17.0% 18.0%
------- ------- ------- ---- ---- ----
Income from continuing operations 132.5 111.2 90.0 19.2% 23.5% 24.8%
Income (loss) from discontinued
operations net of income taxes 1.8 (5.7) (0.8) 131.5% (607.0%) (122.2%)
Gain on disposal of discontinued
operations net of income taxes 11.5 - - N/A N/A N/A
------- ------- ------- ---- ---- ----
Income before cumulative effect of a change
in method of accounting for income taxes 145.8 105.5 89.2 38.2% 18.3% 17.9%
Cumulative effect of change in method
of accounting for income taxes - 10.8 - N/A N/A N/A
------- ------- ------- ---- ---- ----
Net income $145.8 $116.3 $89.2 25.4% 30.4% 17.9%
------- ------- ------- ---- ---- ----
-14-
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
FINANCIAL STATEMENTS:
Report of Independent Accountants 16
Statements of Consolidated Income for the three years
ended November 27, 1993 17
Statements of Consolidated Shareholders' Equity for the
three years ended November 27, 1993 18
Statements of Consolidated Cash Flows for the three years
ended November 27, 1993 19
Consolidated Balance Sheets at November 27, 1993 and
November 28, 1992 20
Notes to Consolidated Financial Statements 22
Financial Statement Schedules for the three years ended
November 27, 1993:
Schedule V - Equipment Leased to Others and Property 37
Schedule VI - Accumulated Depreciation of Equipment
Leased to Others and Property 38
Schedule VIII - Valuation and Qualifying Accounts 39
Schedule IX - Short-Term Borrowings 40
Schedule X - Supplementary Income Statement Information 41
All other schedules are omitted because they are not applicable or
the required information is shown in the financial statements or the
notes thereto.
-15-
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of
Hillenbrand Industries, Inc.
In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of
Hillenbrand Industries, Inc. and its subsidiaries at November 27, 1993 and
November 28, 1992, and the results of their operations and their cash flows for
each of the three years in the period ended November 27, 1993, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 1 to the financial statements, the Company changed its
method of accounting for income taxes in 1992.
PRICE WATERHOUSE
Indianapolis, Indiana
January 10, 1994
-16-
STATEMENT OF CONSOLIDATED INCOME
HILLENBRAND INDUSTRIES, INC. AND SUBSIDIARIES
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
November 27, November 28, November 30,
Year Ended 1993 1992 1991
Net revenues $ 1,447,913 $ 1,303,062 $ 1,084,487
Cost of revenues 747,519 674,377 572,289
Administrative, distribution and selling expenses 466,116 431,892 353,128
---------- ---------- ----------
Operating profit 234,278 196,793 159,070
Other income (expense), net:
Interest expense (21,325) (21,233) (13,199)
Investment income, net 8,872 8,434 10,512
Other (276) (6,241) (9,500)
---------- ---------- ----------
Income from continuing operations
before income taxes 221,549 177,753 146,883
Income taxes 89,063 66,588 56,898
---------- ---------- ----------
Income from continuing operations 132,486 111,165 89,985
Income (loss) from discontinued
operation net of income taxes 1,778 (5,642) (798)
Gain on disposal of discontinued
operation net of income taxes 11,554 - -
---------- ---------- ----------
Income before cumulative effect of a
change in accounting principle 145,818 105,523 89,187
Cumulative effect of change in method
of accounting for income taxes - 10,747 -
---------- ---------- ----------
Net income $ 145,818 $ 116,270 $ 89,187
---------- ---------- ----------
Earnings per common share:
Income from continuing operations $ 1.86 $ 1.55 $ 1.23
Income (loss) from discontinued operation
net of income taxes .02 (.08) (.01)
Gain on disposal of discontinued
operation net of income taxes .16 - -
Cumulative effect of change in method
of accounting for income taxes - 0.15 -
---------- ---------- ----------
Net income per common share $ 2.04 $ 1.62 $ 1.22
---------- ---------- ----------
Dividends per common share $ .45 $.35 $ .29
---------- ---------- ----------
Average number of common shares outstanding 71,406,998 71,915,336 72,885,126
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-17-
STATEMENT OF CONSOLIDATED SHAREHOLDERS' EQUITY
HILLENBRAND INDUSTRIES, INC. AND SUBSIDIARIES
(DOLLARS IN THOUSANDS)
November 27, November 28, November 30,
Year Ended 1993 1992 1991
Common stock $ 4,442 $ 4,442 $ 4,442
------- ------- -------
Additional paid-in capital-Beginning of year 3,228 2,880 2,111
Excess of fair market value over cost on
reissuance of treasury shares 1993 - 23,587;
1992 - 8,358; 1991 - 127,298 666 255 42
Other 6 93 727
------- ------- -------
End of year 3,900 3,228 2,880
------- ------- -------
Retained earnings-Beginning of year 666,241 575,098 507,045
Net income 145,818 116,270 89,187
Dividends (32,136) (25,127) (21,134)
------- ------- -------
End of year 779,923 666,241 575,098
------- ------- -------
Unearned restricted stock compensation - (206) (597)
------- ------- -------
Foreign currency translation adjustment (1,643) 6,462 3,261
------- ------- -------
Treasury stock-Beginning of year (132,423) (94,261) (80,967)
Shares acquired in 1993 - 340,826;
1992 - 1,088,000; 1991 - 689,252 (14,662) (38,300) (14,747)
Reissued 395 138 1,453
------- ------- -------
End of year (146,690) (132,423) (94,261)
------- ------- -------
Total Shareholders' Equity $ 639,932 $ 547,744 $ 490,823
------- ------- -------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-18-
STATEMENT OF CONSOLIDATED CASH FLOWS
HILLENBRAND INDUSTRIES, INC. AND SUBSIDIARIES
(DOLLARS IN THOUSANDS)
November 27, November 28, November 30,
Year Ended 1993 1992 1991
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 145,818 $ 116,270 $ 89,187
Adjustments to reconcile net income to
net cash flows from operating activities:
Depreciation, amortization and write-down of goodwill 112,743 117,588 97,165
Change in noncurrent deferred income taxes (15,780) (27,863) (22,607)
Cumulative effect of change in accounting
for income taxes - (10,747) -
Gain on disposal of discontinued operation (16,306) - -
Current income taxes on gain 4,752 - -
Change in working capital excluding cash, current
debt, earn-out accruals, acquisitions and dispositions:
Trade accounts receivable (19,617) (50,552) (2,076)
Inventories (2,698) 16 8,305
Other current assets 5,652 (3,365) (603)
Trade accounts payable 2,368 4,626 5,168
Accrued expenses (596) 48,700 20,503
Change in insurance items:
Benefit reserves 190,254 169,957 151,293
Unearned revenue 83,107 72,823 49,726
Deferred acquisition costs (52,313) (43,415) (38,799)
Investments, net (231,368) (197,476) (170,258)
Other, net 12,490 3,872 12,269
------- ------- -------
Net Cash Flows From Operating Activities 218,506 200,434 199,273
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (112,735) (98,277) (59,026)
Retirements, net 5,697 2,846 2,998
------- ------- -------
Net capital expenditures (107,038) (95,431) (56,028)
Contingent earn-out payments - (30,257) (57,834)
Acquisitions of businesses, net of cash acquired (21,736) (28,900) (80,097)
Proceeds from disposal of discontinued operation 55,285 - -
------- ------- -------
Net Cash Flows From Investing Activities (73,489) (154,588) (193,959)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to short-term debt 7,052 36,780 5,635
Reductions to short-term debt (37,794) (6,429) -
Additions to long-term debt 21 102,269 -
Reductions to long-term debt (7,931) (20,479) (8,688)
Payment of cash dividends (32,136) (25,127) (21,134)
Treasury stock acquired (14,662) (38,300) (14,747)
Treasury stock reissued 395 138 1,453
Unearned restricted stock compensation 206 391 282
------- ------- -------
Net Cash Flows From Financing Activities (84,849) 49,243 (37,199)
------- ------- -------
TOTAL CASH FLOWS 60,168 95,089 (31,885)
CASH AND CASH EQUIVALENTS:
At Beginning of Period 149,989 54,900 86,785
------- ------- -------
At End of Period $ 210,157 $ 149,989 $ 54,900
------- ------- -------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-19-
CONSOLIDATED BALANCE SHEET
HILLENBRAND INDUSTRIES, INC. AND SUBSIDIARIES
(DOLLARS IN THOUSANDS)
November 27, November 28,
1993 1992
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 210,157 $ 149,989
Trade accounts receivable, less allowances of
$11,271 in 1993 and $15,574 in 1992 253,818 248,933
Inventories 90,900 111,604
Other current assets 19,151 22,844
--------- ---------
Total current assets 574,026 533,370
--------- ---------
EQUIPMENT LEASED TO OTHERS 229,934 252,080
Less accumulated depreciation 171,529 204,342
--------- ---------
Equipment leased to others, net 58,405 47,738
--------- ---------
PROPERTY 557,297 532,046
Less accumulated depreciation 288,914 272,610
--------- ---------
Property, net 268,383 259,436
--------- ---------
OTHER ASSETS:
Intangible assets at amortized cost:
Patents and trademarks 51,155 60,909
Excess of cost over net asset values of
acquired companies 82,547 99,418
Other 4,682 3,196
Deferred charges and other assets 19,116 18,988
--------- ---------
Total other assets 157,500 182,511
--------- ---------
INSURANCE ASSETS (NOTE 9):
Investments 934,029 702,661
Deferred acquisition costs 217,803 165,490
Deferred income taxes 33,649 22,661
Other 26,952 21,340
--------- ---------
TOTAL INSURANCE ASSETS 1,212,433 912,152
--------- ---------
TOTAL ASSETS $ 2,270,747 $ 1,935,207
--------- ---------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-20-
November 27, November 28,
1993 1992
LIABILITIES
CURRENT LIABILITIES:
Short-term debt (Note 3) $12,708 $42,119
Current portion of long-term debt (Note 3) 77,318 6,844
Trade accounts payable 47,768 48,015
Income taxes (Note 7):
Payable 25,664 34,057
Deferred (20,641) (22,497)
Accrued compensation 61,814 52,238
Accrued other taxes and expenses 85,397 93,644
--------- ---------
Total current liabilities 290,028 254,420
--------- ---------
LONG-TERM DEBT (NOTE 3) 107,887 185,081
--------- ---------
OTHER LONG-TERM LIABILITIES (NOTE 4) 72,780 63,286
--------- ---------
DEFERRED INCOME TAXES (NOTES 1 AND 7) 20,633 25,425
--------- ---------
INSURANCE LIABILITIES (NOTE 9):
Benefit reserves 827,815 637,561
Unearned revenues 292,586 209,479
General liabilities 19,086 12,211
--------- ---------
TOTAL INSURANCE LIABILITIES 1,139,487 859,251
--------- ---------
TOTAL LIABILITIES 1,630,815 1,387,463
--------- ---------
SHAREHOLDERS' EQUITY (Note 4)
Common stock - without par value:
Authorized - 199,000,000 shares
Issued - 80,323,912 shares in 1993 and 1992 4,442 4,442
Additional paid-in capital 3,900 3,228
Retained earnings (Note 3) 779,923 666,241
Unearned restricted stock compensation - (206)
Foreign currency translation adjustment (1,643) 6,462
Treasury stock, at cost: 1993 - 9,061,391 shares;
1992 - 8,744,152 shares (146,690) (132,423)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 639,932 547,744
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,270,747 $1,935,207
--------- ---------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
-21-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting policies specific to insurance operations are summarized in Note 9.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries, except for several small subsidiaries which
provide ancillary services to the Company and the public. These subsidiaries
are not consolidated because of their materiality and are accounted for by the
equity method. Their results of operations appear in the income statement, net
of income taxes, under the caption "Other income (expense), net." Operating
results for American Tourister, which was sold on August 30, 1993, are reported
separately as discontinued operations, net of income taxes, in the income
statement. Material intercompany accounts and transactions have been eliminated
in consolidation.
The Company's fiscal year is the 52 or 53 week period ending the Saturday
nearest November 30.
CASH AND CASH EQUIVALENTS
The Company considers investments in marketable securities and other highly
liquid instruments with a maturity of three months or less to be cash
equivalents.
INVENTORIES
Inventories are valued at the lower of cost, principally on a last-in, first-out
(LIFO) basis, or market. The LIFO reserve, which approximates the excess of the
current cost of inventories over the stated LIFO values, increased from $8.3
million at year-end 1991 to $9.3 million at year-end 1992. The LIFO reserve
fell to $8.2 million at year-end 1993 due to the sale of American Tourister in
the fourth quarter. Excluding the effect of the sale, the LIFO reserve
increased $1.6 million in 1993. Separate accounts for raw materials,
work-in-process and finished goods are not maintained.
EQUIPMENT LEASED TO OTHERS
Equipment leased to others represents the cost of remaining CLINITRON-r-
therapy units acquired on November 29, 1985 in the acquisition of Support
Systems International, Inc. and substantially all other therapy units
manufactured and acquired since that date. All units are effectively
depreciated on a straight-line basis over their average economic life. These
units are leased on a day-to-day basis.
PROPERTY
Property is recorded at cost and depreciated over the estimated useful life of
the assets using principally the straight-line method for financial reporting
purposes. Generally, when property is retired from service or otherwise
disposed of, the cost and related amount of depreciation or amortization are
eliminated from the asset and reserve accounts, respectively. The difference,
if any, between the net asset value and the proceeds is charged or credited to
income. The major components of property at the end of 1993 and 1992 were:
1993 1992
Land $ 13,200 $ 13,035
Buildings and building equipment 136,370 123,770
Machinery and equipment 407,727 395,241
-------- --------
Total $ 557,297 $ 532,046
------- -------
-22-
INTANGIBLE ASSETS
Intangible assets are stated at cost and are amortized on a straight-line basis
over periods ranging from 3 to 40 years. In the fourth quarter of 1993, the
Company recorded a $14.0 million charge to reduce the carrying value of the
goodwill related to the Block acquisition based on management's expectations for
Block's future earnings and cash flow. Accumulated amortization of intangible
assets was $119,258 and $106,034 as of November 27, 1993 and November 28, 1992,
respectively.
EARNINGS PER COMMON SHARE
Earnings per common share are computed by dividing net income by the average
number of shares outstanding during each year, including restricted shares
issued to employees. Common equivalent shares arising from shares awarded under
the Senior Executive Compensation Program, which was initiated in fiscal year
1978, have been excluded from the computation because of their insignificant
dilutive effect.
RETIREMENT PLANS
The Company and its subsidiaries have several defined benefit retirement plans
covering the majority of employees, including certain employees in foreign
countries. The Company contributes funds to trusts as necessary to provide for
current service and for any unfunded projected future benefit obligation over a
reasonable period. The benefits for these plans are based primarily on years of
service and the employee's level of compensation during specific periods of
employment.
The weighted average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the projected benefit
obligation were 7.5% and 6.0%, respectively, for 1993, 8.0% and 6.5%,
respectively, for 1992, and 8.5% and 8.0%, respectively, for 1991. The expected
long-term rate of return on assets was 8.0% for 1993 and 1992 and 8.5% for 1991.
Net pension expense includes the following components:
1993 1992 1991
Service expense-benefits earned during the year $ 4,640 $ 4,253 $ 4,370
Interest expense on projected benefit obligation 6,447 5,798 5,243
Actual return on plan assets (6,717) (10,465) (12,238)
Net amortization and deferral 566 5,017 6,755
----- ------ ------
Net pension expense $ 4,936 $ 4,603 $ 4,130
----- ------ ------
-23-
The funded status of the plans is shown in the table below:
1993 1992
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested
benefits of $55,932 in 1993 and $49,614 in 1992 ($59,998) ($53,367)
------ ------
Projected benefit obligation for service rendered to date ($95,601) ($81,691)
Plan assets at fair value, primarily U.S. Government
obligations, corporate bonds and notes, and common
stock issued by the Company. The value of this common
stock at date of acquisition by the plans was $2,613
and the current market value was $19,148 in 1993 and
$19,148 in 1992. 85,221 80,737
------ ------
Plan assets less than projected benefit obligation (10,380) (954)
Unrecognized net gain from past experience different
from that assumed (20,491) (25,076)
Unrecognized prior service cost 4,341 4,572
Unrecognized net asset at year-end being recognized
over 14 to 22 years from the initial compliance date
of December 1, 1985 (1,426) (1,562)
------ ------
Unfunded accrued expenses included in liabilities ($27,956) ($23,020)
The Company also sponsors several defined contribution plans covering
certain of its employees. Employer contributions are made to these plans
based on a percentage of employee compensation. The cost of these defined
contribution plans was $5,928 in 1993, $5,388 in 1992, and $4,313 in 1991.
INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (SFAS 109), in 1992. SFAS 109 is an asset and
liability method of accounting for income taxes. The asset and liability method
requires the recognition of deferred tax assets and liabilities based upon
expected future tax consequences of temporary differences between tax bases and
financial reporting bases of assets and liabilities.
Net assets as of December 1, 1991 were increased by $10,747 as a result of
adopting SFAS 109. For years prior to 1992, income taxes were computed based on
Accounting Principles Board Opinion No. 11.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of foreign operations are translated at year-end rates of
exchange and the income statements are translated at the average rates of
exchange prevailing during the year. Adjustments resulting from translation of
the financial statements of foreign operations are excluded from the
determination of net income and included as a separate caption in shareholders'
equity. Foreign currency gains and losses resulting from transactions are
included in results of operations.
-24-
2. ACQUISITIONS
In May 1993, SSI purchased certain assets of The Mediscus Group, Inc.
Batesville Casket acquired several regional casket distributors during fiscal
1993.
Two acquisitions occurred subsequent to the end of fiscal year 1993. In
December 1993, Batesville acquired Industrias Arga, S.A. de C.V., a casket
manufacturer in Mexico. In February 1994, Hill-Rom completed the acquisition of
L. & C. Arnold A.G., of Schorndorf/Kempen in western Germany.
Amounts paid for these acquisitions were not significant to the Company's
financial position.
3. FINANCING AGREEMENTS
Financing agreements with promissory note holders contain various provisions and
conditions relating to dividend payments, working capital and additional
indebtedness. At November 27, 1993, retained earnings available for dividends
were $305,494. The minimum working capital and long-term debt-to-tangible net
worth limits afford the Company considerable flexibility in its financing
alternatives.
Long-term debt consists of the following:
November 27, November 28,
1993 1992
Unsecured 8 1/2% debentures due on December 1, 2011 $ 100,000 $ 100,000
Unsecured 9 1/4% promissory note payable to an
insurance company in installments of $20,000 due
in 1994, $25,000 due in 1995 and $30,000 due in 1996 75,000 75,000
Unsecured non-interest bearing promissory note
payable in 1995 1,750 -
Unsecured 6% promissory note, due in $800 annual
installments through January, 1993, discounted at
9.5% imputed interest rate - 865
Government sponsored bonds, interest rates ranging from
3.0% to 8.9% as of November 27, 1993, with maturities
to 2008 4,300 10,068
Other 4,155 5,992
------- -------
Total 185,205 191,925
Less current portion 77,318 6,844
------- -------
Total long-term debt $ 107,887 $ 185,081
The scheduled payments of the remaining long-term debt as of November 27,
1993 are: $77,318 in 1994; $2,911 in 1995; $946 in 1996; $679 in 1997 and $490
in 1998. It is the Company's intent to prepay the $75,000 promissory note in
full in 1994 without penalty.
Short-term debt consists of a non-interest bearing promissory note in the
amount of $1,750 payable in 1994 and use of various lines of credit maintained
for foreign subsidiaries totaling $10,958.
-25-
4. SHAREHOLDERS' EQUITY
One million shares of preferred stock, without par value, have been authorized
and none have been issued.
The Company's Senior Executive Compensation Program, initiated in fiscal
year 1978, provides long-term performance share compensation which contemplates
annual payments of common stock of the Company to participants contingent on
their continued employment and upon achievement of pre-established financial
objectives of the Company over succeeding three-year periods. A total of
1,206,593 shares of common stock of the Company remain reserved for issuance
under the program. Total tentative performance shares payable through November
27, 1993, were 99,588. In addition, the Senior Executive Compensation Program
provides for participants to defer payment of long-term performance share and
other compensation earned in prior years. A total of 202,445 deferred shares
are payable as of November 27, 1993. Accruals for payments under these programs
are included in "Other Long-Term Liabilities."
Members of the Board of Directors may elect to defer fees earned as
reinvested in common stock of the Company. A total of 2,692 deferred shares are
payable as of November 27, 1993 under this program.
On April 7, 1992, the shareholders of the Company approved the adoption of
a performance compensation plan whereby key employees will be awarded tentative
performance shares based upon achievement of performance targets. An aggregate
of 1,675,400 shares of common stock have been authorized and reserved for
issuance under this plan. In 1993, 386,096 shares were earned based on the
Company's performance.
The Board of Directors has authorized the repurchase, from time to time, of
up to 14,000,000 shares of the Company's stock in the open market. The
purchased shares will be used for general corporate purposes. As of November
27, 1993, a total of 10,213,272 shares had been purchased.
On April 14, 1987, the shareholders of the Company approved the adoption of
a restricted stock plan whereby key employees may be granted restricted shares
of the Company's stock. The restrictions lapse after six years; or earlier if
certain financial goals are exceeded. 2,000,000 shares of common stock were
designated for this plan. These restricted shares may be awarded during the
next four years and the vesting periods begin when the shares are awarded.
324,600 shares have been awarded, 268,132 shares have been distributed and/or
deferred, and 56,468 shares have been forfeited as of November 27, 1993. No
additional awards are contemplated at this time.
5. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments (other than Insurance investments which are
described in Note 9) for which it is practicable to estimate that value:
The carrying amounts of cash and cash equivalents, trade accounts
receivable, other current assets, trade accounts payable, and accrued expenses
approximate fair value because of the short maturity of those instruments.
The fair value of the Company's debt is estimated based on the quoted
market prices for the same or similar issues or on the current rates offered to
the Company for debt of the same remaining maturities. The estimated fair
values of the Company's debt instruments are as follows:
November 27,
1993
Carrying Fair
Amount Value
Short-term debt $ 12,708 $ 12,674
Long-term debt $185,205 $203,206
-26-
6. SEGMENT INFORMATION
INDUSTRY INFORMATION
The Company has restated its segment presentation to give effect to the sale of
American Tourister and the regrouping of Batesville Casket and Forethought into
the Funeral Services segment.
The Health Care segment consists of Hill-Rom Company, SSI Medical Services
and Block Medical. Results for Medeco Security Locks are included in this
segment due to its relative size. Hill-Rom produces and sells electric hospital
beds, patient room furniture and patient handling equipment designed to meet the
needs of acute care and perinatal providers. SSI provides rental therapy units
to health care facilities for wound therapy, the management of pulmonary
complications associated with critically ill patients, and incontinence
management. Block manufactures and sells home infusion therapy products
including disposable infusion pumps and ambulatory electronic infusion pumps for
antibiotic, nutritional, chemotherapy and other drug therapies. Medeco produces
and sells high-security mechanical locks and lock cylinders and
electronic security systems for commercial, residential and government
applications.
The Funeral Services segment consists of Batesville Casket Company and
Forecorp. Batesville manufactures and sells a variety of metal and hardwood
caskets and sells a line of urns used in cremation. Batesville's products are
sold to licensed funeral directors operating licensed funeral homes. Forecorp's
subsidiaries, Forethought Life Insurance Company and The Forethought Group,
provide funeral planning professionals with marketing support for
Forethought-r- funeral plans funded by life insurance policies. Note 9
contains additional information regarding insurance operations.
-27-
Financial information regarding the Company's industry segments is
presented below:
Corporate
Health Care Funeral Services and Other (a) Consolidated
1993:
Net revenues $ 875,697 $ 572,216 $ - $1,447,913
------- ------- ------- ---------
Operating profit $ 132,732 $ 114,641 $ (13,095) $ 234,278
Interest expense (21,325)
Investment income 8,872
Other expense, net (276)
---------
Income from continuing
operations before income taxes $ 221,549
---------
Identifiable assets $ 568,398 $1,468,111 $ 234,238 $2,270,747
------- ------- ------- ---------
Capital expenditures (b) $ 78,063 $ 31,758 $ 2,914 $ 112,735
------- ------- ------- ---------
Depreciation and amortization $ 69,667 $ 22,549 $ 6,527 $ 98,743
------- ------- ------- ---------
1992:
Net revenues $ 791,042 $ 512,020 $ - $1,303,062
------- ------- ------- ---------
Operating profit $ 116,429 $ 98,092 $ (17,728) $ 196,793
Interest expense (21,233)
Investment income 8,434
Other expense, net (6,241)
---------
Income from continuing
operations before income taxes $ 177,753
------- ------- ------- ---------
Identifiable assets $ 551,780 $1,143,552 $ 181,662 $1,876,994
Assets of discontinued operation 58,213
------- ------- ------- ---------
Consolidated assets $1,935,207
------- ------- ------- ---------
Capital expenditures (b) $ 55,506 $ 26,439 $ 16,332 $ 98,277
------- ------- ------- ---------
Depreciation and amortization $ 85,214 $ 21,370 $ 11,004 $ 117,588
------- ------- ------- ---------
1991:
Net revenues $ 625,584 $ 458,903 $ - $1,084,487
------- ------- ------- ---------
Operating profit $ 90,445 $ 81,344 $ (12,719) $ 159,070
Interest expense (13,199)
Investment income 10,512
Other expense, net (9,500)
------- ------- ------- ---------
Income from continuing
operations before income taxes $146,883
------- ------- ------- ---------
Identifiable assets $ 516,525 $ 885,328 $ 83,588 $1,485,441
Assets of discontinued operation 46,719
------- ------- ------- ---------
Consolidated assets $1,532,160
------- ------- ------- ---------
Capital expenditures (b) $ 28,598 $ 23,307 $ 7,121 $ 59,026
------- ------- ------- ---------
Depreciation and amortization $ 68,858 $ 21,089 $ 7,218 $ 97,165
------- ------- ------- ---------
(A) INCLUDES CAPITAL EXPENDITURES, DEPRECIATION AND AMORTIZATION OF DISCONTINUED OPERATION.
(B) EXCLUDES ACQUISITIONS OF BUSINESSES.
-28-
GEOGRAPHIC INFORMATION
The net revenues, operating profit, and identifiable assets of the Company's
foreign operations each constituted less than 10% of the corresponding
consolidated items in 1991 and prior years and are therefore not reported
separately.
Sales between geographic area are at transfer prices, which are equivalent
to market value.
United Other Corporate
States Europe International and Other (a) Eliminations Consolidated
1993:
Net revenues:
To unaffiliated customers $1,279,141 $121,798 $ 46,974 $ - $ - $1,447,913
Transfers to other geographic areas 38,108 - 17 - (38,125) -
--------- ------- ------- ------- ------ ---------
Total net revenues $1,317,249 $121,798 $ 46,991 $ - $(38,125) $1,447,913
--------- ------- ------- ------- ------ ---------
Operating profit (loss) $ 248,517 $ (1,270) $ 122 $(13,095) $ 4 $ 234,278
--------- ------- ------- ------- ------ ---------
Identifiable assets $1,968,689 $143,431 $ 19,492 $234,238 $(95,103) $2,270,747
--------- ------- ------- ------- ------ ---------
1992:
Net revenues:
To unaffiliated customers $1,140,280 $122,855 $ 39,927 $ - $ - $1,303,062
Transfers to other geographic areas 31,134 - - - (31,134) -
--------- ------- ------- ------- ------ ---------
Total net revenues $1,171,414 $122,855 $ 39,927 $ - $(31,134) $1,303,062
--------- ------- ------- ------- ------ ---------
Operating profit (loss) $ 211,481 $ 3,379 $ (339) $(17,728) $ - $196,793
--------- ------- ------- ------- ------ ---------
Identifiable assets $1,623,067 $146,589 $ 12,239 $239,876 $(86,564) $1,935,207
--------- ------- ------- ------- ------ ---------
(A) IDENTIFIABLE ASSETS IN 1992 INCLUDE ASSETS OF THE DISCONTINUED OPERATION AT NOVEMBER 28, 1992.
7. INCOME TAXES
In 1992, the Company adopted SFAS 109 "Accounting for Income Taxes." Under SFAS
109, the deferred tax provision is determined using the liability method. This
method recognizes deferred tax assets and liabilities measured on differences
between financial statement and tax bases of assets and liabilities using
presently enacted tax rates.
1993 1992 1991
Provision for Income Taxes:
Current items:
Federal $91,590 $ 83,445 $ 65,084
State 14,075 12,617 13,078
Foreign 172 5,266 5,894
------- ------- ------
Total current items 105,837 101,328 84,056
------- ------- ------
Deferred items:
Federal (16,549) (33,628) (21,957)
State (224) (1,369) (3,319)
Foreign (1) 257 (1,882)
------ ------ ------
Total deferred items (16,774) (34,740) (27,158)
------ ------ ------
Provision for income taxes $ 89,063 $ 66,588 $ 56,898
------ ------ ------
-29-
The fiscal year differences between the amounts recorded for income taxes
on income from continuing operations for financial statement purposes and the
amounts computed by applying the Federal statutory tax rate to income from
continuing operations before taxes are explained as follows:
1993 1992 1991
% of % of % of
Pretax Pretax Pretax
Amount Income Amount Income Amount Income
Federal income
tax (A) $77,321 34.9 $60,436 34.0 $49,940 34.0
State income
tax (B) 9,017 4.1 7,424 4.2 6,441 4.4
Foreign income
tax (C) 1,960 0.9 3,910 2.2 1,494 1.0
Goodwill write-down (a) 4,886 2.2 - - - -
Other, net (4,121) (1.9) (5,182) (2.9) (977) (0.7)
------- ---- ------- ------- ------ ----
Provision for
income taxes $89,063 40.2 $66,588 37.5 $56,898 38.7
------- ---- ------- ------- ------ ----
(A) AT STATUTORY RATE
(B) NET OF FEDERAL BENEFIT
(C) FEDERAL TAX RATE DIFFERENTIAL
Items that gave rise to significant portions of the net deferred tax
balance sheet accounts are as follows:
1993 1992
Non-insurance Insurance Non-insurance Insurance
Deferred tax assets:
Current:
Inventories $ 4,034 $ - $ 3,645 $ -
Employee benefit accruals 2,587 - 7,988 -
Self insurance accruals 4,984 - 2,916 -
Litigation accruals 2,804 - 2,513 -
Restructuring accruals - - 1,651 -
Other, net 9,799 - 7,913 -
Long-term:
Employee benefit accruals 17,220 - 15,366 -
Deferred policy revenues - 102,405 - 71,223
Other, net 6,680 529 6,668 286
------- ------- ------- -------
Total assets $ 48,108 $102,934 $ 48,660 $ 71,509
------- ------- ------- -------
Deferred tax liabilities:
Current:
Inventories $ 1,969 $ - $ 2,854 $ -
Other, net 1,598 - 1,275 -
Long-term:
Depreciation 33,980 - 33,901 -
Amortization 5,834 - 8,570 -
Benefit reserves - 5,951 - 3,062
Deferred acquisition costs - 61,163 - 44,018
Other, net 4,719 2,171 4,988 1,768
------- ------- ------- -------
Total liabilities $ 48,100 $ 69,285 $ 51,588 $ 48,848
------- ------- ------- -------
-30-
Items that gave rise to significant portions of the deferred provision for
income taxes for 1991 are as follows:
Accelerated methods of depreciation for tax purposes ($ 7,979)
Accelerated deduction of certain acquired intangibles (3,526)
Interest expense on earn-out payment 237
Insurance operations-deferred acquisition costs 7,622
Insurance operations-deferred policy revenues (16,907)
Insurance operations-other, net 831
Other timing differences, net (7,436)
------
Total deferred items ($27,158)
-------
8. SUPPLEMENTARY INFORMATION
The following amounts were (charged) or credited to income in the year
indicated:
1993 1992 1991
Rental expense (a) ($19,037) ($18,630) ($18,843)
Research and
development costs (a) ($30,359) ($28,010) ($22,608)
Interest income (a) (b) $ 8,872 $ 8,434 $10,512
(A) FROM CONTINUING OPERATIONS ONLY.
(B) EXCLUDES INSURANCE OPERATIONS.
The table below indicates the minimum annual rental commitments (excluding
renewable periods) aggregating $49,552, primarily for warehouses, under
noncancellable operating leases.
1994 $ 13,840
1995 $ 10,507
1996 $ 7,548
1997 $ 5,091
1998 $ 3,826
1999 and beyond $ 8,740
The table below provides supplemental cash flow information.
1993 1992 1991
Cash paid for:
Income taxes $116,043 $ 97,581 $ 67,297
Interest $ 21,322 $ 23,119 $ 17,512
Non-cash investing and
financing activities:
Liabilities assumed from/incurred
for the acquisition of businesses $ 5,307 $ - $49,348
9. INSURANCE OPERATIONS
Forecorp, Inc., through its two subsidiaries, The Forethought Life Insurance
Company and The Forethought Group, Inc., serves funeral planning professionals
with life insurance policies and marketing support for FORETHOUGHT-R- funeral
planning, a pre-need insurance program.
Investments are predominantly U.S. Government, Federal agency and corporate
debt securities with fixed maturities and are carried on the balance sheet at
amortized cost. It is management's intent that these investments be held to
maturity. Cash (unrestricted as to use) is held for future investment.
-31-
The amortized cost and fair values of investments in debt securities at
November 27, 1993 are as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $386,772 $ 10,926 ($1,081) $396,617
Obligations of states and
political subdivisions 255 36 - 291
Corporate securities 494,136 14,150 (1,450) 506,836
------- ------ ----- -------
Total (a) $881,163 $ 25,112 ($2,531) $903,744
------- ------ ----- -------
(a) Does not include the amortized cost of other investments (primarily
short-term) carried on the balance sheet in the amount of $52,866, the
carrying value of which approximates fair value.
The amortized cost and fair value of debt securities at November 27, 1993,
by contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or repay
obligations with or without call or prepayment penalties.
Amortized Fair
Cost Value
Due in one year or less $ 999 $ 1,004
Due after 1 year through 5 years 80,400 83,163
Due after 5 years through 10 years 398,203 408,127
Due after ten years 73,479 75,586
Mortgage-backed securities 328,082 335,864
------- -------
Total $881,163 $903,744
------- -------
Proceeds and realized gains and losses from the sale of investments in
debt securities were as follows:
1993 1992 1991
Proceeds $92,035 $88,318 $10,982
Realized gross gains $ 1,809 $ 3,579 $ 319
Realized gross losses $ 212 $ 1,001 $ 109
Premiums received are recorded as an increase to benefit reserves or as
unearned revenue. Unearned revenues are recognized over the actuarial life of
the contract.
Policy acquisition costs, consisting of commissions, policy issue expense
and premium taxes, are deferred and amortized consistently with unearned
revenues.
Benefit reserves are equal to the net cash surrender value available to
policyholders. Cash surrender values are determined using Commissioner's
Standard Ordinary tables with interest rates from 4.0% to 5.5%.
-32-
Summarized financial information of insurance operations included in the
consolidated financial statements is as follows:
1993 1992 1991
Investment income $62,538 $49,300 $35,818
Earned premium revenue 51,856 33,884 26,371
Net gain on sale of investments 1,597 2,578 210
Other, net (55) (157) (390)
------- ------ ------
Total net revenues 115,936 85,605 62,009
Benefits paid 31,065 21,589 14,634
Credited interest 48,985 35,333 27,168
Deferred acquisition costs amortized 14,358 10,302 10,609
Other operating expenses 11,421 11,813 7,046
------- ------ ------
Income before income taxes $10,107 $ 6,568 $ 2,552
------- ------ ------
Statutory data at December 31 includes:
1993 1992 1991
Net income $29,752 $24,667 $ 852
Capital and surplus $78,208 $51,297 $27,167
10. UNAUDITED QUARTERLY FINANCIAL INFORMATION
QUARTER ENDED TOTAL
1993: 2/27/93 5/29/93 8/28/93 11/27/93 YEAR
Net revenues $348,432 $365,398 $340,599 $393,484 $1,447,913
------- ------- ------- ------- ---------
Gross profit $166,426 $175,461 $161,370 $197,137 $ 700,394
------- ------- ------- ------- ---------
Income from continuing operations $ 34,073 $ 36,294 $ 28,776 $ 33,343 $ 132,486
Income (loss) from discontinued operation (514) 1,093 1,199 - 1,778
Gain on disposal of discontinued
operation - - - 11,554 11,554
------- ------- ------- ------- ---------
Net income $ 33,559 $ 37,387 $ 29,975 $ 44,897 $ 145,818
------- ------- ------- ------- ---------
Earnings per common share:
Income from continuing operations $ .48 $ .50 $ .41 $ .47 $ 1.86
Income (loss) from discontinued operation (.01) .02 .01 - .02
Gain on disposal of discontinued
operation - - - .16 .16
------- ------- ------- ------- ---------
Net income per common share $ .47 $ .52 $ .42 $ .63 $ 2.04
------- ------- ------- ------- ---------
QUARTER ENDED TOTAL
1992: 2/29/92 5/30/92 8/29/92 11/28/92 YEAR
Net revenues $322,850 $320,083 $313,287 $346,842 $1,303,062
------- ------- ------- ------- ---------
Gross profit $153,420 $153,365 $149,248 $172,652 $ 628,685
------- ------- ------- ------- ---------
Income from continuing operations $ 27,511 $ 29,104 $ 25,035 $ 29,515 $ 111,165
Income (loss) from discontinued operation (904) 218 455 (5,411) (5,642)
Cumulative effect of change in method
of accounting for income taxes 10,747 - - - 10,747
------- ------- ------- ------- ---------
Net income $ 37,354 $ 29,322 $ 25,490 $ 24,104 $ 116,270
------- ------- ------- ------- ---------
Earnings per common share:
Income from continuing operations $ 0.38 $ 0.41 $ 0.34 $ 0.42 $ 1.55
Income (loss) from discontinued operation (0.01) - 0.01 (0.08) (0.08)
Cumulative effect of change in method
of accounting for income taxes 0.15 - - - 0.15
------- ------- ------- ------- ---------
Net income per common share $ 0.52 $ 0.41 $ 0.35 $ 0.34 $ 1.62
------- ------- ------- ------- ---------
-33-
11. DISCONTINUED OPERATION
On August 30, 1993, the Company sold its luggage business, American
Tourister, Inc., for a cash payment of $63.8 million. Net proceeds (after
disposition costs) were $55.3 million. The gain on the sale of $11.6 million is
net of income taxes of $4.7 million. The results of American Tourister, Inc.,
representing a substantial portion of the previously-reported Durables segment,
have been reported separately as discontinued operations in the Statement of
Consolidated Income for the three year period ended November 27, 1993. The
income (loss) from discontinued operations is net of income tax provisions
(benefits) of $1,091, ($782) and ($426) in 1993, 1992 and 1991, respectively.
-34
ITEM 9. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no disagreements with the independent accountants.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to executive officers is included in this report as
the last section of Item 1 under the caption "Executive Officers of the
Registrant." Information relating to the directors will appear in the section
entitled "Election of Directors" in the definitive Proxy Statement to be dated
February 25, 1994, and to be filed with the Commission relating to the Company's
1994 Annual Meeting of Shareholders, which section is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
The section entitled "Executive Compensation" in the definitive Proxy
Statement dated February 25, 1994, and to be filed with the Commission relating
to the Company's 1994 Annual Meeting of Shareholders, is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The section entitled "Election of Directors" in the definitive Proxy
Statement to be dated February 25, 1994, and to be filed with the Commission
relating to the Company's 1994 Annual Meeting of Shareholders, is incorporated
herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The sections entitled "About the Board of Directors" and "Compensation
Committee Interlocks and Insider Participation" in the definitive Proxy
Statement to be dated February 25, 1994, and to be filed with the Commission
relating to the Company's 1994 Annual Meeting of Shareholders, are incorporated
herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) The following documents have been filed as a part of this report or,
where noted, incorporated by reference:
(1) Financial Statements
The financial statements of the Company and its consolidated
subsidiaries listed on the index to Consolidated Financial Statements
on page 15.
(2) Financial Statement Schedules
The financial statement schedules filed in response to Item 8 and Item
14(d) of Form 10-K are listed on the index to Consolidated Financial
Statements on page 15.
-35-
(3) Exhibits
The following exhibits have been filed as part of this report in
response to Item 14(c) of Form 10-K.
3 (i) Form of Restated Certificate of Incorporation of the
Registrant (Incorporated herein by reference to Exhibit 3
filed with Form 10-K for the year ended November 28, 1992)
3 (ii) Form of Amended Bylaws of the Registrant
10 (i) Purchase Agreement dated April 30, 1986, between Registrant
and Metropolitan Life Insurance Company (Incorporated herein
by reference to Exhibit 4 filed with Form 10-K for the year
ended November 29, 1986)
The following management contracts or compensatory plans or
arrangements are required to be filed as exhibits to this form
pursuant to Item 14 (c) of this report:
10 (ii) Hillenbrand Industries, Inc. Senior Executive Compensation
Program (Incorporated herein by reference to Exhibit 10
filed with Form 10-K for the year ended November 30, 1991)
10 (iii) Hillenbrand Industries, Inc. Performance Compensation Plan
(Incorporated herein by reference to the definitive Proxy
Statement dated February 28, 1992, and filed with the
Commission relative to the Company's 1992 Annual Meeting of
Shareholders)
21 Subsidiaries of the Registrant
23 Consents of Experts and Counsel
(b) Reports on Form 8-K for the Quarter Ended November 27, 1993.
A report on Form 8-K under Item 5 was filed on August 30, 1993, relative to
the sale of the Company's luggage business, American Tourister, Inc. The
sale did not represent the disposition of a significant amount of assets as
would be required to be reported under Item 2 of Form 8-K; however,
American Tourister represented a substantial portion of the Company's
previously-reported Durables segment. The report included the Company's
consolidated balance sheet at November 28, 1992 and November 30, 1991, and
consolidated statements of income, shareholders' equity and cash flows for
each of the three years in the period ended November 28, 1992, restated to
give effect to the discontinued operations of American Tourister from
November 29, 1987.
-36-
SCHEDULE V
HILLENBRAND INDUSTRIES, INC. AND SUBSIDIARIES
EQUIPMENT LEASED TO OTHERS AND PROPERTY
FOR THE YEARS ENDED NOVEMBER 27, 1993, NOVEMBER 28, 1992, AND NOVEMBER 30, 1991
(DOLLARS IN THOUSANDS)
BALANCE AT ADDITIONS OTHER CHANGES BALANCE
USEFUL BEGINNING AT ------------- AT END
LIVES (D) OF PERIOD COST RETIREMENTS ADD (E) DEDUCT (E) OF PERIOD
-------- -------- --------- ----------- ------ ---------- ---------
YEAR ENDED NOVEMBER 27, 1993:
Equipment Leased to Others 3-7 $252,080 $31,827 $64,057 $12,634 $ 2,550 $229,934
------- ------ ------ ------ ------ -------
------- ------ ------ ------ ------ -------
Land and land improvements 6-20 $ 13,035 $ 259 $3 $- $91 $13,200
------- ------ ------ ------ ------ -------
Buildings and building equipment 5-40 123,770 16,926 683 - 3,643 136,370
------- ------ ------ ------ ------ -------
Machinery and equipment 3-15 307,153 42,074 7,654 57 27,537 314,093
Aircraft and aircraft facilities 5-20 37,392 340 - - - 37,732
Transportation equipment 2-8 50,696 9,946 3,908 296 1,128 55,902
------- ------ ------ ------ ------ -------
Subtotal 395,241 52,360 11,562 353 28,665 407,727
------- ------ ------ ------ ------ -------
Total Property $532,046 $69,545(A) $12,248 $ 353 $32,399 $557,297
------- ------ ------ ------ ------ -------
------- ------ ------ ------ ------ -------
YEAR ENDED NOVEMBER 28, 1992:
Equipment Leased to Others 3-7 $242,616 $17,396 $ 8,922 $ 990 $ - $252,080
------- ------ ------ ------ ------ -------
------- ------ ------ ------ ------ -------
Land and land improvements 6-20 $ 12,863 $ 404 $ 8 $ - $ 224 $ 13,035
------- ------ ------ ------ ------ -------
Buildings and building equipment 5-40 109,605 8,394 710 6,798 317 123,770
------- ------ ------ ------ ------ -------
Machinery and equipment 3-15 269,259 45,403 7,611 1,249 1,147 307,153
Aircraft and aircraft facilities 5-20 25,191 13,596 1,395 - - 37,392
Transportation equipment 2-8 43,818 11,483 4,631 45 19 50,696
------- ------ ------ ------ ------ -------
Subtotal 338,268 70,482 13,637 1,294 1,166 395,241
------- ------ ------ ------ ------ -------
Total Property $460,736 $79,280(B) $14,355 $ 8,092 $ 1,707 $532,046
------- ------ ------ ------ ------ -------
------- ------ ------ ------ ------ -------
YEAR ENDED NOVEMBER 30, 1991:
Equipment Leased to Others 3-7 $234,701 $13,307 $ 3,404 $ - $ 1,988 $242,616
------- ------ ------ ------ ------ -------
------- ------ ------ ------ ------ -------
Land and land improvements 6-20 $12,607 $46 $ 76 $ 316 $ 30 $ 12,863
------- ------ ------ ------ ------ -------
Buildings and building equipment 5-40 100,670 5,393 1,487 5,211 182 109,605
------- ------ ------ ------ ------ -------
Machinery and equipment 3-15 245,125 30,926 11,507 4,918 203 269,259
Aircraft and aircraft facilities 5-20 24,940 130 4 - (125) 25,191
Transportation equipment 2-8 42,299 5,903 5,444 1,203 143 43,818
------- ------ ------ ------ ------ -------
Subtotal 312,364 36,959 16,955 6,121 221 338,268
------- ------ ------ ------ ------ -------
Total Property $425,641 $42,398(C) $18,518 $11,648(F) $ 433 $460,736
------- ------ ------ ------ ------ -------
------- ------ ------ ------ ------ -------
(A) THE MAJOR ADDITIONS IN 1993 WERE FOR MACHINERY AND EQUIPMENT USED IN EXISTING PLANTS, AND REPLACEMENTS OF TRACTORS AND
TRAILERS.
(B) THE MAJOR ADDITIONS IN 1992 WERE FOR MACHINERY AND EQUIPMENT USED IN EXISTING PLANTS, AND REPLACEMENTS OF TRACTORS, TRAILERS
AND AIRCRAFT.
(C) THE MAJOR ADDITIONS IN 1991 WERE FOR MACHINERY AND EQUIPMENT USED IN EXISTING PLANTS, AND REPLACEMENTS OF TRACTORS AND
TRAILERS.
(D) ESTIMATED USEFUL LIVES IN COMPUTING DEPRECIATION. UPON RETIREMENT OR DISPOSAL OF ANY ITEM OF PROPERTY, THE COST AND THE
RELATED DEPRECIATION ARE REMOVED FROM THE RESPECTIVE ACCOUNTS. ANY RESULTING GAIN OR LOSS IS INCLUDED IN NET INCOME.
(E) INCLUDES TRANSFERS TO UNCONSOLIDATED SUBSIDIARIES, FOREIGN CURRENCY TRANSLATION ADJUSTMENTS, RECLASSIFICATIONS, ACQUISITIONS,
CAPITALIZED LEASES AND, IN 1993, THE SALE OF DISCONTINUED OPERATION.
(F) ACQUIRED IN LE COUVIOUR AND BLOCK PURCHASES.
-37-
SCHEDULE VI
HILLENBRAND INDUSTRIES, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION OF EQUIPMENT LEASED TO OTHERS AND PROPERTY
FOR THE YEARS ENDED NOVEMBER 27, 1993, NOVEMBER 28, 1992, AND NOVEMBER 30, 1991
(DOLLARS IN THOUSANDS)
ADDITIONS
CHARGED
BALANCE AT TO COSTS OTHER CHANGES BALANCE
BEGINNING AND ------------- AT END
OF PERIOD EXPENSES RETIREMENTS ADD (A) DEDUCT (A) OF PERIOD
-------- --------- ----------- ------ --------- ---------
YEAR ENDED NOVEMBER 27, 1993:
Equipment Leased to Others $ 204,342 $ 29,363 $ 60,865 $ 264 $ 1,575 $ 171,529
-------- ------- ------- ------ ------- --------
-------- ------- ------- ------ ------- --------
Land improvements $ 5,313 $ 468 $ 3 $ - $ 1 $ 5,777
Buildings and building equipment 48,226 6,634 591 - 1,505 52,764
Machinery and equipment 180,051 31,047 5,515 - 20,157 185,426
Aircraft and aircraft facilities 11,129 2,159 - - - 13,288
Transportation equipment 27,891 8,307 3,666 11 884 31,659
-------- ------- ------- ------ ------- --------
Total Property $ 272,610 $ 48,615 $ 9,775 $ 11 $ 22,547 $ 288,914
-------- ------- ------- ------ ------- --------
-------- ------- ------- ------ ------- --------
YEAR ENDED NOVEMBER 28, 1992:
Equipment Leased to Others $ 165,682 $ 46,885 $ 8,529 $ 304 $ - $ 204,342
-------- ------- ------- ------ ------- --------
-------- ------- ------- ------ ------- --------
Land improvements $ 4,925 $ 464 $ 4 $ 9 $ 81 $ 5,313
Buildings and building equipment 42,399 6,171 417 717 644 48,226
Machinery and equipment 157,622 29,003 6,634 456 396 180,051
Aircraft and aircraft facilities 10,540 1,269 680 - - 11,129
Transportation equipment 24,785 7,207 4,407 306 - 27,891
-------- ------- ------- ------ ------- --------
Total Property $ 240,271 $ 44,114 $ 12,142 $ 1,488 $ 1,121 $ 272,610
-------- ------- ------- ------ ------- --------
-------- ------- ------- ------ ------- --------
YEAR ENDED NOVEMBER 30, 1991:
Equipment Leased to Others $ 129,829 $ 39,557 $ 2,915 $ - $ 789 $ 165,682
-------- ------- ------- ------ ------- --------
-------- ------- ------- ------ ------- --------
Land improvements $ 4,512 $ 489 $ 76 $ - $ - $ 4,925
Buildings and building equipment 37,868 5,473 923 - 19 42,399
Machinery and equipment 141,050 26,870 10,061 - 237 157,622
Aircraft and aircraft facilities 8,982 1,561 4 - (1) 10,540
Transportation equipment 24,512 5,610 5,282 - 55 24,785
-------- ------- ------- ------ ------- --------
Total Property $ 216,924 $ 40,003 $ 16,346 $ - $ 310 $ 240,271
-------- ------- ------- ------ ------- --------
-------- ------- ------- ------ ------- --------
(A) INCLUDES TRANSFERS TO UNCONSOLIDATED SUBSIDIARIES, FOREIGN CURRENCY TRANSLATION ADJUSTMENTS, RECLASSIFICATIONS, AND, IN 1993,
THE SALE OF DISCONTINUED OPERATION.
-38-
SCHEDULE VIII
HILLENBRAND INDUSTRIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED NOVEMBER 27, 1993, NOVEMBER 28, 1992, AND NOVEMBER 30, 1991
(DOLLARS IN THOUSANDS)
ADDITIONS
--------------------------
BALANCE AT CHARGED TO CHARGED TO DEDUCTIONS BALANCE
BEGINNING COSTS AND OTHER NET OF AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS (A) RECOVERIES (B) OF PERIOD
- ------------------------------------ --------- --------- ------------ -------------- ---------
Reserves deducted from assets
to which they apply:
Allowance for possible losses
and discounts
- accounts receivable:
Year Ended:
November 27, 1993 $ 15,574 $ 3,761 $ 3,392 $ 11,456 $ 11,271
November 28, 1992 $ 15,168 $ 6,721 $ 2,325 $ 8,640 $ 15,574
November 30, 1991 $ 11,191 $ 7,603 $ 5,959 $ 9,585 $ 15,168
(A) REDUCTION OF GROSS REVENUES FOR CASH DISCOUNTS, CO-OPERATIVE ADVERTISING ALLOWANCES AND OTHER ADJUSTMENTS IN DETERMINING NET
REVENUE. ALSO INCLUDES THE EFFECT OF ACQUISITION OF BUSINESSES.
(B) INCLUDES THE SALE OF DISCONTINUED OPERATION IN 1993.
-39
SCHEDULE IX
HILLENBRAND INDUSTRIES, INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
FOR THE YEARS ENDED NOVEMBER 27, 1993, NOVEMBER 28, 1992, AND NOVEMBER 30, 1991
(DOLLARS IN THOUSANDS)
MAXIMUM AVERAGE WEIGHTED
BALANCE AT WEIGHTED AMOUNT AMOUNT AVERAGE
CATEGORY END OF AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
OF BORROWINGS PERIOD INTEREST RATE DURING PERIOD DURING PERIOD DURING PERIOD (B)
- --------------------------- ---------- ------------ ------------- ------------- -----------------
Bank Borrowings: (A)
Year Ended:
November 27, 1993 $ 12,708 8.0% $ 48,867 $ 33,085 9.8%
November 28, 1992 $ 42,119 10.0% $ 44,764 $ 21,709 9.4%
November 30, 1991 $ 12,803 10.3% $ 12,803 $ 5,431 11.3%
(A) THE COMPANY MAINTAINS REVOLVING LINES OF CREDIT FOR FOREIGN SUBSIDIARIES. BORROWINGS DURING 1992 AND 1993 INCLUDE A TERM LOAN
UTILIZED TO FUND PAYMENTS IN CONNECTION WITH THE ACQUISITION OF LE COUVIOUR S.A. IN 1991.
(B) THE WEIGHTED AVERAGE INTEREST RATE DURING THE PERIOD WAS COMPUTED BY DIVIDING INTEREST EXPENSE BY THE WEIGHTED AVERAGE
SHORT-TERM DEBT OUTSTANDING DURING THE PERIOD IN WHICH INCURRED.
-40-
SCHEDULE X
HILLENBRAND INDUSTRIES, INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED NOVEMBER 27, 1993, NOVEMBER 28, 1992, AND NOVEMBER 30, 1991
(DOLLARS IN THOUSANDS)
ITEM CHARGED TO COSTS AND EXPENSES (B)
- ------------------------------------------------------- ------------------------------------------
NOVEMBER 27, NOVEMBER 28, NOVEMBER 30,
1993 1992 1991
------------ ------------ -------------
1. Maintenance and repairs . . . . . . . . . . . . . . . . $ 30,282 $ 30,323 $ 29,417
------ ------- -------
------ ------- -------
2. Depreciation, amortization and write-down
of intangible assets . . . . . . . . . . . . . . . . $ 32,585(C) $ 24,275 $ 15,472
------ ------- -------
------ ------- -------
3. Taxes, other than payroll and income taxes. . . . . . . $ 15,960 $ 13,883 $ 12,628
------ ------- -------
------ ------- -------
4. Royalties . . . . . . . . . . . . . . . . . . . . . . . (a) (a) (a)
------ ------- -------
------ ------- -------
5. Advertising costs . . . . . . . . . . . . . . . . . . . $ 15,454 $ 16,081 $ 14,876
------ ------- -------
------ ------- -------
(A) AMOUNTS HAVE BEEN OMITTED SINCE THEY ARE LESS THAN ONE PERCENT OF NET REVENUES.
(B) INCLUDES AMOUNTS RELATIVE TO DISCONTINUED OPERATIONS THROUGH AUGUST 28, 1993.
(C) REFLECTS THE WRITE-DOWN OF GOODWILL IN THE AMOUNT OF $14,000 RELATIVE TO THE ACQUISITION OF BLOCK MEDICAL, INC.
-41-
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
HILLENBRAND INDUSTRIES, INC.
By: /S/ W August Hillenbrand
-------------------------------------
W August Hillenbrand
Dated: January 19, 1994 President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
/S/ Daniel A. Hillenbrand /S/ Leonard Granoff
--------------------------- ---------------------------
Daniel A. Hillenbrand Leonard Granoff
Chairman of the Board Director
/S/ Tom E. Brewer /S/ John C. Hancock
--------------------------- ---------------------------
Tom E. Brewer John C. Hancock
Senior Vice President and Director
Chief Financial Officer
/S/ James D. Van De Velde /S/ W August Hillenbrand
--------------------------- ---------------------------
James D. Van De Velde W August Hillenbrand
Vice President, Controller Director
/S/ Robert K. Bellamy /S/ George M. Hillenbrand II
--------------------------- ---------------------------
Robert K. Bellamy George M. Hillenbrand II
Director Director
/S/ Lawrence R. Burtschy /S/ John A. Hillenbrand II
--------------------------- ---------------------------
Lawrence R. Burtschy John A. Hillenbrand II
Director Director
/S/ Peter F. Coffaro /S/ Ray J. Hillenbrand
--------------------------- ---------------------------
Peter F. Coffaro Ray J. Hillenbrand
Director Director
/S/ Edward S. Davis /S/ Lonnie M. Smith
--------------------------- ---------------------------
Edward S. Davis Lonnie M. Smith
Director Director
Dated: January 19, 1994
-42-
HILLENBRAND INDUSTRIES, INC.
INDEX TO EXHIBITS
3 (i) Form of Restated Certificate of Incorporation of the Registrant
(Incorporated herein by reference to Exhibit 3 filed with Form
10-K for the year ended November 28, 1992)
3 (ii) Form of Amended Bylaws of the Registrant
10 (i) Purchase Agreement dated April 30, 1986, between Registrant and
Metropolitan Life Insurance Company (Incorporated herein by
reference to Exhibit 4 filed with Form 10-K for the year ended
November 29, 1986)
10 (ii) Hillenbrand Industries, Inc. Senior Executive Compensation
Program (Incorporated herein by reference to Exhibit 10 filed
with Form 10-K for the year ended November 30, 1991)
10 (iii) Hillenbrand Industries, Inc. Performance Compensation Plan
(Incorporated herein by reference to the definitive Proxy
Statement dated February 28, 1992, and filed with the Commission
relative to the Company's 1992 Annual Meeting of Shareholders)
21 Subsidiaries of the Registrant
23 Consents of Experts and Counsel
-43-