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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended September 30, 2003		Commission File No. 1-6651

HILLENBRAND INDUSTRIES, INC.

Registrant’s telephone number, including area code: (812) 934-7000
Securities registered pursuant to Section 12(b) of the Act:

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 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes   ü

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.  o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

Yes   ü

No

State the aggregate market value of the common stock held by non-affiliates of the registrant.

     Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

     Documents incorporated by reference.

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HILLENBRAND INDUSTRIES, INC.
Annual Report on Form 10-K
September 30, 2003
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PART I

Item 1. BUSINESS

Hillenbrand Industries, Inc., an Indiana corporation incorporated on August 7, 1969 and headquartered in Batesville, Indiana, is a diversified, public holding company and the owner of 100% of the capital stock of its three major operating companies serving the health care and funeral services industries in the United States and abroad. Hill-Rom is a manufacturer of equipment for the health care industry and a provider of associated systems for wound, pulmonary and circulatory care. Batesville Casket and Forethought both serve the funeral services industry. Batesville Casket is a manufacturer of caskets and cremation-related products while Forethought is a provider of financial products and services designed to help people prefund anticipated funeral and cemetery costs. Unless the context otherwise requires, the terms “Hillenbrand” and the “Company” refer to Hillenbrand Industries, Inc., and its consolidated subsidiaries, and the terms “Hill-Rom Company”, “Batesville Casket Company” and “Forethought Financial Services”, and derivations thereof, refer to one or more of the subsidiary companies of Hillenbrand that comprise those businesses.

Health Care

Hill-Rom Company is a recognized leader in the worldwide health care community providing sales, rentals, service and support for products including hospital bed systems, non-invasive therapeutic surfaces and devices, stretchers and transport systems, furniture, communication and locating systems, headwalls and operating room accessories. Depending upon customer preferences, utilization levels and financial objectives, many Hill-Rom® products are available to customers on either a sales or a rental basis.

     The Hill-Rom® line of electrically adjustable hospital beds includes models, which, through siderail and pendant controls, can be raised, lowered and adjusted to varied orthopedic and therapeutic contours and positions. Hospital bed models include the TotalCare Sp0₂RT® bed, a pulmonary bed that delivers rotation, percussion, and vibration; the TotalCare® bed, a bed designed for the critically acute patient; the Advanta™, AvantGuard™ and CareAssist™ beds, designed for a variety of med/surg applications; and the Affinity® III bed, a bed specifically designed for the needs of the maternity department. Hill-Rom also provides therapy products for acute care, home care and long term care applications designed to reduce pressure ulcer prevalence rates and pulmonary complications, to facilitate patient transfer and positioning, and to prevent deep vein thrombosis (DVT). Hill-Rom also manufactures a full line of stretchers under the “TranStar®” name.

     Other Hill-Rom® products include nurse call systems, fetal monitoring information systems, siderail communications, surgical table accessories, wood-finished and metal/plastic bedside cabinets, adjustable-height overbed tables, mattresses and upholstered wooden chairs. Its architectural products include customized, prefabricated modules, either wall-mounted or on freestanding columns, enabling medical gases, communication accessories and electrical services to be distributed in patient rooms.

     The Company continues to expand its line of products and services to improve the efficiency and effectiveness of the health care environment for patients and health care providers. In October 2003, Hill-Rom acquired Advanced Respiratory, Inc., a manufacturer and distributor of non-invasive airway clearance products and systems known as The Vest™ airway clearance system for a purchase price of $83 million, subject to certain working capital adjustments at the date of close not to exceed $12 million, with additional contingent payments not to exceed $20 million based on Advanced Respiratory achieving certain net revenue targets. Also in October 2003, the Company signed an agreement to acquire Mediq, Inc. (Mediq), a provider of medical equipment outsourcing, asset management and peak-needs rentals to hospitals and extended care and home medical equipment makers, for a purchase price of approximately $330 million. Subject to regulatory approvals and other conditions, the Company expects to close the acquisition of Mediq before the end of January 2004. The Company also recently sold its piped-medical gas business and signed an agreement to sell its infant care products business, reflecting the Company’s continued efforts to streamline and

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rationalize its existing portfolio of assets. These activities are further described in Note 16 to the Consolidated Financial Statements, which statements are included under Item 8.

     Hill-Rom operates hospital bed, therapy bed and patient room manufacturing and development facilities in the United States and France. Hill-Rom® products are sold and/or rented directly to acute and long-term health care facilities throughout the United States, Canada, Australia and Europe by Hill-Rom account executives. Hill-Rom has contracts with a number of group purchasing organizations in the United States as well as government purchasers in other countries. A significant portion of Hill-Rom’s sales are made pursuant to these contracts. Most Hill-Rom® products are delivered by Hill-Rom owned trucks. Hill-Rom also sells products through distributorships throughout the world.

     Within the wound care business, CLINITRON® 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.

     Hill-Rom’s other wound and pulmonary care technology, low airloss therapy, consists of a sleep surface with air-filled cushions separated into integrated zones. Air pressure is automatically adjusted whenever the patient changes position. Micro air vents on the cushions allow for the controlled release of air. This technology is applied to either an integrated unit or as an overlay to an existing bed. Low airloss products include the Flexicair Eclipse® mattress, a portable, rental mattress replacement for the acute care environment; the Silkair® mattress, a low airloss overlay product for home care; and the V-Cue® mattress, a rotational mattress for pulmonary applications. In addition to the above products, Hill-Rom’s European operations have also introduced the Duo Deteq® mattress that combines advanced pressure control technology in two clinically accepted therapies, the continuous low pressure Primo™ mattress and the Alto® alternating pressure relief mattress. Hill-Rom introduced its ActiveCare® sequential compression device for the prevention of deep vein thrombosis in August of 2003.

     Clinical support for Hill-Rom’s wound, pulmonary and circulatory care therapy systems is provided by a sales force composed primarily of nurses and health care professionals. Technical support is made available by an extensive network of technicians and service personnel who provide maintenance and technical assistance from Hill-Rom Service Centers.

     Hill-Rom® therapy systems are made available to hospitals, long-term care facilities and homes on a rental basis through more than 200 Service Centers located in the United States, Canada and Western Europe. Certain Hill-Rom® therapy systems are also made available to customers on a sales basis.

Funeral Services

Batesville Casket Company, an Indiana Corporation, was founded in 1884 and acquired by the Hillenbrand family in 1906. Batesville manufactures and sells gasketed caskets made of carbon steel, stainless steel, copper and bronze. It also produces and markets non-gasketed steel and wood caskets. In addition, Batesville also manufactures and sells cloth-covered caskets, all wood construction (orthodox) caskets and a line of urns, cremation containers and other memorialization products used in cremations. Batesville also supplies selection room display fixturing through its System Solutions group.

     Most Batesville-produced metal caskets are gasketed caskets that are electronically welded to help resist the entrance of outside elements through the use of rubber gaskets and a locking bar mechanism. Batesville’s premium steel caskets also employ a magnesium alloy bar to cathodically help protect the casket from rust and corrosion. The Company believes that this system of Cathodic Protection is a feature found only on Batesville produced caskets. Hardwood caskets from Batesville are made from walnut, mahogany, cherry, maple, pine, oak, pecan and poplar, solids and veneers. In October 2002, Batesville also introduced its Marquetry™ Collection, manufactured with a revolutionary new process for veneers that allows for rounded corners and a furniture-grade finished appearance. Additional lines of veneer caskets in oak and cherry were introduced in 2003. Also in 2003, Batesville Casket purchased certain intellectual property related to the former Marsellus Casket Company and reintroduced

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select lines of these premium caskets to independent funeral homes. Batesville’s cloth-covered caskets are constructed with a patented process using cellular fiberboard construction.

     The Options by Batesville cremation division offers a complete cremation marketing system for funeral service professionals. In addition to a broad line of cremation caskets, cremation containers and urns, the system includes training, merchandising support and marketing support materials. Cremation caskets and containers are manufactured primarily of hardwoods and fiberboard. Options’ wide assortment of memorial urns are made from a variety of materials, including cast bronze, cast acrylic, wood, sheet bronze, cloisonné and marble.

     Batesville offers several other marketing and merchandising programs to funeral professionals for both casket and cremation products. Batesville® caskets are marketed by Batesville’s direct sales force to licensed funeral professionals operating licensed funeral establishments (or, in the absence of state licensing requirements, to full service funeral establishments offering both funeral goods and funeral services in conformance with state law) throughout the United States, the United Kingdom, Australia, Canada, Mexico and Puerto Rico. A significant portion of Batesville’s sales are made to large national funeral services providers under contracts Batesville has entered into with several of these customers. Batesville maintains inventory at approximately 80 company-operated Customer Service Centers (CSCs) and six Rapid Deployment Centers (RDCs) in North America. Batesville® caskets are generally delivered in specially equipped vehicles owned by Batesville.

     Batesville mainly manufactures and distributes products in the U.S. It also has a small manufacturing facility in Mexico and distribution facilities in Canada, Mexico, the United Kingdom, Puerto Rico and Australia.

     Forethought Financial Services operates primarily through its life insurance subsidiaries, Forethought Life Insurance Company and Arkansas National Life Insurance Company, its bank, Forethought Federal Savings Bank, and its marketing company, The Forethought Group, Inc. These companies provide funeral and cemetery planning products and services to consumers through funeral and cemetery professionals. Forethought’s core products are an insurance-funded funeral plan, a trust-funded funeral plan, and a trust-funded cemetery plan. The insurance-funded funeral plan consists of two discrete elements: a contract of life insurance between the consumer and a Forethought life insurance company (the “Policy”) and a guaranteed funeral planning agreement between the consumer and the funeral establishment (the “FPA”). The Policy provides whole life coverage and accumulates cash value. The death benefit of the Policy is designed to grow over time. In the FPA, the consumer and the funeral establishment agree on the funeral goods and services to be provided and the current price of the consumer’s funeral. The funeral establishment then agrees that if the consumer fully funds the Policy, the establishment will accept the death benefit of the Policy as payment in full when the consumer dies and the funeral goods and services are provided (referred to in the industry as “at time of need”). In this way, consumers using insurance-funded funeral planning are assured that covered goods and services will be provided at time of need without additional cost. Because the death benefit of the Policy is designed to grow over time, the funeral establishment is provided with protection against cost increases.

     Forethought Life Insurance Company also issues life insurance coverage that is not tied to a guaranteed funeral plan. These policies are referred to in the industry as “final expense” coverage. Final expense coverage allows a consumer wishing to set aside funds for his or her funeral to gain immediate insurance protection and to place funds in a tax-advantaged vehicle that is designed to increase in value over time.

     Trust-funded funeral and cemetery planning offers similar protection, but uses a different contractual framework. In a guaranteed trust-funded plan, the consumer and the funeral or cemetery establishment enter into a contract in which the establishment agrees to provide the goods and services at time of need in exchange for payment by the consumer to the establishment (the “Trust Contract”). The Trust Contract is similar to the FPA used for insurance-funded funeral planning in that the consumer and the funeral or cemetery establishment agree on the goods and services to be provided at time of need. Unlike the FPA used for insurance-funded funeral planning, the Trust Contract also includes terms and conditions under which the consumer will pay the funeral or cemetery establishment, as the case may be, for the planned funeral or cemetery services. The establishment, in turn, places these funds in trust with Forethought Federal Savings Bank. These funds are deposited into

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interest-bearing accounts or publicly traded mutual funds in accordance with applicable state laws. The consumer does not have a direct contractual relationship with any Forethought entity. At time of need, these funds are distributed in accordance with the Trust Contract. The Trust Contract provides that covered goods and services will be provided at time of need without additional cost to the consumer. Forethought Federal Savings Bank has also recently begun administering endowment care trust funds as part of its services.

     The Forethought Group, Inc. cooperates with Batesville Casket Company to offer the Total Casket Protection® program. Under this program, a benefit is paid to a funeral professional who delivers a Batesville® casket under a Forethought funded funeral plan at the time the funeral is performed. This benefit is equal to the difference between the wholesale price of the casket at the time the funeral is planned and at the time it is provided.

     Forethought is licensed and authorized to write life insurance in 49 states, Puerto Rico and the District of Columbia. Forethought distributes its insurance-funded funeral planning products through funeral establishments. In some cases, the funeral professional acts as agent for the sale of the Policy. In other cases, a preneed insurance professional works in conjunction with funeral professionals to develop and fund the funeral plan. In all cases, a life insurance agent licensed by the appropriate state authority and appointed by Forethought solicits the Policy. Forethought trust-funded funeral and cemetery planning products are distributed by funeral planning professionals in 29 states.

     In addition to these core products, Forethought offers marketing and administrative products and services directly to its funeral and cemetery customers. These products and services range from sales and training support and materials to analytical reports to business-to-business back office support through Forethoughtonline.com.

BUSINESS SEGMENT INFORMATION

Net revenues, segment profitability, identifiable assets and other measures of segment reporting for each reporting segment are set forth in Note 10 to the Consolidated Financial Statements, which statements are included under Item 8.

     While the Company serves two predominant industries, health care and funeral services, for segment reporting purposes each of the Company’s three major operating companies constitute a reporting segment. The Company’s three reporting segments are Hill-Rom, Batesville Casket and Forethought.

RAW MATERIALS

Principal materials used in Hill-Rom® products include carbon steel, aluminum, stainless steel, wood, high-pressure laminates, fabrics, plastics, silicone-coated soda-lime glass beads and other materials, substantially all of which are available from several sources. Motors and electronic controls for electrically and hydraulically operated beds and certain other components are purchased from one or more manufacturers.

     Batesville Casket 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.

     Prices for raw materials and finished goods used in the Company’s products may fluctuate based on a number of factors beyond the Company’s control, and such fluctuations may affect the Company’s profitability. The Company does not engage in hedging transactions with respect to raw material purchases, but does enter into fixed price supply contracts at times.

     Additionally, although most of the raw materials and finished goods used by the Company in its products are generally available from several sources, certain of these raw materials and finished goods currently are available only from a single source.

     Historically, the Company has been able to anticipate and react to changing raw material and finished good prices and availability through its purchasing practices and product price adjustments so as to avoid any material adverse effect on profitability and supply. However, there can be no assurance that the Company will be able to do so in the future. See also “Risk Factors” below.

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COMPETITION

Health Care

Hill-Rom is a recognized U.S. industry leader in the sale and rental of electrically and hydraulically operated hospital beds, patient room equipment, specialty beds and surfaces and non-invasive therapy devices for wound, pulmonary and circulatory care, competing with several other manufacturers and distributors of competing products. With respect to the sale and rental of electrically and hydraulically operated hospital beds, specialty beds and surfaces, competitors include Stryker Corporation, Kinetic Concepts, Inc., Gaymar Industries, Inc., Sunrise Medical/Joerns Healthcare Inc., Getinge/Pegasus Airwave Inc., and Huntleigh Healthcare, Inc. With respect to other products and services, competitors include Tyco International/The Kendall Company, Huntleigh Healthcare, Inc., Nemschoff Chairs Inc., Kimball International, Modular Services Company, Heraeus, Dukane Communication Systems, Rauland-Borg Corporation, Homewood Health Care and STERIS Corporation. In Europe, Hill-Rom competes with a large number of international competitors and regional manufacturers. Hill-Rom believes that it is a leader in the products and services it provides in Europe. Hill-Rom competes on the basis of product quality, service to its customers, innovation and price.

Funeral Services

Batesville Casket is a recognized North American industry leader in the sale of funeral services products. Batesville competes on the basis of product quality, innovation, personalization, customer service and price, and believes that there are at least two other companies, Aurora Casket Company and Matthews International Corporation, that also manufacture and/or sell funeral services products over a wide geographic area. However, throughout the United States, there are many enterprises that manufacture, assemble, or distribute funeral services products for sale within a limited geographic area.

     Forethought is a leader in insurance-funded funeral planning products. Forethought competes in this business primarily on the basis of service to funeral establishment customers, compensation to the distribution channel, and price to the consumer. Forethought’s guaranteed insurance-funded funeral planning products compete with similar products offered by approximately ten other life insurers. Forethought’s final expense products compete with products offered by a large number of life insurance companies. Forethought’s trust-funded funeral and cemetery planning products compete with similar products offered by banks and trade associations. Forethought competes in this business primarily on the basis of service to its funeral and cemetery customers and the return on funds placed in trust by these customers.

RESEARCH

Each of the Company’s operating subsidiaries conducts research efforts to further develop new products and improve its existing products, as well as to enhance its manufacturing and production methods and improve service. All research and development is Company sponsored and expensed as incurred. Research and development expense incurred for the fiscal year ended September 30, 2003, the ten-month period ended September 30, 2002 and fiscal year 2001, were as follows:

PATENTS AND TRADEMARKS

The Company owns a number of patents on its products and manufacturing processes that are of importance to it, but, except for the marks “Hill-Rom,” “Batesville,” and “Forethought,” does

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not believe 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 does not believe any single trademark or service mark is of material significance to the business of the Company as a whole.

     The Company’s ability to compete effectively depends, to an extent, on its ability to maintain the proprietary nature of its intellectual property. However, the Company may not be sufficiently protected by its various patents, trademarks and service marks. Additionally, certain of its existing patents, trademarks or service marks may be challenged, invalidated, canceled, narrowed or circumvented. Beyond that, it may not receive the pending or contemplated patents, trademarks or service marks for which it has applied or filed.

     In the past, certain of the Company’s products have been copied and sold by others. The Company tries to vigorously enforce its intellectual property rights. However, the Company cannot ensure that the copying and sale of its products by others would not materially adversely affect the sale of its products.

EMPLOYEES

As of September 30, 2003, the Company employed approximately 9,900 persons in its operations, of which approximately 2,800 work under collective bargaining agreements. The collective bargaining agreements have expiration dates ranging from January 2004 to November 2005. Although the Company has not experienced any significant work stoppages in the past 20 years as a result of labor disagreements, it cannot ensure that such a stoppage will not occur in the future. A labor disturbance at one of the Company’s principal facilities could have a material adverse effect on the Company’s operations.

REGULATORY MATTERS

FDA Regulation

Hill-Rom designs, manufactures, installs and distributes medical devices that are regulated by the Food and Drug Administration (FDA) in the United States and similar agencies in other countries. The regulations adopted and standards imposed by these agencies evolve over time and require Hill-Rom to make changes in its manufacturing processes and quality systems to remain in compliance. These agencies routinely inspect Hill-Rom’s facilities, as with other medical device manufacturers. If Hill-Rom fails to comply with applicable regulations and standards, determined by inspections or otherwise, Hill-Rom may be subject to compliance measures, including the recall of products and cessation of manufacture and/or distribution.

     As necessary, Hill-Rom engages in voluntary product recalls and other corrective actions, including voluntarily ceasing shipment of devices. Hill-Rom has also implemented an extensive program designed to ensure its quality systems continue to comply with the FDA Quality System Regulation requirements and the regulatory equivalents under the Medical Device Directive in the European Union.

     Over the past two years most of Hill-Rom’s United States facilities have been inspected by FDA representatives who, as is customary in the industry, issued reports of their findings to management for discussion and remediation. While Hill-Rom believes it has responded fully to the findings and has implemented corrective actions when necessary, any determination by the FDA or similar foreign agency that Hill-Rom’s products or quality systems do not comply with applicable regulations could result in future compliance activities, including product recalls, injunctions preventing shipment of products, or other enforcement actions that could have a material adverse effect on financial condition, results of operations and cash flow of the Company.

Health Care Regulation

Hill-Rom’s customers include hospitals and other acute and long-term care facilities that receive reimbursement for certain of the products and services they provide from various third-party payers including Medicare, Medicaid, managed care organizations, such as health

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maintenance organizations and preferred provider organizations, and traditional indemnity insurers. In the Company’s home care rental business, the Company is reimbursed directly by such third party payors. Accordingly, the Company’s customers are significantly affected by changes in reimbursement practices of such third-party payors. Historical changes to Medicare payment programs from traditional “cost-plus” reimbursement to a prospective diagnosis-based payment system resulted in a significant change in how the Company’s health care customers acquire and utilize the Company’s products. This has resulted in reduced utilization and downward pressure on prices. Future legislative or regulatory efforts relating to health care reimbursement policies or other factors affecting health care spending may further affect the manner in which the Company’s customers acquire and use the Company’s products.

     The Company is currently assessing the effects on its business of the Medicare reform legislation passed by Congress in November 2003, known as the Medicare Prescription Drug, Improvement and Modernization Act of 2003. While all of the implications of this legislation are not yet clear, the Company’s initial assessment is that the net effect on the Company may be positive. Although the legislation may cause increased pressure on prices in some of the markets served by the Company, the Company should benefit from increased capital spending by hospitals resulting from favorable hospital reimbursement provisions in the legislation.

Environmental Protection

The Company is subject to a variety of federal, state, local and foreign environmental laws and regulations relating to environmental, waste management, and health and safety concerns, including the handling, storage, discharge and disposal of hazardous materials used in or derived from its manufacturing processes. The Company is committed to operating all of its businesses in a manner that protects the environment. In the past year, the Company has been issued Notices of Violation alleging violation of certain environmental permit conditions. The Notices of Violation involved no or only minor fines or penalties. The Company, however, has successfully implemented measures to abate such conditions in compliance with the underlying agreements and/or regulations. In the past, the Company has voluntarily entered into remediation agreements with various environmental authorities to address onsite and offsite environmental impacts. The remaining voluntary remediation activities are nearing completion. The Company has also been notified as a potentially responsible party in investigations of certain offsite disposal facilities. Based on the nature and volume of materials involved, the cost of such onsite and offsite remediation activities to be incurred by the Company in which it is currently involved is not expected to exceed $1 million. The Company believes it has provided adequate reserves in its financial statements for all of these matters, which have been determined without consideration of possible loss recoveries from third parties. Future events or changes in existing laws and regulations or their interpretation may require the Company to make additional expenditures in the future. The cost or need for any such additional expenditures 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 10 to the Consolidated Financial Statements, which statements are included under Item 8.

     The Company’s export revenues constituted less than 10% of consolidated revenues in 2003 and prior years.

     The Company’s foreign operations are subject to risks inherent in doing business in foreign countries. Risks associated with operating internationally include political, social and economic instability, increased operating costs, expropriation and complex and changing government regulations, all of which are beyond the Company’s control. Further, to the extent the Company receives revenues in currencies other than U.S. dollars, the value of assets and income could be, and have in the past been, adversely affected by fluctuations in the value of local currencies.

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EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers of the Company are elected each year by the Board of Directors at its first meeting following the Annual Meeting of Shareholders, and from time to time as necessary, to serve during the ensuing year and until their respective successors are elected and qualified. There are no family relationships between any of the executive officers of the Company or between any of them and any of the members of the Board of Directors. The following is a list of the executive officers of the Company as of December 1, 2003.

     Frederick W. Rockwood, 55, was elected Chief Executive Officer and President of the Company on December 3, 2000 after being President since December 6, 1999. He has been employed by the Company since 1977. Previous positions held within the Company include President and Chief Executive Officer of Hillenbrand Funeral Services Group, Inc. from 1997 to 1999, President and Chief Executive Officer of Forethought Financial Services, Inc. from 1985 to 1997, Senior Vice President of Corporate Planning and Director of Corporate Strategy. He has also been a management consultant with Bain and Company and Boston Consulting Group. He is also a member of the Board of Directors of the Advanced Medical Technology Association (AdvaMed).

     Kenneth A. Camp, 58, was elected President and Chief Executive Officer of Batesville Casket Company on May 1, 2001 and was elected as a Vice President of Hillenbrand Industries on October 8, 2001. He has been employed by the Company since 1981. Ken previously held the position of Vice President of Administration of Hillenbrand Industries from 2000 to 2001. Prior to that position he held various positions at Batesville Casket Company including Vice President/General Manager of Operations from 1995 to 2000; Vice President, Sales and Service; Vice President, Marketing; and Vice President, Strategic Planning.

     Stephen R. Lang, 51, was elected President and Chief Executive Officer of Forethought Financial Services, Inc. on June 29, 2001 and was elected as a Vice President of Hillenbrand Industries on October 8, 2001. He also serves as President of Forethought Life Insurance Company and Forethought Federal Savings Bank, subsidiaries of Forethought Financial Services, Inc. Steve is a 17-year Forethought veteran, holding various positions including Vice President and Chief Operating Officer from 1999 to 2001, Vice President and General Manager from 1995 to 1999, Vice President of Sales, and Vice President of Human Resources.

     R. Ernest Waaser, 47, was elected President and Chief Executive Officer of Hill-Rom on January 22, 2001 and was elected as a Vice President of Hillenbrand Industries on October 8, 2001. He was previously Senior Vice President of AGFA Corporation and President of AGFA’s Medical Imaging Division from 1999 to 2000. Prior to joining AGFA, Ernest was Executive Vice President and Chief Operating Officer of Sterling Diagnostic Imaging, Inc. from 1996 to 1999, a supplier of conventional and digital systems for the capture, communication, display and storage of medical diagnostic images. He also served as Research and Development Director, Diagnostic Imaging, for E. I. DuPont De Nemours & Co., Inc. and in various other management capacities with DuPont.

     Patrick D. de Maynadier, 43, was elected on January 28, 2002 as Vice President, General Counsel and Secretary. From May 2000 to October 2001 Patrick was Executive Vice President, General Counsel and Corporate Secretary for CombiMatrix Corporation, a biotechnology company that develops software addressable biochips for drug researchers. From May 1999 to May 2002, he was the President and Chief Executive Officer of SDI Investments, LLC, a spin-off of Sterling Diagnostic Imaging, Inc. He served as Senior Vice President, General Counsel and Corporate Secretary of Sterling Diagnostic Imaging, Inc. from June 1996 to May 1999. Prior to that he was Associate General Counsel of Falcon Seaboard Resources, Inc., a cogeneration and oil and gas company and a partner in the corporate and securities section of the law firm Bracewell & Patterson, L.L.P.

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     Kimberly K. Dennis, 36, was elected Vice President, Shared Services on September 10, 2003. Kim is responsible for directing the corporation’s IT infrastructure, travel services, administrative services, graphic communications, aviation operations and customer visitation guest facilities. Prior to this assignment, she was Vice President, Business Information Systems for Batesville Casket Company from August 2001 to September 2003 and Director, Enterprise Systems for Batesville Casket Company from January 2000 to August 2001. Her career with the Company started in 1989 with Batesville Casket Company where she held positions of increasing responsibility in finance, planning, operations, logistics, and information technology. She was also the principal architect of Batesville Casket Company’s regional distribution center network and was director and project leader of its enterprise resource planning project.

     Catherine Greany, 47, was elected Vice President, Corporate Development on May 21, 2002. Since 1998, Catherine was Vice President, Mergers and Acquisitions, for Omnicare, Inc., a Covington, Kentucky-based health care services provider. Prior to joining Omnicare, Inc., Catherine was Vice President, Mergers and Acquisitions, for Vitalink Pharmacy Services Inc. She has also held a variety of corporate development and financial leadership positions with Linc Anthem Financial Corporation; American Ophthalmic, Inc.; GranCare Inc.; Donaldson, Lufkin & Jenrette Securities Corporation; and Atlantic Richfield Company.

     Gregory N. Miller, 40, was elected Vice President - Controller and Chief Accounting Officer for Hillenbrand Industries on May 16, 2002. He previously held the position of Vice President-Controller from November 9, 2001 to May 16, 2002. Prior to joining the Company he held a number of positions with Newell Rubbermaid, Inc., a manufacturer and marketer of name-brand consumer products and its divisions including Group Vice President and Controller, Photo Fashions and Juvenile Products Groups, Newell Rubbermaid from 2000 to 2001; Vice President and Controller, Little Tikes Company, a Newell Rubbermaid division from 1999 to 2000; Vice President and Controller and various positions of increasing responsibility in finance, Newell Window Furnishings/Kirsch from 1993 to 1999. Prior to his Newell positions, he held positions with the accounting firms of Deloitte & Touche LLP and Grant Thornton.

     David L. Robertson, 57, has been employed by the Company since March 23, 1998, and was elected Vice President, Administration on May 1, 2001. He previously served as Vice President, Executive Leadership Development from June 26, 2000 to May 1, 2001, Vice President, Administration from December 6, 1999 to June 26, 2000 and Vice President, Human Resources from March 23, 1998 to December 6, 1999. Prior to joining the Company, he was Senior Vice President, Human Resources for Rubbermaid, Inc., a manufacturer and marketer of name-brand consumer products, in Wooster, Ohio from 1994 to 1998. From 1982 to 1994 Mr. Robertson served as Vice President, Human Resources for Hillenbrand Industries, Inc. Mr. Robertson announced his intent to retire effective February 1, 2004.

     Scott K. Sorensen, 42, was elected Vice President and Chief Financial Officer on March 1, 2001. Prior to joining the Company, he was employed by Pliant Corporation (formerly Huntsman Packaging), a film and flexible packaging producer as its Executive Vice President and Chief Financial Officer, Treasurer since 1998. Prior to joining Pliant Corporation, Scott held various senior financial leadership positions with Westinghouse Electric Corporation/CBS including Chief Financial Officer of the Power Generation Division and the Communication and Systems Divisions from 1996 to 1998. He has also been an executive with Phelps Dodge Corporation and a management consultant with McKinsey & Company.

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AVAILABILITY OF REPORTS AND OTHER INFORMATION

The Company’s website is www.hillenbrand.com. The Company makes available on this website, free of charge, access to its annual, quarterly and current reports and other documents filed by it with or furnished by it to the Securities and Exchange Commission as soon as practicable after such reports or documents are filed or furnished. The Company also makes available on this website position specifications for the Chairman, Vice Chairman, members of the Board of Directors and the Chief Executive Officer, the Company’s Code of Ethical Business Conduct, the Corporate Governance Standards of the Company’s Board of Directors and the charters of each of the standing committees of the Board of Directors. All of these documents are also available to shareholders in print upon request.

Item 2. PROPERTIES

The principal properties of the Company and its subsidiaries’ continuing operations are listed below, and are owned by the Company or its subsidiaries subject to no material encumbrances. 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.

     In addition to the foregoing, the Company leases or owns a number of other manufacturing facilities, warehouse distribution centers, service centers and sales offices throughout the United States, Canada, Western Europe, Mexico and the Far East.

Item 3. LEGAL PROCEEDINGS

     The Company is subject to various other claims and contingencies arising out of the normal course of business, including those relating to commercial transactions, product liability, employee related matters, antitrust, safety, health, taxes, environmental and other matters. Litigation is subject to many uncertainties and the outcome of individual litigated matters is not predictable with assurance. It is possible that some litigation matters for which reserves have not been established could be decided unfavorably to the Company, and that any such unfavorable decisions could have a material adverse effect on the financial condition, results of operations and cash flows of the Company.

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Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during the quarter ended September 30, 2003.

PART II

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

Certain statements in this Annual Report on Form 10-K contain forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995 (the “Act”) or adopted rules, regulations and releases by the Securities and Exchange Commission (SEC) regarding the Company’s future plans, objectives, beliefs, expectations, representations and projections. The Company desires to take advantage of the “safe harbor” provisions in the Act for forward-looking statements made from time to time, including, but not limited to, the forward-looking statements relating to the future performance of the Company contained in Management’s Discussion and Analysis (under Items 7 and 7A of Form 10-K), the Notes to Consolidated Financial Statements (under Item 8 of Form 10-K) and other statements made in this Form 10-K and in other filings with the SEC. The Company has tried, whenever possible, to identify these forward-looking statements by using words such as “intend,” “anticipate,” “believe,” “plan,” “encourage,” “expect,” “may,” “goal,” “become,” “pursue,” “estimate,” “strategy,” “will,” “projection,” “forecast,” “continue,” “accelerate,” “promise,” “increase,” or the negative of those terms or other variations of them or by comparable terminology. The absence of such terms, however, does not mean that the statement is not forward-looking.

     The Company cautions readers that any such forward-looking statements are based on assumptions that the Company believes are reasonable, but are subject to a wide range of risks, and there is no assurance that actual results may not differ materially from those in any such forward-looking statements. Forward-looking statements are not guarantees of future performance. Information about factors that may affect future results is set forth under the caption “Risk Factors” below.

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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 the twelve months ended September 30, 2003 and 2002.

Holders

On December 1, 2003, there were approximately 16,900 shareholders of record.

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 thereafter. In fiscal 2003, dividends were paid on December 31, 2002 and March 31, June 30 and September 30, 2003 to shareholders of record as of December 17, 2002 and March 3, June 2 and September 16, 2003. Cash dividends of $1.00 ($0.25 per quarter) in fiscal 2003 and $0.69 ($0.23 per quarter) in 2002 were paid on each share of common stock outstanding. As a result of the Company’s change in its fiscal year end to September 30, the Company also paid a special dividend of $0.0767 per share on March 29, 2002 to shareholders of record as of March 1, 2002. This one-time dividend was for the month of March 2002 and represented one-month of the regular quarterly dividend of $0.23 per share paid throughout the remainder of 2002. The Company currently believes that comparable quarterly cash dividends will continue to be paid in the future, as evidenced by the Board of Directors recent approval of a dividend of $0.27 per share for the first quarter of fiscal 2004.

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Item 6. SELECTED FINANCIAL DATA

The following table presents selected consolidated financial data of Hillenbrand Industries, Inc., for the fiscal year ended September 30, 2003 and the ten month period ended September 30, 2002. Fiscal years 1999-2001 are presented based on the Company’s previous fiscal year end of the Saturday nearest November 30. Also presented are comparable unaudited data for the twelve month periods ended September 30, 2001 and 2002.

(a)

The selected financial data presented above includes a number of non-recurring and special charges. Following is a summary of these charges, on a net-of-tax basis. The amounts are summarized based upon the line items within the Statement of Consolidated Income impacted. Further discussion regarding these adjustments can be found in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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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 audited Consolidated Financial Statements and accompanying notes included under Item 8 of this Form 10-K.

OVERVIEW

Hillenbrand Industries is organized into three major operating companies serving the health care and funeral services industries. Hill-Rom is a manufacturer of equipment for the health care industry and a provider of associated services for wound, pulmonary and circulatory care. Batesville Casket and Forethought both serve the funeral services industry. Batesville Casket is a manufacturer of caskets and cremation-related products while Forethought is a provider of funeral planning financial products.

     Over the course of the past three years, Hillenbrand Industries has embarked on a new strategy to create value for shareholders, customers, suppliers and employees. At the cornerstone of this strategy is the Company’s commitment to create and accelerate shareholder value and growth by identifying and implementing strategies that will help realize the potential of the existing portfolio of businesses and position the Company for future growth, both organically and through acquisitions. The five key elements of the Company’s strategy and its impact on the business are outlined as follows:

	1.		Profitable revenue growth: Profitable revenue growth is critical to the Company’s overall commitment to build shareholder value. Actions taken to achieve this objective include higher research and development spending, a more strategic approach to new product development, an increased focus on higher margin products and a more profitable product mix. These efforts have resulted in numerous product line extensions, new product platforms, gross margin improvement and a foundation for future revenue growth. The Company is also committed to growth through health care acquisitions, such as the recently completed acquisition of Advanced Respiratory, Inc. and the pending acquisition of Mediq, Inc.
	2.		Improved asset management: The Company continually strives to improve the efficiency and return on its assets and capital. Key components of this effort include business process simplification, asset rationalization and achieving an optimal sales structure. Significant progress has been made in all these areas. In business process simplification, the Company is continuing its efforts to move to a common technology platform with its Enterprise Resource Planning implementations at Hill-Rom and Batesville Casket. In the area of asset rationalization, certain poor performing and slower growth product lines and businesses have been exited and certain under-performing assets have been divested. The recent sale of the Company’s piped-medical gas business and the pending sale of its infant care products business are examples of the asset rationalization strategy. These businesses were selected for divestiture as they no longer fit within our strategic portfolio. They were considered to have limited future growth potential, possessed unique sales channels and research and development requirements, had low profit margins and would have required significant investment to achieve their limited growth potential. Proceeds from the disposition of these businesses will be reinvested as part of the Company’s acquisition growth strategy.
	3.		Lower cost structure: The Company is committed to increasing shareholder value through the reduction of costs and waste in all areas of its business and the streamlining of processes for higher performance. Strategic sourcing and supply arrangements with key suppliers have resulted in significant reductions in raw material costs while maintaining quality. Fixed costs also continue to be reduced as a result of work force and other realignment activities. With respect to non-operating expenses, in the fourth quarter of 2003 the Company completed the repurchase of approximately

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			$157 million of its outstanding long-term debt, all of which carried interest rates ranging from 6.75% to 8.5%. The Company incurred a charge of approximately $16 million related to the repurchase of this debt.
			In addition, in the third fiscal quarter of 2003 Hill-Rom established a new business structure to further the execution of its strategy and strengthen its core businesses. The Company recognized a fiscal 2003 third quarter charge of approximately $9 million with respect to this action and upon completion, expects net operating costs to be reduced between $12 and $14 million annually, with significant benefits beginning in the first quarter of calendar 2004. The Company believes that the benefits of the new Hill-Rom organizational structure include increased speed of decision making, enhanced ability to execute business plans, and improved integration of acquisitions. The new structure should also provide the flexibility to structure and manage distinct business models that address the unique characteristics and opportunities of each Hill-Rom division.
	4.		Strategic portfolio management: The Company continues to manage its portfolio of operating companies under a unified corporate structure rather than as a group of autonomous companies. Under this approach, each operating company plays a specific role in the fulfillment of the Company’s overall strategy. Batesville Casket and Forethought are responsible for providing earnings and cash flow to fund Corporate growth. Hill-Rom’s role is to provide, in addition to cash flow and earnings, profitable growth through new product innovation, expansion into new areas and acquisitions in its respective adjacent health care businesses.
	5.		Leadership excellence: The Company has continued the aggressive development of talent in the organization through developmental assignments, inter-organizational transfers and special executive development training experiences. The Company has launched a unique performance development facility to enhance executive capabilities. During 2003, the Company completed a comprehensive evaluation of its compensation and benefit programs to assure marketplace competitive programs and practices, as well as proper alignment with the Company’s shareholder value creation objectives.

     The Company’s recent results of operations have been significantly affected by these strategic initiatives and the resulting reductions in cost, improved manufacturing efficiencies, more profitable product mix and enhanced price realization. The charges and expenditures incurred to implement these initiatives partially offset the achieved benefits, but such benefits are expected to continue in future periods. The Company expects further benefits to be achieved as the Company continues to pursue its strategy, with a primary focus on the following elements of the strategy in 2004:

	1.		Accelerating top line growth through new business development: While organic growth is important, the Company recognizes that it will not be able to consistently meet its long-term strategic objectives without the benefit of acquisitions. The Company will continue to pursue a focused approach to acquisitions, looking for companies with profitability and growth potential in the health care environment. The Company believes that Advanced Respiratory, Inc., which the Company acquired in October 2003, and Mediq, Inc., which the Company has agreed to acquire, meet these criteria.
	2.		Product quality, innovation and new product development: The Company is becoming increasingly focused on its product quality and new product development initiatives, increasing funding levels and the speed of research and development and manufacturing cycle times. The ultimate goal of these initiatives is to provide meaningful innovative solutions to customers. During 2003, Hill-Rom introduced its TotalCare® Bariatric bed for use with obese patients, its ActiveCare® product for the prevention of deep vein thrombosis and upgrades to its COMLinx™ communications system, among others. Additionally, Batesville Casket introduced new engineered wood

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			casket products manufactured under its revolutionary new process for veneers, reintroduced select premium wood caskets under the Marsellus brand name and entered a new product category with the introduction of urn vaults.
	3.		Streamlining business for higher performance: The Company plans to continue to rationalize and exit poor performing product lines and businesses and divest itself of under-performing assets. In addition, implementation efforts related to the Enterprise Resource Planning systems at Hill-Rom and Batesville Casket will continue, providing a common technology platform aimed at speeding productivity gains and process improvements.
	4.		Reduce risk in Forethought investment portfolio: At Forethought, efforts will continue to reduce exposure to the volatility of the credit markets by reducing exposure to high-yield bonds, lowering limits for investments in individual securities, investing in commercial mortgages and seeking favorable returns within acceptable risk parameters.

     In addition to the effects of the continued execution of the Company’s overall Corporate strategy, other trends in the Company’s businesses which have impacted and may continue to impact performance are outlined below.

     The health care products industry is a diverse and highly competitive industry. Over the long term, patient demand for services is rising as a result of a number of factors, including an aging population, increasing life expectancy, enlightened consumers and technological advances. These long-term trends are reflected in increasing days of inpatient stays at acute care facilities in the United States and Western Europe, creating modest demand for new facilities and pressure for existing facilities to upgrade and increase efficiency, caregiver safety and productivity in order to maintain profitability and meet demand in a period of staffing shortages.

     In addition, health care providers are under continued pressure to control costs. As a result, purchasers of health care products and services such as those offered by the Company’s health care businesses continue to demand more cost effective products and services that improve the quality and efficiency of patient care and service. Specifically, state and federal budget deficits are causing increasing pressure to control costs in the Medicare and Medicaid programs, increasing the likelihood of health care reform and changes in reimbursement practices. Additionally, health care providers face cost control pressures due to increasing numbers of uninsured patients and increasing supply costs. Premium increases to health care plans and the rising uninsured population further exacerbate a difficult reimbursement and economic environment for providers. In the aggregate, these cost control pressures can also impact the relative industry-wide demand for sales versus rental options in various product segments, which in turn can affect the sales versus rental mix of many products in the Company’s portfolio.

     Further, group purchasing organizations have come under increasing scrutiny regarding contracting practices, which have included various Congressional hearings. While the Company derives significant revenues through group purchasing organizations, it is not possible at this time to determine what impact, if any, future changes in the practices of group purchasing organizations could have on the Company.

     The Company is currently assessing the effects on its business of the Medicare reform legislation passed by Congress in November 2003, known as the Medicare Prescription Drug, Improvement and Modernization Act of 2003. While all of the implications of this legislation are not yet clear, the Company’s initial assessment is that the net effect on the Company may be positive. Although the legislation may cause increased pressure on prices in some of the markets served by the Company, the Company should benefit from increased capital spending by hospitals resulting from favorable hospital reimbursement provisions in the legislation.

     Management believes that in order for the Company to achieve its goals of faster growth and improved profitability, it will be required to continue to provide innovative, high quality customer solutions on a cost-effective basis. The Company has been subject to increasing competitive pressure in areas in which the Company has not brought sufficient new products and features to market in the past. Hill-Rom’s increased commitment to new product

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development should generate additional growth opportunities in 2004 and beyond. New products expected to be launched in 2004 include bed systems, architectural and furniture products and clinical therapy solutions.

     Fundamentally, Hill-Rom’s strategy is aimed at providing three value propositions that management believes should directly address long-term customer needs: improving the operational efficiency of healthcare facilities; providing improved patient outcomes, thereby reducing length of stay and costs; and, improving caregiver safety and efficiency. Management believes substantial opportunity exists to grow in these areas by leveraging Hill-Rom’s global rental service center network, its clinical sales force and its strong position in capital equipment. The recently completed acquisition of Advanced Respiratory, Inc. and the pending acquisition of Mediq, Inc. aim to take advantage of these opportunities. Because of its heavy concentration in sales of capital equipment, the Company is susceptible to short-term demand fluctuations resulting from economic and regulatory changes. For example, the Company is currently experiencing a slowdown in capital order patterns in Western Europe and declines in its North American backlog as a result of general economic weakness and competitive pressures. The Company intends to accelerate its efforts in non-capital products and services, which it believes will provide a more stable revenue base. Meanwhile, Hill-Rom continues to focus on increasing its cost competitiveness in light of anticipated price pressures and low cost competitors, particularly in low- to mid-range products.

     In the funeral services products industry, the North American burial casket industry appears to be gradually but steadily declining as the result of lower age-adjusted mortality rates and a continued increase in the rate of cremations. The popularity of cremations continues to grow at a rate of approximately one percentage point each year, now estimated at approximately one-third of total deaths. Management expects these trends, which have resulted in declines in the volume of casket sales for the Company over the past three years, to continue in the near future. Although the Company offers a line of cremation products, these products result in lower revenue and carry lower margins. Partially offsetting these negative trends is a growing demand for enhanced personalization of funeral products and increased manufacturing and other operational efficiencies. Based on these trends and factors, the Company’s strategy to improve profitability in the funeral services products industry will require the Company to continue to differentiate its products on the basis of quality, innovation, personalization and customer service, while at the same time continuing to control costs through manufacturing efficiencies, strategic sourcing and other cost reduction efforts.

     In the funeral services insurance industry, volatility in the credit markets has continued to adversely impact the Forethought investment portfolio resulting in significant net capital losses and impairments. The current low interest rate environment continues to impact the investment yield on the portfolio, a trend which is not likely to improve significantly in the near-term, as a result of continued low interest rates. The underwriting component of the insurance business is also under some pressure as funeral value sales have been adversely impacted by the rationalization of sales and marketing programs and general economic weakness. The competitive marketplace has also made it difficult to fully align the crediting rate applied to the underlying policies sold and overall investment returns. Forethought is actively managing the spread between its investment returns and the rate of earnings on its policies in force, with target spreads being achieved in the fourth quarter of 2003.

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RESULTS OF OPERATIONS

Effective for fiscal year 2002, the Company changed its fiscal year end to September 30 from the Saturday nearest November 30 of each year. As a result of this change, the Statements of Consolidated Income, Statements of Consolidated Cash Flows and Statements of Consolidated Shareholders’ Equity presented in this Form 10-K reflect the Fiscal Year Ended September 30, 2003, the Ten Months Ended September 30, 2002 and the Fiscal Year Ended December 1, 2001.

     As a result of the change in fiscal year ends, for purposes of Management’s Discussion and Analysis of Financial Condition and Results of Operations, the following periods of operations are presented and discussed:

	•		Fiscal Year Ended September 30, 2003 compared to Twelve Months Ended September 30, 2002
	•		Fiscal Year Ended September 30, 2003 compared to Ten Months Ended September 30, 2002
	•		Twelve Months Ended September 30, 2002 compared to Twelve Months Ended September 30, 2001
	•		Ten Months Ended September 30, 2002 compared to Fiscal Year Ended December 1, 2001

     The discussion of results for the Fiscal Year Ended September 30, 2003 to the Twelve Months Ended September 30, 2002 and for the Twelve Months Ended September 30, 2002 to the Twelve Months Ended September 30, 2001 are presented for comparative purposes only. Management considers these to be more meaningful presentations than the respective comparisons of the Ten Months Ended September 30, 2002 to the Fiscal Years Ended September 30, 2003 and December 1, 2001. As a result, the explanations related to the comparative results of the Fiscal Year Ended September 30, 2003 to the Ten Months Ended September 30, 2002 and the Ten Months Ended September 30, 2002 to the Fiscal Year Ended December 1, 2001 are more abbreviated than for the other comparisons included herein. Unless otherwise noted, the factors affecting the results for the Ten Months Ended September 30, 2002 are consistent with those affecting the unaudited results for the twelve months ending on this same date. The results for the Twelve Months Ended September 30, 2002 and 2001 are unaudited.

     Unless otherwise indicated, references to 2002 or 2001 in the comparative discussions below correspond to the periods set forth in the heading of each section. Further, with the announced divestitures of the infant care and piped-medical gas businesses of Hill-Rom, these operations are presented as discontinued operations within the Company’s Consolidated Statement of Income. Under this presentation, the revenues and variable costs associated with the businesses are removed from the individual line items comprising the Consolidated Statement of Income and presented in a separate section entitled, “Discontinued Operations”. In addition, fixed costs related to the businesses that will be eliminated with the divestitures are also included as a component of discontinued operations. The results of discontinued operations are not necessarily indicative of the results of the businesses if they had been operated on a stand-alone basis. All discussions and presentations of financial results within Management’s Discussion and Analysis are presented based on the Company’s results from continuing operations.

     Following receipt by a member of the Board of Directors of an anonymous letter in late 2003 that alleged potential issues related to the timing of revenue recognition at Hill-Rom, an investigation was voluntarily initiated by the Audit Committee of the Board of Directors. The Audit Committee engaged independent counsel to investigate the matter with assistance of forensic accountants. That investigation did not identify any fraud or illegal conduct. However, in the course of the investigation a limited number of sales transactions were identified and corresponding adjustments were reflected in our audited financial results for fiscal 2003. Senior management and the Audit Committee will continue to assess and enhance, where appropriate, the Company’s disclosure controls and procedures in order to ensure their ongoing effectiveness.

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     The following table presents comparative operating results for all periods discussed within Management’s Discussion and Analysis: