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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 14, 2008
HILLENBRAND INDUSTRIES, INC.
(Exact Name of Registrant as Specified in Charter)
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Indiana
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1-6651
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35-1160484 |
(State or Other Jurisdiction
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(Commission
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(IRS Employer |
of Incorporation)
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File Number)
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Identification No.) |
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1069 State Route 46 East |
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Batesville, Indiana
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47006-8835 |
(Address of Principal Executive Offices)
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(Zip Code) |
Registrants telephone number, including area code: (812) 934-7000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c)) |
Item 8.01. Other Events.
Approval of Distribution
On March 14, 2008, the Board of Directors of Hillenbrand Industries, Inc. (the Company)
formally approved the previously announced distribution (the Distribution) to the Companys
shareholders of all of the common stock of Batesville Holdings, Inc. (Batesville Holdings) held
by the Company, and established the record date and distribution date for the Distribution.
Batesville Holdings is a wholly owned subsidiary of the Company recently formed to become the
holding company for the Companys funeral service business, which has operated under the Batesville
Casket name. To implement the Distribution, the Company will distribute to each of its
shareholders, through a pro rata dividend, one share of Batesville Holdings common stock for each
share of the Companys common stock held by such shareholder as of the close of business on March
24, 2008, the record date for the Distribution. The Distribution is expected to be made after the
close of business on March 31, 2008, which is referred to as the distribution date. A press
release announcing the Board of Directors approval of the Distribution and the establishment of
the record date and distribution date is filed as Exhibit 99.1. The contents of such Exhibit are
incorporated herein by reference.
In connection with the Distribution, the Company will change its name to Hill-Rom Holdings,
Inc., and Batesville Holdings will change its name to Hillenbrand, Inc. These name changes are
being made to continue the long association of the Hillenbrand name with the Batesville Casket
business. The amendment of the Companys articles of incorporation to change the Companys name
was approved by the Companys shareholders at a special meeting of shareholders held March 13,
2008.
A goal of the separation of Batesville Holdings from the Company is that current shareholders
of the Company initially receive combined quarterly cash dividends from the Company and Batesville
Holdings equal to the $0.285 per share quarterly dividend currently paid by the Company.
Accordingly, following the distribution the Company expects initially to pay a quarterly dividend
of $0.1025 per share, and Batesville Holdings expects initially to pay a quarterly dividend of
$0.1825 per share. The declaration and payment of dividends by the Company or Batesville Holdings
will be subject to the sole discretion of their respective boards of directors and will depend upon
many factors, including their financial condition, earnings, capital requirements, covenants
associated with their debt obligations or other contractual restrictions, legal requirements and
other factors deemed relevant by their respective boards of directors.
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Agreements to Be Entered into in Connection with the Distribution
On or about March 18, 2008, the Company will enter into definitive agreements with Batesville
Holdings that, among other things, set forth the terms and conditions of the Distribution and
provide a framework for Batesville Holdings relationship with the Company after the Distribution.
Summaries of the material terms of these definitive agreements, which consist of a distribution
agreement, a judgment sharing agreement, an employee matters agreement, a tax sharing agreement,
shared services agreements and transitional services agreements, are set forth below. The
distribution agreement, judgment sharing agreement, employee matters agreement and tax sharing
agreement are each filed as exhibits to this report, and the summary of each of these agreements
sets forth those terms we believe to be material. These summaries are qualified in their entirety
by reference to the full text of the agreements.
Distribution Agreement
The distribution agreement will set forth the agreements between the Company and Batesville
Holdings with respect to the principal corporate transactions required to effect the Distribution
and the related separation of Batesville Holdings from the Company, the allocation of certain
corporate assets and liabilities of the Company and Batesville Holdings, and other agreements
governing the relationship between the Company and Batesville Holdings.
The Distribution. The distribution agreement will provide that, subject to the terms
and conditions contained in the agreement, the Company will effect the Distribution after the close
of business on the distribution date, which will be March 31, 2008. The Distribution is subject to
the satisfaction or waiver by the Company, in its sole discretion, of a number of conditions. See
"Conditions to the Distribution below.
Releases and Indemnification. The distribution agreement will provide that the
Company and its subsidiaries (other than Batesville Holdings and its subsidiaries) will release and
discharge Batesville Holdings and its subsidiaries from all liabilities to the Company and its
subsidiaries of any sort, including in connection with the transactions contemplated by the
distribution agreement, except as expressly set forth in the agreement. Batesville Holdings and
its subsidiaries will release and discharge the Company and its subsidiaries from all liabilities
to Batesville Holdings and its subsidiaries of any sort, including in connection with the
transactions contemplated by the distribution agreement, except as expressly set forth in the
agreement. The releases will not release
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any party from, among other matters, liabilities assumed by or allocated to the party pursuant
to the distribution agreement or the other agreements entered into in connection with the
separation (including the judgment sharing agreement described below) or from the indemnification
and contribution obligations under the distribution agreement or such other agreements.
Except as otherwise provided in the distribution agreement, the Company will agree to
indemnify, defend and hold harmless Batesville Holdings and its subsidiaries from and against all
liabilities relating to, arising out of or resulting from:
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any liabilities relating to the Company or its business, including the failure
of the Company or any of its subsidiaries (other than Batesville Holdings or any of its
subsidiaries), to pay, perform or otherwise promptly discharge any such liabilities in
accordance with their respective terms; |
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any breach by the Company or any of its subsidiaries (other than Batesville
Holdings or any of its subsidiaries), of the distribution agreement or any of the other
agreements; |
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certain specified claims, other than the claims covered by the judgment sharing
agreement discussed below; and |
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any untrue statement or alleged untrue statement of a material fact, or any
omission or alleged omission to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading
in any information provided by the Company to Batesville Holdings specifically for
inclusion in Batesville Holdings Registration Statement on Form 10 or the related
information statement or in any information provided by the Company to Batesville
Holdings specifically for use in SEC filings made by Batesville Holdings after the
distribution date. |
Except as otherwise provided in the distribution agreement, Batesville Holdings will agree to
indemnify, defend and hold harmless the Company and each of its subsidiaries, other than Batesville
Holdings and its subsidiaries, from and against all losses relating to, arising out of or resulting
from:
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any liabilities relating to Batesville Holdings or its business or assumed by
Batesville Holdings pursuant to the distribution agreement, including the failure of
Batesville Holdings or any of its |
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subsidiaries to pay, perform or otherwise promptly discharge any such liabilities in
accordance with their respective terms; |
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any breach by Batesville Holdings or any of its subsidiaries of the
distribution agreement or any of the other agreements; |
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certain specified claims, other than the claims covered by the judgment sharing
agreement discussed below; and |
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any untrue statement or alleged untrue statement of a material fact, or any
omission or alleged omission to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading,
in Batesville Holdings Registration Statement on Form 10 or the related information
statement (except for any information provided to Batesville Holdings by the Company
for inclusion therein) or in any information provided by Batesville Holdings to the
Company specifically for use in SEC filings made by the Company after the distribution
date. |
The distribution agreement also will establish procedures with respect to claims subject to
indemnification and related matters.
Restrictive Covenants. In order to preserve the credit capacity of each of the
Company and Batesville Holdings to perform its obligations under the judgment sharing agreement
described below, the distribution agreement will impose certain restrictive covenants on the
Company and Batesville Holdings. Specifically, the distribution agreement will provide that, until
the occurrence of an Agreed Termination Event (as described below), the Company and its
subsidiaries will not:
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incur indebtedness to finance the payment of any extraordinary cash dividend on
its outstanding capital stock or the repurchase of any outstanding shares of its
capital stock; |
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in the case of the Company, declare and pay regular quarterly cash dividends on
the shares of the Companys common stock in excess of the $0.1025 per share quarterly
dividend that the Company initially expects to pay following the Distribution; |
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make any acquisition outside its core area of business, defined to mean the
manufacture or sale of non-implantable devices or any |
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other existing business line conducted by Hill-Rom, Inc. and its subsidiaries
immediately prior to the Distribution (including medical technologies and related
services for the health care industry, such as, for example, patient support
systems, non-invasive therapeutic products for a variety of acute and chronic
medical conditions, medical equipment rentals and workflow technology solutions); |
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incur indebtedness in excess of $100 million to finance any acquisition in its
core area of business without the receipt of an opinion from a qualified investment
banker that the transaction is fair to the Companys shareholders from a financial
point of view; or |
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incur indebtedness to make an acquisition in its core area of business that
either (1) causes the Companys ratio, calculated as provided in the distribution
agreement, of Pro Forma Consolidated Total Debt to Consolidated EBITDA (each as defined
in the distribution agreement) to exceed 1.8x or (2) causes the Companys credit rating
by either Standard & Poors Ratings Services or Moodys Investor Services to fall more
than one category below its initial rating after giving effect to the Distribution. |
As used in the distribution agreement, Agreed Termination Event means the first to occur of
(1) the full and complete satisfaction of a trial court judgment in the last pending antitrust
litigation matter described below under Judgment Sharing Agreement (including any similar future
litigation matter that is asserted against both the Company and Batesville Holdings prior to the
completion of the Distribution and any other matter that is consolidated with any such existing or
future matter) or the suspension of the execution of such judgment by
the posting of a supersedeas
bond or (2) the settlement or voluntary dismissal of such last pending matter as to the Company and
Batesville Holdings. These restrictive covenants will terminate in the event that either the
Companys or Batesville Holdings funding obligations under the judgment sharing agreement
terminate in accordance with the terms of that agreement. The distribution agreement will impose
similar restrictions on Batesville Holdings and its subsidiaries, except that the definition of
core business will be appropriate for Batesville Holdings.
Conditions to the Distribution. The completion of the Distribution is subject to the
satisfaction or waiver by the Company in its sole discretion of a number of conditions, including
the following:
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any government approvals and other material consents necessary to consummate the
distribution shall have been received and be in full force and effect; and |
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no order, injunction, decree or regulation issued by any governmental authority
or other legal restraint or prohibition preventing consummation of the distribution
shall be in effect, and no other event outside the control of the Company shall
have occurred or failed to occur that prevents the consummation of the
distribution. |
In addition, the Company has the right not to complete the Distribution if, at any time, the
Companys Board of Directors determines, in its sole discretion, that the Distribution is not in
the best interests of the Company or its shareholders or that market conditions or other
circumstances are such that it is not advisable to separate the funeral service business from the
Company.
Dispute Resolution. The distribution agreement will contain provisions that govern,
except as otherwise provided in any other agreement, the resolution of disputes, controversies or
claims that may arise between Batesville Holdings and the Company related to the separation or
Distribution. These provisions will contemplate that efforts will be made to resolve disputes,
controversies and claims by escalation of the matter to senior management or other mutually agreed
representatives of Batesville Holdings and the Company. If such efforts are not successful, either
Batesville Holdings or the Company may submit the dispute, controversy or claim to binding
arbitration, subject to the provisions of the agreement.
Insurance. The distribution agreement will provide for the allocation among the
parties of benefits under existing insurance policies for occurrences prior to the separation and
sets forth procedures for the administration of insured claims. In addition, the agreement will
allocate among the parties the right to proceeds and the obligation to incur deductibles under
certain insurance policies.
Further Assurances. In addition to the actions specifically provided for in the
distribution agreement, except as otherwise set forth therein or in any other agreement, both the
Company and Batesville Holdings will agree to use commercially reasonable efforts, prior to, on and
after the distribution date, to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws, regulations and
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agreements to consummate and make effective the transactions contemplated by the distribution
agreement and the other agreements.
Judgment Sharing Agreement
The Company and its Batesville Casket Company subsidiary (which will be a subsidiary of
Batesville Holdings following the Distribution) have been named in several purported antitrust
class action lawsuits described under Item 3. Legal ProceedingsBatesville Antitrust Litigation
in the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 2007 and Part
II, Item 1. Legal ProceedingsBatesville Antitrust Litigation in the Companys Quarterly Report
on Form 10-Q for the quarterly period ended December 31, 2007. The Company believes that it and
Batesville Casket have committed no wrongdoing as alleged by the plaintiffs and that it has
meritorious defenses to class certification and to plaintiffs underlying allegations and damage
theories. In accordance with applicable accounting standards, neither the Company nor Batesville
Holdings has established a loss reserve for any of these cases. Because the Company, Batesville
Casket and the other co-defendants in these antitrust litigation matters are jointly and severally
liable for any damages assessed at trial with no statutory contribution rights among the
defendants, the Company and Batesville Holdings will enter into a judgment sharing agreement to
allocate any potential liability under these cases, any similar case brought against both the
Company and Batesville Holdings prior to the completion of the Distribution and any other case that
is consolidated with any such existing or future case.
Under the judgment sharing agreement, the aggregate amount that the Company and Batesville
Holdings will be required to pay or post in cash (1) to satisfy in its entirety any claim
(including upon settlement) once the action has been finally judicially determined or (2) to post a
bond, in the event the Company or Batesville Holdings elects to do so, to stay the execution of any
adverse judgment pending its final determination, will be funded in the following order of
priority:
First, Batesville Holdings will be required to contribute an amount equal to:
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the maximum amount of cash and cash proceeds that Batesville Holdings
has on hand or is able to raise using its best efforts, without any obligation to
sell assets other than cash equivalents and subject to limitations on the amount of
equity securities Batesville Holdings is required to issue and the ability to
retain |
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cash sufficient to operate its business in the normal course, which is referred to
as maximum funding proceeds, minus |
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the difference between $50 million and the amount of cash retained to
operate the business if the amount of such retained cash is less than $50 million; |
Second, the Company and its subsidiaries will be required to contribute their maximum
funding proceeds; and
Third, Batesville Holdings will be required to contribute the remainder of its maximum
funding proceeds.
Neither the Company nor Batesville Holdings will be required to raise or provide funds if the
total amount of funds available to both the Company and Batesville Holdings would not be sufficient
to cover a judgment or settlement amount or the cost of the appeal bond. The funding obligations
of each company also are subject to a limitation relating to that companys continued solvency.
The judgment sharing agreement will provide that if the foregoing allocation is held to be
unenforceable, the Company and Batesville Holdings will be required to contribute to satisfy any
funding obligation based upon a mutually satisfactory agreement as to the Companys and Batesville
Holdings relative culpability (if any) or, failing such an agreement, pursuant to arbitration
under the arbitration provisions contained in the judgment sharing agreement. The judgment sharing
agreement will provide that Batesville Holdings is responsible for bearing all fees and costs
incurred in the defense of the antitrust litigation matters on behalf of itself and the Company.
The distribution agreement will contain provisions governing the joint defense of the antitrust
litigation and other claims. In the event that the Company or Batesville Holdings is dismissed as
a defendant in the antitrust litigation matters (except where the dismissal results from a
settlement agreement other than a settlement not including both the Company and Batesville
Holdings) or is found upon conclusion of trial not to be liable for payment of any damages to the
plaintiffs, any funding obligations under the judgment sharing agreement of the party so dismissed
or found not liable will terminate once such dismissal or finding of no liability is finally
judicially determined.
Employee Matters Agreement
The Company will enter into an employee matters agreement with Batesville Holdings prior to
the Distribution that will govern Batesville
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Holdings compensation and employee benefit obligations with respect to its directors and its
current and former employees, along with the assumption of liabilities for certain former Company
directors and employees and former employees of other non-medical technology businesses. The
employee matters agreement will allocate liabilities and responsibilities relating to employee
compensation and benefits plans and programs and other related matters in connection with the
Distribution including, without limitation, the treatment of outstanding Company equity-based
awards, certain outstanding annual and long-term incentive awards, existing deferred compensation
obligations and certain retirement, post-retirement and welfare benefit obligations.
In connection with the Distribution, Batesville Holdings initially expects to adopt, for the
benefit of its employees and directors, a variety of compensation and employee benefit plans that
are generally comparable in the aggregate to those provided by the Company immediately prior to the
Distribution. Once Batesville Holdings establishes its own compensation and benefits plans, it
reserves the right to amend, modify or terminate each such plan in accordance with the terms of
that plan. With certain possible exceptions, the employee matters agreement will provide that as
of the close of the Distribution, Batesville Holdings employees and directors will generally cease
to be active participants in, and Batesville Holdings will generally cease to be a participating
employer in, the benefit plans and programs maintained by the Company. As of such time, Batesville
Holdings employees and directors will generally become eligible to participate in all of its
applicable plans. In general, Batesville Holdings will credit each of its employees with his or her
service recognized under the Companys plans prior to the Distribution for all purposes under plans
maintained by Batesville Holdings, to the extent the corresponding Company plans give credit for
such service and such crediting does not result in a duplication of benefits. The employee matters
agreement will provide that as of the distribution date, except as specifically provided therein,
Batesville Holdings generally will assume, retain and be liable for all wages, salaries, welfare,
incentive compensation and employee-related obligations and liabilities for its directors and all
current and former employees of its business, along with those for certain former Company directors
and corporate employees and former employees of other non-medical technology businesses. The
distribution agreement will provide that if neither the Company nor Batesville Holdings is entitled
to receive a full deduction for state and federal income tax purposes for any liabilities
discharged by Batesville Holdings with respect to these Company directors and former employees,
Batesville Holdings will reassign those liabilities back to the Company and pay the Company an
amount equal to the then carrying value of these liabilities on its books and records, net of taxes
at an assumed tax rate of 36.25%, subject to adjustment at the time of such reassignment in the
event of future changes
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in the federal income tax rate. Additionally, the Company and Batesville Holdings will agree
that with the assumption of liabilities for these Company directors and former employees,
Batesville Holdings is entitled to the tax benefit from the satisfaction of such liabilities, and
if it is determined that it is not entitled to this tax benefit, the Company will reimburse
Batesville Holdings for the tax benefit. This tax benefit will be determined based on the cash
benefit to Batesville Holdings as if such deduction were taken and allowed on the Batesville
Holdings filed tax returns, including any amended tax returns.
The employee matters agreement will also provide for the transfer of assets and liabilities
relating to the predistribution participation of employees and directors for which Batesville
Holdings has assumed responsibility in various Company retirement, postretirement, welfare,
incentive compensation and employee benefit plans from such plans to the applicable plans
Batesville Holdings adopts for the benefit of its employees and directors. The employee matters
agreement will provide that the Company and Batesville Holdings may arrange with current service
providers with respect to the Companys employee benefit plans to continue such services on a
shared basis for a period of time following the Distribution and that Batesville Holdings will
reimburse the Company for Batesville Holdings share of the cost of such shared services.
Tax Sharing Agreement
In conjunction with the separation of Batesville Holdings from the Company, the Company will
enter into a tax sharing agreement with Batesville Holdings that generally will govern the
Companys and Batesville Holdings respective rights, responsibilities and obligations after the
Distribution with respect to taxes, including ordinary course of business taxes and the preparation
and filing of tax returns and the handling of tax audits. Included in the taxes to be addressed
will be taxes, if any, incurred as a result of any failure of the Distribution to qualify as a
tax-free distribution for U.S. federal income tax purposes within the meaning of Sections 355 and
368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the Code) (including as a result
of Section 355(e) of the Code).
Under the tax sharing agreement, the Company expects that, with certain exceptions, Batesville
Holdings generally will be responsible for the payment of all income and non-income taxes
attributable to its operations, and the operations of its direct and indirect subsidiaries, whether
or not such tax liability is reflected on a consolidated or combined tax return filed by the
Company. The Company will be responsible for the payment of all income taxes and non-income taxes
that are not specifically the obligation of Batesville Holdings under the terms of the tax sharing
agreement. Other than the
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reimbursement or sharing of external and internal costs incurred as a result of and related to
tax audits, no fees will be paid by either party to the other party under the tax sharing
agreement.
Notwithstanding the foregoing, the Company expects that, under the tax sharing agreement,
Batesville Holdings also generally will be responsible for any taxes imposed on the Company that
arise from the failure of the Distribution to qualify as a tax-free distribution for U.S. federal
income tax purposes within the meaning of Sections 355 and 368(a)(1)(D) of the Code, to the extent
that such failure to qualify is attributable to actions, events or transactions relating to
Batesville Holdings stock, assets or business, or a breach of the relevant representations or
covenants made by Batesville Holdings in the tax sharing agreement. The Company generally will be
responsible for a portion of any taxes that arise from the failure of the Distribution to qualify
as a tax-free distribution for U.S. federal income tax purposes within the meaning of Sections 355
and 368(a)(1)(D) of the Code, if such failure is for any reason for which neither the Company nor
Batesville Holdings is responsible. The Company will be responsible for taxes based on a fraction,
the numerator of which shall be the price of its stock based on the five trading days after the
distribution date and the denominator of which is the sum of the price of its stock and the price
of Batesville Holdings stock on the five trading days following the Distribution.
The tax sharing agreement also will impose restrictions on the Companys and Batesville
Holdings ability to engage in certain actions following the separation of Batesville Holdings from
the Company and to set forth the respective obligations between the Company and Batesville Holdings
with respect to the filing of tax returns, the administration of tax contests, assistance and
cooperation and other matters.
Shared Services and Transitional Services Agreements
The Company will enter into shared services agreements and transitional services agreements
with Batesville Holdings in connection with the separation. The shared services agreements will
address services that may be provided for an extended period of time, while the transitional
services agreements will cover services that are intended to be provided for a limited period of
time while the recipient of the services makes other arrangements for these services. Under the
shared services agreements, the Company, on the one hand, and Batesville Holdings, on the other
hand, will agree to provide certain services to each other following the separation for an initial
term of two years, with automatic two-year extensions if commercially viable alternatives for the
services are not available, except as noted below. After the initial two-year
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term, either party may terminate an agreement by notice to the other party, and the recipient
of the services must terminate after notice if commercially viable alternatives for the services
are available. For purposes of the foregoing, the determination of whether commercially viable
alternatives are available is in the discretion of the recipient of the services. These services
include aviation services related to the airfield that the Company will own and operate and certain
aircraft that the Company and Batesville Holdings will jointly own and operate following the
separation, as well as certain ground transportation and fleet maintenance services. In addition,
due to the interrelated nature of certain facilities that will be owned by the Company and
Batesville Holdings, the Company and Batesville Holdings will enter into agreements requiring each
party to maintain its respective parts of such facilities, including, for example, maintaining fire
protection systems for the facilities. In general, the recipient of services will be billed for
the services at the fair value of the services, except that Batesville Holdings will be billed at
cost for aviation services provided to Batesville Holdings by the Company, and the Company and
Batesville Holdings will be independently responsible for their respective obligations to maintain
their respective portions of the interrelated facilities. The Company will continue to provide
aviation services related to the airfield to Batesville Holdings for as long as Batesville Holdings
continues to own an interest in certain aircraft or maintains its own
aircraft. Ground transportation services could continue as
long as the Company and Batesville Holdings continue to jointly own corporate conference facilities
used by both companies. Obligations under the agreements relating to the maintenance of
interrelated facilities could continue for so long as required for the proper maintenance,
operation and use of such facilities or until such interrelated facilities are segregated.
Under the transitional services agreements, the Company will provide certain services to
Batesville Holdings for a specified period following the separation. The services to be provided
may include services regarding certain financial reporting and other public company staffing needs,
legal services, including labor and employment and litigation support, human resources services,
medical services and certain information technology services. Batesville Holdings will generally
be billed at cost for these services, including information technology services provided through a
third party under a contract to which the Company is a party. The transitional services agreements
will generally provide that the services will continue for a period of up to two years following
the separation, subject to earlier termination by the recipient of the services and to extension if
the parties agree.
Risk Factors
Following is a discussion of certain risk factors relating to the Distribution and the
separation of Batesville Holdings from the Company.
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The Company may be unable to achieve some or all of the benefits that it expects to achieve from
the separation of Batesville Holdings from the Company, and any such benefits may be offset in part
by certain negative consequences of the separation.
The Company may not be able to achieve the full strategic and financial benefits that it
expects will result from the separation of Batesville Holdings from the Company or such benefits
may be delayed or may not occur at all. For example, there can be no assurance that analysts and
investors will regard the Companys corporate structure as clearer and simpler than its current
corporate structure or place a greater value on the Company as a stand-alone medical technology
company after the separation than on the Companys current structure as a holding company for its
medical technology and funeral service businesses. As a result, in the future the aggregate market
price of the Companys common stock and Batesville Holdings common stock as separate companies may
be less than the market price per share of the Companys common stock had the separation and
Distribution not occurred.
Because the Company will be a smaller company after the separation and expects to have credit
ratings below its current credit ratings, the Company expects to have less borrowing capacity and
greater borrowing costs than it currently has.
The Companys agreements with Batesville Holdings may not reflect terms that would have resulted
from arms-length negotiations among unaffiliated third parties.
The agreements related to the separation of Batesville Holdings from the Company, including
the distribution agreement, judgment sharing agreement, employee matters agreement, tax sharing
agreement, shared services agreements and transitional services agreements, were prepared in the
context of the separation while Batesville Holdings was still part of the Company and, accordingly,
may not reflect terms that would have resulted from arms length negotiations among unaffiliated
third parties. The terms of these agreements relate to, among other things, allocation of assets,
employees, liabilities, rights, indemnifications and other obligations between the Company and
Batesville Holdings. See the descriptions of these agreements above.
The Distribution could result in significant tax liability.
The Company has received a private letter ruling from the IRS that the Distribution will
qualify for tax-free treatment under Code Sections 355 and 368(a)(1)(D). The IRS ruling relies on
certain representations, assumptions and
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undertakings, including those relating to the past and future conduct of the Companys and
Batesville Holdings businesses. Although the Company believes that all of these representations,
assumptions and undertakings were correct, the IRS ruling would not be valid if the
representations, assumptions and undertakings were incorrect. Moreover, the IRS private letter
ruling does not address all the issues that are relevant to determining whether the Distribution
will qualify for tax-free treatment, although the Company has received an opinion of counsel with
respect to the legal and tax issues not addressed in the private letter ruling. Notwithstanding
the IRS private letter ruling, the IRS could determine that the Distribution should be treated as a
taxable transaction if it determines that any of the representations, assumptions or undertakings
that were included in the request for the private letter ruling were false or had been violated.
If the Distribution fails to qualify for tax-free treatment, the Company would be subject to
tax as if it had sold the common stock of Batesville Holdings in a taxable sale for its fair market
value and Batesville Holdings initial public shareholders would be subject to tax as if they had
received a taxable distribution equal to the fair market value of Batesville Holdings common stock
that was distributed to them. Under the tax sharing agreement between the Company and Batesville
Holdings, Batesville Holdings would generally be required to indemnify the Company against any tax
resulting from the Distribution to the extent that such tax resulted from (1) an issuance of
Batesville Holdings equity securities, a redemption of its equity securities or its involvement in
other acquisitions of its equity securities, (2) other actions or failures to act by Batesville
Holdings or (3) any of Batesville Holdings representations or undertakings being incorrect or
violated. For a more detailed discussion, see the description of the tax sharing agreement above.
If the Company is unable to convert its portfolio of auction rate securities to cash, the
Companys liquidity and earnings could be adversely affected.
The Company currently holds a portfolio of auction rate securities (consisting of highly rated
state and municipal bonds) carried on its books at a value of approximately $107 million. As a
result of recent market conditions and auction failures, the Company may not be able to liquidate
these securities prior to completion of the Distribution. Accordingly, at the time of the
Distribution and in connection with the allocation of cash, cash equivalents and short-term
investments between the Company and Batesville Holdings, the Company expects to transfer
approximately $57 million of these securities to Batesville Holdings. If current market conditions
do not improve or worsen, the Company may not be able, or may be
delayed in its ability, to convert the auction rate securities
retained by
14
it to cash, these assets could be impaired, and the Companys liquidity and earnings could be
adversely affected.
Rule 10b5-1 Plan
The Company understands that its President and Chief Executive Officer, Peter H. Soderberg,
has entered into a plan under Rule 10b5-1 of the Securities and Exchange Commission for the
purchase by Mr. Soderberg of a total of $500,000 of common stock of the Company (Hill-Rom Holdings,
Inc.) in the ex-distribution market prior to completion of the Distribution and in the regular
way market following the completion of the Distribution.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
|
|
|
Exhibit Number |
|
Description |
2.1
|
|
Form of Distribution Agreement by and between Hillenbrand
Industries, Inc. and Batesville Holdings, Inc.
(Incorporated herein by reference to Exhibit 2.1 to
Batesville Holdings, Inc.s Registration Statement on Form
10 (Registration No. 001-33794)) |
|
|
|
10.1
|
|
Form of Judgment Sharing Agreement by and between Hillenbrand
Industries, Inc., Batesville Holdings, Inc. and Batesville
Casket Company, Inc. (Incorporated herein by reference to
Exhibit 10.3 to Batesville Holdings, Inc.s Registration
Statement on Form 10 (Registration No. 001-33794)) |
|
|
|
10.2
|
|
Form of Employee Matters Agreement by and between Hillenbrand
Industries, Inc. and Batesville Holdings, Inc.
(Incorporated herein by reference to Exhibit 10.2 to
Batesville Holdings, Inc.s Registration Statement on Form
10 (Registration No. 001-33794)) |
|
|
|
10.3
|
|
Form of Tax Sharing Agreement by and between Hillenbrand
Industries, Inc. and Batesville Holdings, Inc.
(Incorporated herein by reference to Exhibit 10.1 to
Batesville Holdings, Inc.s Registration Statement on Form
10 (Registration No. 001-33794)) |
|
|
|
99.1
|
|
Press release dated March 17, 2008 |
15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
|
|
|
|
HILLENBRAND INDUSTRIES, INC.
|
|
DATE: March 17, 2008 |
BY: |
/s/ Gregory N. Miller
|
|
|
|
Gregory N. Miller |
|
|
|
Senior Vice President and
Chief Financial Officer |
|
|
|
|
|
DATE: March 17, 2008 |
BY: |
/s/ Richard G. Keller
|
|
|
|
Richard G. Keller |
|
|
|
Vice President Controller and
Chief Accounting Officer |
|
16
EXHIBIT INDEX
|
|
|
Exhibit Number |
|
Description |
2.1
|
|
Form of Distribution Agreement by and between Hillenbrand
Industries, Inc. and Batesville Holdings, Inc.
(Incorporated herein by reference to Exhibit 2.1 to
Batesville Holdings, Inc.s Registration Statement on Form
10 (Registration No. 001-33794)) |
|
|
|
10.1
|
|
Form of Judgment Sharing Agreement by and between Hillenbrand
Industries, Inc., Batesville Holdings, Inc. and Batesville
Casket Company, Inc. (Incorporated herein by reference to
Exhibit 10.3 to Batesville Holdings, Inc.s Registration
Statement on Form 10 (Registration No. 001-33794)) |
|
|
|
10.2
|
|
Form of Employee Matters Agreement by and between Hillenbrand
Industries, Inc. and Batesville Holdings, Inc.
(Incorporated herein by reference to Exhibit 10.2 to
Batesville Holdings, Inc.s Registration Statement on Form
10 (Registration No. 001-33794)) |
|
|
|
10.3
|
|
Form of Tax Sharing Agreement by and between Hillenbrand
Industries, Inc. and Batesville Holdings, Inc.
(Incorporated herein by reference to Exhibit 10.1 to
Batesville Holdings, Inc.s Registration Statement on Form
10 (Registration No. 001-33794)) |
|
|
|
99.1
|
|
Press release dated March 17, 2008 |
17