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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2012

Commission File No. 001-33794

HILLENBRAND, INC.

(Exact name of registrant as specified in its charter)

Telephone:  (812) 934-7500

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 x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

The registrant had 62,594,765 shares of common stock, no par value per share, outstanding as of July 26, 2012.

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HILLENBRAND, INC.

INDEX TO FORM 10-Q

Exhibit 31.1

Exhibit 31.2

Exhibit 32.1

Exhibit 32.2

Exhibit 101 Instance document

Exhibit 101 Schema document

Exhibit 101 Calculation linkbase document

Exhibit 101 Labels linkbase document

Exhibit 101 Presentation linkbase document

Exhibit 101 Definition linkbase document

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PART I — FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Hillenbrand, Inc.

Consolidated Statements of Income (Unaudited)

(in millions, except per share data)

See Condensed Notes to Consolidated Financial Statements

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Hillenbrand, Inc.

Consolidated Balance Sheets (Unaudited)

(in millions)

See Condensed Notes to Consolidated Financial Statements

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Hillenbrand, Inc.

Consolidated Statements of Cash Flow (Unaudited)

(in millions)

See Condensed Notes to Consolidated Financial Statements

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Hillenbrand, Inc.

Condensed Notes to Consolidated Financial Statements (Unaudited)

(in millions, except share and per share data)

1.               Background and Basis of Presentation

Hillenbrand, Inc. is a global diversified industrial company that makes and sells premium business-to-business products and services for a wide variety of industries.  Hillenbrand has two business platforms: Batesville and the Process Equipment Group.  Batesville is a recognized leader in the North American funeral products industry, and the Process Equipment Group is a recognized leader in the design and production of equipment and systems used in processing applications.  “Hillenbrand,” “the Company,” “we,” “us,” “our,” and similar words refer to Hillenbrand, Inc. and its subsidiaries.

The accompanying unaudited consolidated financial statements include the accounts of Hillenbrand and its wholly owned subsidiaries.  These unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial statements and therefore do not include all information required in accordance with accounting principles generally accepted in the United States (GAAP).  The unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the fiscal year ended September 30, 2011.  Certain prior period balances have been reclassified to conform to the current presentation.  In the opinion of management, these financial statements reflect all normal and recurring adjustments considered necessary to present fairly the Company’s consolidated financial position and the consolidated results of operations and cash flow as of the dates and for the periods presented.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosures of contingent assets and liabilities as of the dates presented.  Actual results could differ from those estimates.  Examples of such estimates include, but are not limited to, the establishment of reserves related to customer rebates, allowance for doubtful accounts, warranties, early-pay discounts, inventories, income taxes, accrued litigation, self-insurance, and progress toward achievement of performance criteria under the incentive compensation programs.

2.               Summary of Significant Accounting Policies

The accounting policies used in preparing these financial statements are consistent with the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2011, filed with the SEC on November 28, 2011.  The following represent additions and changes to significant accounting policies in the Form 10-K.

Recently Adopted and Issued Accounting Standards

In May 2011, the FASB issued Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (Topic 820, Fair Value Measurement).  The new standard provides updates to measurement guidance and enhanced disclosure requirements.  The most significant change is an expansion of the information required for Level 3 measurements based on unobservable inputs.  The new disclosure requirements were effective for Hillenbrand beginning January 1, 2012.  The adoption of this standard did not have a significant impact on our consolidated financial statements for the period presented.

In June 2011, the FASB issued an accounting standards update titled Presentation of Comprehensive Income.  This update eliminates the current option to report other comprehensive income and its components in the statement of changes in shareholders’ equity.  An entity can elect to present items of net income and other comprehensive income in one continuous statement or in two separate consecutive statements.  Each component of net income and other comprehensive income, together with totals for comprehensive income and its two parts, net income and other comprehensive income, must be displayed under either alternative.  The new disclosure requirements will be effective for Hillenbrand in our fiscal year beginning October 1, 2012.  As the new standard relates to presentation only, we do not expect that the adoption of this standard will have a significant impact on our consolidated financial statements.

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In September 2011, the FASB issued an accounting standards update titled Intangibles — Goodwill and Other:  Testing Goodwill for Impairment.  This update gives the option of performing a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount and, in some cases, skipping the two-step impairment test.  The adoption of this standard did not have a significant impact on our consolidated financial statements.

3.               Business Acquisitions

We completed the acquisition of Rotex Global, LLC, on August 31, 2011.  We have recorded the identifiable assets acquired and liabilities assumed at their fair values on the acquisition date.  As expected, tax-related purchase accounting adjustments were recorded as of June 30, 2012.  The adjustments increased goodwill and net deferred taxes and other liabilities by $6.5.

The financial information in the table below summarizes the combined results of operations for the Company, including Rotex for the three and nine months ended June 30, 2011, on a pro forma basis, as though the companies were combined as of the beginning of the period presented.  The pro forma financial information is presented for informational purposes only and may not be indicative of the results of operations if the acquisition had actually taken place at the beginning of the period presented.  This pro forma financial information should not be considered representative of future consolidated results of operations.

4.               Supplemental Balance Sheet Information

5.               Financing Receivables

As of June 30, 2012, Batesville had $6.8 of customer notes receivable, primarily representing long-term payment plans negotiated to collect unpaid balances.  These notes generally carry repayment terms of up to five years and had a weighted-average interest rate of 5.3% at June 30, 2012.  The current portion of these notes ($4.1) is included in trade receivables, and the long-term portion ($2.7) is included in other assets in the consolidated balance sheet at June 30, 2012.

We evaluate the recoverability of each note receivable quarterly and record allowances based upon the customer’s credit score, historical experience, and individual customer collection experience.  As of June 30, 2012, $2.7 of customer notes receivable were over 31 days past due.  We have established an allowance of $0.9 related to these notes, with a gross balance of $2.1 as of June 30, 2012.   There has not been a significant change in the reserve during the periods presented.  Each quarter we perform a detailed review of all notes to determine whether any amounts should be charged off.  Amounts are charged off when they are deemed to no longer be collectible.

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6.               Financing Agreements

As of June 30, 2012, we (i) had $6.5 outstanding letters of credit under our $400 revolving credit facility, (ii) were in compliance with all covenants, and (iii) had $268.5 of remaining borrowing capacity available.  The weighted-average interest rate was 0.7% for the three- and nine-month periods ended June 30, 2012 and 2011.  We entered into a new $600 five-year senior unsecured revolving credit facility on July 27, 2012, which replaced our $400 revolving credit facility.  See Note 18 for further details.  Under the Distribution Agreement with Hill-Rom Holdings, Inc., our ability to borrow using the revolving credit facility for certain strategic transactions such as acquisitions may be limited.  The Distribution Agreement is described fully in our Annual Report on Form 10-K for the year ended September 30, 2011.

As of June 30, 2012, our Swiss subsidiary maintained additional availability of $18.3 through local credit facilities collateralized by cash or real property.  There were no borrowings under these facilities as of June 30, and availability was reduced by $4.9 for outstanding bank guarantees.  We had $9.9 additional outstanding letters of credit and bank guarantees with other financial institutions and restricted cash of $1.6 at June 30, 2012.

On July 9, 2010, we issued $150 fixed-rate senior unsecured notes due July 15, 2020 (the Notes).  The Notes bear interest at a fixed rate of 5.5%, payable semi-annually in arrears.  The Notes were issued at an original issue discount of $1.6, which is being amortized to interest expense over the term of the Notes using the effective interest rate method, resulting in an annual interest rate of 5.65%.  Deferred financing costs of $2.1 are being amortized to interest expense over the term of the Notes.

7.               Retirement Benefits

Defined Benefit Plans

Postretirement Healthcare Plans — Net postretirement healthcare costs were $0.3 for both of the three months ended June 30, 2012 and 2011, and $0.7 and $1.0 for the nine months ended June 30, 2012 and 2011.

Defined Contribution Plans — Expenses related to our defined contribution plans were $2.2 and $1.7 for the three months ended June 30, 2012 and 2011, and $6.1 and $5.0 for the nine months ended June 30, 2012 and 2011.

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8.               Income Taxes

The following is a reconciliation of the U.S. federal statutory income tax rate to the effective income tax rate:

In connection with the acquisition of K-Tron in April 2010, we recorded a deferred tax liability related to the historical earnings of its Swiss operations that would be subject to U.S. income taxes upon earnings repatriation.  With the acquisition of Rotex, we identified the need to retain cash overseas to support the continued growth of the Process Equipment Group and began developing a plan to integrate Rotex into our existing international structure.  As a result, during the first quarter of fiscal 2012, we asserted the K-Tron historical earnings to be permanently reinvested.  Accordingly, a tax benefit of $10.4 was recognized, representing the full release of the deferred tax liability.  During the period ended March 31, 2012, we completed the plan of integrating Rotex into our existing international structure.  As of June 30, 2012, U.S. federal and state income taxes have not been provided on accumulated undistributed earnings of substantially all our foreign subsidiaries, as these earnings are considered permanently reinvested.

The activity within our reserve for unrecognized tax benefits was:

9.               Earnings Per Share

At June 30, 2012 and 2011, potential dilutive effects of 2.0 million shares relating to unvested time-based restricted stock units and stock options were excluded from the computation of earnings per share as their effects were anti-dilutive.  At June 30, 2012 and 2011, potential dilutive effects of 1.8 million and 1.7 million shares relating to unvested performance-based stock awards were excluded from the computation of diluted earnings per share as the related performance period is not yet complete.  The effects of these performance-based shares will be dilutive in the future to the extent various levels of performance criteria are met.

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10.         Shareholders’ Equity

During the nine months ended June 30, 2012, we paid $35.8 of cash dividends.  In connection with unvested performance-based stock awards, we retired 0.2 million shares of stock.

11.         Comprehensive Income and Accumulated Other Comprehensive Loss

12.         Share-Based Compensation

The decrease in share-based compensation expense from the prior year for both the three and nine-month periods ending June 30, 2012 was driven by a decline in operating results in the current year.

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During the nine months ended June 30, 2012, we made the following grants:

Stock options granted had a weighted-average exercise price of $22.37 and a weighted-average grant date fair value of $5.88 for the nine-month period ended June 30, 2012. Our time-based stock awards and performance-based stock awards had a weighted-average grant date fair value of $23.04 and $22.34 for the nine-month period ended June 30, 2012.

13.         Other Income and Expense

14.         Commitments and Contingencies

Litigation

General

Like most companies, we are involved on an ongoing basis in claims, lawsuits, and government proceedings relating to our operations, including environmental, antitrust, patent infringement, business practices, commercial transactions, product and general liability, workers’ compensation, auto liability, employment, and other matters.  The ultimate outcome of these matters cannot be predicted with certainty.  An estimated loss from these contingencies is recognized when we believe it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated; however, it is difficult to measure the actual loss that might be incurred related to litigation.  If a loss is not considered probable and/or cannot be reasonably estimated, we are required to make a disclosure if there is at least a reasonable possibility that a material loss may have been incurred.  Legal fees associated with claims and lawsuits are generally expensed as incurred.

Claims other than employment and related matters have deductibles and self-insured retentions ranging from $0.5 to $1.0 per occurrence or per claim, depending upon the type of coverage and policy period.  Outside insurance companies and third-party claims administrators assist in establishing individual claim reserves, and an independent outside actuary provides estimates of ultimate projected losses, including incurred but not reported claims, which are used to establish reserves for losses.  Claim reserves for employment-related matters are established based upon advice from internal and external counsel and historical settlement information for claims and related fees, when such amounts are considered probable of payment.

The recorded amounts represent our best estimate of the costs we will incur in relation to such exposures, but it is possible that actual costs will differ from those estimates.

Antitrust Litigation

In 2005, the Funeral Consumers Alliance, Inc. (FCA) and a number of individual consumer casket purchasers filed a purported class action antitrust lawsuit on behalf of certain consumer purchasers of Batesville® caskets against the Company and our former parent company, Hillenbrand Industries, Inc., now Hill-Rom Holdings, Inc. (Hill-Rom),

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and three national funeral home businesses (the FCA Action).  A more detailed history of the litigation has been disclosed in our previous filings.

The lawsuit claimed, among other things, that the Company’s maintenance and enforcement of, and alleged modifications to, its long-standing policy of selling caskets only to licensed funeral homes were the product of a conspiracy among the Company, the other defendants, and others to exclude “independent casket discounters,” resulting in suppressed competition in the alleged market for caskets and allegedly leading consumers to pay higher than competitive prices for caskets.

Plaintiffs in the FCA Action have generally sought monetary damages on behalf of a class of purchasers of Batesville caskets, trebling of any such damages that may be awarded, recovery of attorneys’ fees and costs, and injunctive relief.  The plaintiffs in the FCA Action filed a report indicating that they were seeking damages ranging from approximately $947 to approximately $1,460 before trebling on behalf of the purported class of consumers they seek to represent, based on approximately one million casket purchases by the purported class members.

The Federal District Court for the Southern District of Texas denied class certification on March 26, 2009, and ultimately dismissed the lawsuit on September 24, 2010, concluding that “plaintiffs shall take nothing by their suit.”  Currently, the FCA Action is on appeal to the Fifth Circuit Court of Appeals.  Plaintiffs have appealed both the District Court’s order of dismissal and the order denying class certification.  The parties have submitted all appellate briefs, and the Court of Appeals heard oral argument from the parties on December 5, 2011.  The Court of Appeals has not yet issued its ruling affirming or reversing the District Court.

If plaintiffs succeed in overturning the judgment, reversing the District Court order denying class certification, and a class is subsequently certified in the FCA Action filed against Hill-Rom and Batesville, and if the plaintiffs prevail at a trial of the class action, the damages awarded to the plaintiffs, which would be trebled as a matter of law, could have a material adverse effect on our results of operations, financial condition, and cash flow.  In antitrust actions such as the FCA Action, the plaintiffs may elect to enforce any judgment against any or all of the co-defendants, who have no statutory contribution rights against each other.  We and Hill-Rom have entered into a Judgment Sharing Agreement that apportions the costs and any potential liabilities associated with this litigation between us and Hill-Rom.

The defendants are vigorously contesting both liability and the plaintiffs’ damages theories.

As of June 30, 2012, we had incurred approximately $29.2 in cumulative legal and related costs associated with the FCA Action since its inception.  Costs incurred in 2012 were $0.5.

Matthews Litigation

In August 2010, the York Group, Inc., Milso Industries Corporation, and Matthews International Corporation (collectively the plaintiffs) filed a lawsuit against Scott Pontone and Batesville Casket Company, Inc. in the United States District Court, Western District of Pennsylvania, which was subsequently amended by the plaintiffs in February 2011 to include two additional defendants, Harry Pontone and Pontone Casket Company, LLC (the Litigation).  The Litigation arises, in part, as a result of a Marketing Consulting Agreement entered into between Batesville and Pontone Casket Company effective June 24, 2010, and Batesville’s hiring of two former employees of certain plaintiff entities in June 2010.  Scott Pontone provides consulting services to Batesville pursuant to the Marketing Consulting Agreement.  The plaintiffs allege that Scott Pontone and Harry Pontone breached contractual and business obligations with the plaintiffs and that Batesville induced certain of those breaches as part of its sales initiatives in the New York metropolitan area.

The plaintiffs claim that they have lost revenue and will lose future revenue in the New York metropolitan area, although the amount of those alleged damages is unspecified.  The plaintiffs seek to: (i) recover compensatory damages, punitive damages, attorneys’ fees, and costs; and (ii) enjoin certain activities by Harry Pontone, Scott Pontone,  Pontone Casket Company, and Batesville and its employees in the New York metropolitan area.  The plaintiffs had also originally requested a preliminary injunction, but withdrew that request after expedited discovery.

No trial date has been set, and the parties are engaged in ongoing motions practice and discovery.

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The Company believes it acted lawfully and intends to defend this matter vigorously.  Batesville also has several counterclaims pending against plaintiffs in the Litigation, including but not limited to:  (i) tortious interference with prospective economic advantage and unfair competition; (ii) abuse of process; (iii) malicious prosecution; and (iv) unjust enrichment.  The Company does not believe, based on currently available information, that the outcome of this lawsuit will have a material adverse effect on the Company’s financial condition and liquidity.  If the plaintiffs prevail at trial, however, the outcome could be materially adverse to the Company’s operating results or cash flow for the particular period, depending, in part, upon the operating results or cash flow for such period.

15.         Fair Value Measurements

The fair value of the 10-year, 5.5% fixed rate senior unsecured notes was based on quoted prices in an active market.  The revolving credit facility approximated fair value at June 30, 2012.  There were no changes in the fair value of measurements using significant unobservable inputs during the quarter.

16.   Segment and Geographical Information

(1)     Revenue is attributed to a geography based upon the location of the business unit that consummated the external sale.

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The following schedule reconciles total segment EBITDA to consolidated net income.