10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended September 30, 2015

OR

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

For the transition period from ____ to ____

Commission File No. 1-6651

HILL-ROM HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Indiana	35-1160484
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Two Prudential Plaza, Suite 4100 Chicago, IL	60601
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (312) 819-7200

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, without par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes R                       No £

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes £                       No R

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 R                       No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes R                       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. R

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

            Large accelerated filer R       Accelerated filer £       Non-accelerated filer £       Smaller reporting company £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes £                       No R

The aggregate market value of the registrant’s voting common equity, held by non-affiliates of the registrant, was approximately $2.8 billion, based on the closing sales price of $49.00 per share as of March 31, 2015 (the last business day of the registrant’s most recently completed second fiscal quarter). There is no non-voting common equity held by non-affiliates.

The registrant had 65,169,068 shares of its common stock, without par value, outstanding as of November 12, 2015.

Documents incorporated by reference.

Certain portions of the registrant’s definitive Proxy Statement to be delivered to shareholders in connection with the Annual Meeting of Shareholders to be held on March 15, 2016 are incorporated by reference into Part III of this Annual Report on Form 10-K.

HILL-ROM HOLDINGS, INC.

Annual Report on Form 10-K

For the Fiscal Year Ended September 30, 2015

TABLE OF CONTENTS

		Page
	PART I
	Disclosure Regarding Forward Looking Statements	3
Item 1.	Business	3
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	14
Item 2.	Properties	15
Item 3.	Legal Proceedings	16
Item 4.	Mine Safety Disclosures (not applicable)	16
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6.	Selected Financial Data	19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 8.	Financial Statements and Supplementary Data	41
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	80
Item 9A.	Controls and Procedures	80
Item 9B.	Other Information	80
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	81
Item 11.	Executive Compensation	81
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	81
Item 13.	Certain Relationships and Related Transactions and Director Independence	81
Item 14.	Principal Accounting Fees and Services	81
	PART IV
Item 15.	Exhibits and Financial Statement Schedules	82
	SIGNATURES	84

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PART I

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 regarding our future plans, objectives, beliefs, expectations, representations and projections.

Forward-looking statements are not guarantees of future performance, and our actual results could differ materially from those set forth in any forward-looking statements. Factors that could cause actual results to differ from forward-looking statements include, but are not limited to, the factors discussed under the heading “Risk Factors” in this Annual Report on Form 10-K. We assume no obligation to update or revise any forward-looking statements.

Item 1. BUSINESS

General

Hill-Rom Holdings, Inc. (the “Company,” “Hill-Rom,” “we,” “us,” or “our”) was incorporated on August 7, 1969 in the State of Indiana and is headquartered in Chicago, Illinois. We are a leading global medical technology company with approximately 10,000 employees worldwide. We partner with health care providers in more than 100 countries by focusing on patient care solutions that improve clinical and economic outcomes in five core areas: Advancing Mobility, Wound Care and Prevention, Clinical Workflow, Surgical Safety and Efficiency, and Respiratory Health. Around the world, Hill-Rom's people, products, and programs work towards one mission: Enhancing outcomes for patients and their caregivers.

Segment Information

We operate and manage our business within three reportable segments, each of which is generally aligned by region or product type. The segments are as follows:

· North America - sells and rents our patient support and near-patient technologies and services, as well as our clinical workflow solutions, in the U.S. and Canada.

· Surgical and Respiratory Care - sells and rents our surgical and respiratory care products globally.

· International - sells and rents similar products as our North America segment in regions outside of the U.S. and Canada.

Net revenue, segment profitability and other measures of segment reporting for each reporting segment are set forth in Note 11 of Notes to Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K. No single customer accounts for more than ten percent of our revenue.

In September 2015, we acquired Welch Allyn Holdings, Inc. (“Welch Allyn”). The results of Welch Allyn’s operations for the 22 days under our ownership are reported as a reconciling item in our segment disclosures for the year ended September 30, 2015.

Products and Services

We have extensive distribution capabilities and broad reach across all health care settings. We primarily operate in the following channels: (1) sales and rentals of products to acute and extended care facilities worldwide through both a direct sales force and distributors; (2) sales and rentals of products directly to patients in the home; and (3) sales into primary care facilities (primarily Welch Allyn products). Through our network of approximately 160 North American and 50 international service centers, and approximately 1,500 service professionals, we are able to provide technical support and services and rapidly deliver our products to customers on an as-needed basis, providing our customers flexibility to purchase or rent select products. This extensive network is critical to serving our customers and securing contracts with Group Purchasing Organizations (“GPOs”) and integrated delivery networks (“IDNs”).

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Our products and services are outlined below. Except where noted, all of our business segments generally sell products and services and rent products from each of our product categories.

Advancing Mobility. Our innovative patient care systems include a variety of bed systems, such as Medical Surgical (“MedSurg”) beds, Intensive Care Unit (“ICU”) beds, and Bariatric patient beds, as well as mobility solutions (such as lifts and other devices used to safely move patients). These patient care systems can be designed for use in high, mid, and low acuity settings, depending on the specific design options, and are built to reduce patient falls and caregiver injuries and improve caregiver efficiency. Our advanced patient care systems can also provide patient data reporting, patient safety alarms and caregiver alerts concerning such things as bed exit, bed height, patient positioning, point of care controls, patient turn assist and upright positioning. Supporting solutions within the patient/resident room include architectural products (such as headwalls) and health care furniture. These products are sold by our North America and International segments, primarily to acute and extended care facilities worldwide. Approximately 57, 67 and 70 percent of our revenue during fiscal 2015, 2014 and 2013, were derived from advancing mobility products and services.

Wound Care and Prevention. We rent and sell non-invasive therapeutic products and surfaces designed for the prevention and treatment of a variety of acute and chronic medical conditions, including pulmonary, wound and bariatric conditions. These products are rented and sold by our North America and International segments, primarily in the U.S., Canada and Europe. Medical Equipment Management and Contract Services provide rentals and health care provider asset management services for a wide variety of moveable medical equipment (“MME”), such as ventilators, defibrillators, intravenous pumps and patient monitoring equipment in our North America segment. In addition, we also sell equipment service contracts for our capital equipment, primarily in the U.S. Approximately 9, 10 and 11 percent of our revenue during fiscal 2015, 2014 and 2013, were derived from wound care and prevention products and services.

Clinical Workflow. We also develop and market a variety of communications technologies and software solutions. These are designed to improve patient safety and efficiency at the point of care by, among other things, enabling patient-to-staff and staff-to-staff communications, aggregating and delivering patient data, tracking staff and assets, and monitoring hand hygiene compliance. The NaviCare® Platform is the infrastructure Hill-Rom uses to support multiple clinical solutions and applications, including nurse call, asset tracking, staff and patient locating and hand-hygiene monitoring. We believe that our ability to integrate multiple applications using one primary infrastructure is a significant advantage for us versus our competitors in the clinical workflow product category today. These products are sold mainly to our North America customers. This product category also includes our Welch Allyn products, which help caregivers assess their patients quickly, easily, safely, and accurately. We also see exciting opportunities to integrate even more of Welch Allyn’s technologies and patient data in the care environment to further enhance our Clinical Workflow product offerings. Welch Allyn products are sold globally.

Surgical Safety and Efficiency. We offer surgical tables, lights, and pendants utilized within the operating room setting. We also offer a range of positioning devices for use in shoulder, hip, spinal and lithotomy surgeries as well as platform-neutral positioning accessories for nearly every model of operating room table. In addition, we offer operating room surgical safety and accessory products such as scalpel and blade, light handle systems, skin markers and other disposable products. The products offered within this category are primarily recurring, consumable revenue streams. These products are sold by our Surgical and Respiratory Care segment. In 2014, we acquired Trumpf Medical, a worldwide leader in medical products technology distinguished by high-quality German engineering, a history of innovation, and a dedication to total customer satisfaction. Trumpf offers surgical tables, surgical and examination lights, surgical pendants and video solutions. Approximately 21, 13 and 10 percent of our revenue during fiscal 2015, 2014 and 2013, were derived from surgical safety and efficiency products.

Respiratory Health. We offer therapeutic products that provide bronchial hygiene (airway clearance) for acute and home care patients. Some of the key products include:  The Vest® Airway Clearance System, designed to assist patients in the mobilization of retained blockages that, if not removed, may lead to increased rates of respiratory infection, hospitalization, and reduced lungfunction; the VitalCough® System, a non-invasive therapy that stimulates a cough to remove secretions in patients with compromised peak cough flow; and the MetaNeb® Systems, a triple-therapy system indicated for the mobilization of secretions, lung expansion therapy and aerosol delivery.  These products are sold by our Surgical and Respiratory Care segment.

Raw Materials

Principal materials used in our products for each business segment include carbon steel, aluminum, stainless steel, wood and laminates, petroleum based products, such as foams and plastics, and other materials, substantially all of which are available from several sources. Motors and electronic controls for electrically operated beds and certain other components are purchased from one or more manufacturers.

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Prices fluctuate for raw materials and sub-assemblies used in our products based on a number of factors beyond our control. Specifically, over the past several years, the fluctuating prices of certain raw materials, including metals, fuel, plastics and other petroleum-based products in particular, and fuel related delivery costs, had a direct effect on our profitability. Although we generally have not engaged in hedging transactions with respect to raw material purchases, we have entered into fixed price supply contracts at times.

Most of our extended contracts with hospital GPOs and other customers for the sale of products in North America permit us to institute annual list price increases, although we may not be able to raise prices sufficiently to offset all raw material cost inflation.

Competition

In all our business segments, we compete on the basis of clinical expertise and resulting product clinical utility and ability to produce favorable outcomes, as well as value, quality, customer service, innovation and breadth of product offerings. As our business segments generally sell products and services across our product categories, we evaluate our competition based on our product categories, rather than our business segments.

The following table displays our significant competitors with respect to each product category:

Product Categories	Competitors
Advancing Mobility	ArjoHuntleigh (Division of Getinge AB) Guldmann Invacare Joerns Healthcare	Linet Stiegelmeyer Stryker Corporation
Wound Care and Prevention	ArjoHuntleigh (Division of Getinge AB) Freedom Medical, Inc. RecoverCare, LLC/Joerns Healthcare	SIZEWise Rentals, LLC Universal Hospital Services, Inc.
Clinical Workflow	Ascom Holding Covidien, Ltd. Exergen Corporation GE Healthcare Heine Optotechnik	Omron Healthcare Philips Rauland-Borg Corporation Riester
Surgical Safety and Efficiency	Action Medical DeRoyal Draeger Maquet (Division of Getinge AB) MizuhoOSI	Skytron Steris Stryker Corporation Swann-Morton
Respiratory Health	Electromed, Inc. Respironics (Division of Philips) Respirtech

Additionally, we compete with a large number of smaller and regional manufacturers.

Regulatory Matters

FDA Regulation. We design, manufacture, install and distribute medical devices that are regulated by the Food and Drug Administration (“FDA”) in the U.S. and similar agencies in other countries. The regulations and standards of these agencies evolve over time and require us to make changes in our manufacturing processes and quality systems to remain in compliance. The FDA’s Quality System regulations and the regulatory equivalents under the Medical Device Directive in the European Union set forth standards for our product design and manufacturing processes, require the maintenance of certain records and provide for inspections of our facilities. From time to time, the FDA performs routine inspections of our facilities and may inform us of certain deficiencies in our processes or facilities. In 2012, we received an FDA warning letter with respect to our Batesville facility. After making the necessary improvements in our quality systems and processes, the warning letter was lifted in 2015. See Item 1A. “Risk Factors” for additional information. In addition, there are also certain state and local government requirements that must be complied with in the manufacturing and marketing of our products.

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Environmental. We are subject to a variety of federal, state, local and foreign environmental laws and regulations relating to environmental and health and safety concerns, including the handling, storage, discharge and disposal of hazardous materials used in or derived from our manufacturing processes. When necessary, we provide for reserves in our financial statements for environmental matters. We do not expect the remediation costs for any environmental issues in which we are currently involved to exceed $3 million.

Health Care Regulations. In March 2010, comprehensive health care reform legislation was signed into law through the passage of the Patient Protection and Affordable Health Care Act and the Health Care and Education Reconciliation Act. The health care industry continues to undergo significant change as the law is implemented. In addition to health care reform, Medicare, Medicaid and managed care organizations, such as health maintenance organizations and preferred provider organizations, traditional indemnity insurers and third-party administrators are under increasing pressure to control costs and limit utilization, while improving quality and health care outcomes. These objectives are being advanced through a variety of reform initiatives including: accountable care organizations, value based purchasing, bundling initiatives, competitive bidding programs, etc. We are also subject to a number of other regulations related to the sale and distribution of health care products. The potential impact of these regulations to our business is discussed further in Item 1A. Risk Factors and Part II, Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in this Annual Report on Form 10-K.

Product Development

Most of our products and product improvements have been developed internally. We maintain close working relationships with various medical professionals who assist in product research and development. New and improved products play a critical role in our sales growth. We continue to place emphasis on the development of proprietary products and product improvements to complement and expand our existing product lines. Our significant research and development activities are located in Acton, Massachusetts; Batesville, Indiana; Beaverton, Oregon; Cary, North Carolina; Skaneateles Falls, New York; Lulea, Sweden; Montpelier and Pluvigner, France; Singapore; and Saalfeld and Witten, Germany.

Research and development is expensed as incurred. Research and development expense for the fiscal years ended September 30, 2015, 2014 and 2013, was $91.8 million, $71.9 million and $70.2 million.

In addition, certain software development technology costs are capitalized as intangibles and are amortized over a period of three to five years once the software is ready for its intended use. The amounts capitalized during fiscal years 2015, 2014 and 2013 were approximately $2.6 million, $2.6 million and $2.4 million.

Patents and Trademarks

We own, and from time-to-time license, a number of patents on our products and manufacturing processes, but we do not believe any single patent or related group of patents is of material significance to any business segment or our business as a whole. We also own a number of trademarks and service marks relating to our products and product services. Except for the marks “Hill-Rom®”, “Bard-Parker®”, and “Welch Allyn®”, we do not believe any single trademark or service mark is of material significance to any business segment or our business as a whole.

Foreign Operations and Export Sales

Information about our foreign operations is set forth in tables relating to geographic information in Note 11 of Notes to Consolidated Financial Statements, included herein under Part II, Item 8 of this Form 10-K.

Employees

At September 30, 2015, we had approximately 10,000 employees worldwide. Approximately 7 percent of our employees work in our logistics and manufacturing operations in the U.S. under collective bargaining agreements. We are also subject to various collective bargaining arrangements or national agreements outside the U.S. The collective bargaining agreement at our primary U.S. manufacturing facility expires in January 2016. We have not experienced a work stoppage in the U.S. in over 40 years, and we believe that our employee relations are satisfactory.

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Executive Officers

The following sets forth certain information regarding our executive officers. The term of office for each executive officer expires on the date his or her successor is chosen and qualified. No director or executive officer has a “family relationship” with any other director or executive officer of the Company, as that term is defined for purposes of this disclosure requirement. There is no understanding between any executive officer and any other person pursuant to which the executive officer was selected.

John J. Greisch, 60, was elected President and Chief Executive Officer of Hill-Rom in January 2010. Mr. Greisch was most recently President, International Operations for Baxter International, Inc., a position he held since 2006. Prior to this, he held several other positions with Baxter, serving as Baxter's Chief Financial Officer and as President of Baxter's BioScience division.

Carlos Alonso, 56, was elected Senior Vice President and President, Hill-Rom International in April 2015. Before joining Hill-Rom, Mr. Alonso served as the President and CEO of the Esaote Group, a medical imaging leader based in Genova, Italy. Prior to the Esaote Group, Mr. Alonso served as the CEO of Esteve Pharmaceuticals based in Barcelona, Spain, and held various leadership roles of increasing responsibility with Baxter International, Inc. over the course of 15 years, including serving as Global President of the Renal Division.

Andreas Frank, 39, was elected as Senior Vice President Corporate Development and Strategy in October 2011. Before joining Hill-Rom, Mr. Frank was Director Corporate Development at Danaher Corporation. Previously he worked in the Corporate Finance and Strategy practice at the consulting firm McKinsey & Company.

Richard G. Keller, 54, was elected Vice President, Controller and Chief Accounting Officer of the Company effective August 2005. He had served as Executive Director - Controller of Hill-Rom since March 2004.

Susan R. Lichtenstein, 58, was elected Senior Vice President, Corporate Affairs, Chief Legal Officer and Secretary for Hill-Rom effective May 2010. Previously she was Corporate Vice President and General Counsel at Baxter International, where she was responsible for global legal matters, corporate communications and government affairs. Ms. Lichtenstein has informed the Company that she will be leaving the Company by the end of calendar year 2015.

Kenneth Meyers, 53, was elected Senior Vice President and Chief Human Resources Officer effective September 2015. Before joining Hill-Rom he was Senior Vice President and Chief Human Resources Officer at Hospira, Inc. Previously, he was a partner at Mercer / Oliver Wyman Consulting. Prior to Mercer / Oliver Wyman, he served as Senior Vice President, Human Resources, for Starbucks International.

Alton Shader, 42, was elected Senior Vice President and President, Front Line Care in September 2015. He had served as Senior Vice President and President, North America since July 2012 and previously as Senior Vice President and President, Post-Acute Care with Hill-Rom since July 2011. Before joining Hill-Rom, Mr. Shader was General Manager of Renal at Baxter International, Inc. Previously, he served as General Manager for Baxter Ireland and held senior marketing positions in Baxter's operations in Zurich and in California.

Taylor Smith, 55, was elected as Senior Vice President and President, Surgical and Respiratory Care in November 2013. Before joining Hill-Rom, Mr. Smith served as Senior Vice President and General Manager for Cardinal Health’s Orthopedic Products and Services group. Previously he held numerous leadership positions of increasing responsibility at Cardinal Health over the past 13 years.

Carlyn D. Solomon, 53, was elected Chief Operating Officer of Hill-Rom in November, 2014. Mr. Solomon was most recently the Corporate Vice President, Critical Care & Vascular Business Units of Edwards Lifesciences since 2006, and was VP of Corporate Strategy and GM of Cardiac Surgery Systems Business of Edwards Lifesciences from 2005 to 2006.

Steven J. Strobel, 57, was elected Senior Vice President in November 2014 and Chief Financial Officer in December, 2014. Before joining Hill-Rom, Mr. Strobel was President of McGough Road Advisors, a corporate finance consulting firm, from 2012 to 2014 and previously Chief Financial Officer of BlueStar Energy, an independent retail energy services company, from 2009 to 2012. Prior to BlueStar, he served as Treasurer and Corporate Controller at Motorola, and in the same positions at Owens Corning. Mr. Strobel serves on the Board of Directors of Newell Rubbermaid Inc., where he chairs the Audit Committee.

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Availability of Reports and Other Information

Our website is www.Hill-Rom.com. We make available on this website, free of charge, access to our annual, quarterly and current reports and other documents we file with, or furnish to, the Securities and Exchange Commission (“SEC”) as soon as practicable after such reports or documents are filed or furnished. We also make available on our website position specifications for the Chairman, members of the Board of Directors and the Chief Executive Officer, our Code of Ethical Business Conduct (and any amendments or waivers), the Corporate Governance Standards of our 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.

All reports filed with the SEC are also available via the SEC website, www.sec.gov, or may be read and copied at the SEC Public Reference Room at 100 F Street, NE, Washington, DC  20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.

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Item 1A. RISK FACTORS

Our business involves risks. The following information about these risks should be considered carefully together with the other information contained herein. The risks described below are not the only risks we face. Additional risks not currently known or deemed immaterial also may result in adverse effects on our business.

We face significant uncertainty in the industry due to government health care reform, changes in Medicare, Medicaid and other governmental medical program reimbursements, and we cannot predict how these reforms will impact our operating results.

In March 2010, the U.S. Congress adopted and President Obama signed into law comprehensive health care reform legislation through the passage of the Patient Protection and Affordable Health Care Act (H.R. 3590) and the Health Care and Education Reconciliation Act (H.R. 4872). We cannot predict with certainty what additional healthcare initiatives, if any, will be implemented at the federal or state level, or what the ultimate effect of federal health care reform or any future legislation or regulation will have on us. In addition, Medicare, Medicaid, managed care organizations and foreign governments are increasing pressure to both control health care utilization and to limit reimbursement. Changes in reimbursement programs or their regulations, including retroactive and prospective rate and coverage criteria changes, competitive bidding for certain products and services, and other changes intended to reduce expenditures (domestically or internationally), could adversely affect the portions of our businesses that are dependent on third-party reimbursement or direct governmental payments. Moreover, to the extent that our customers experience reimbursement pressure resulting in lower revenue for them, their demand for our products and services may decrease. The impact of the above mentioned items could have a material adverse impact on our business, results of operations and cash flows.

Failure by us or our suppliers to comply with the FDA regulations and similar foreign regulations applicable to the products we manufacture or distribute could expose us to enforcement actions or other adverse consequences.

We design, manufacture, install and distribute medical devices that are regulated by the FDA in the U.S. and similar agencies in other countries. Failure to comply with applicable regulations could result in future product recalls, injunctions preventing the shipment of products or other enforcement actions that could have a material adverse effect on our revenue and profitability. In March 2012, we received a warning letter from the FDA following an inspection by the FDA at our Batesville, Indiana production facilities. Upon the successful completion of our remediation efforts, the warning letter was lifted in September 2015. Additionally, certain of our suppliers are subject to FDA regulations, and the failure of these suppliers to comply with regulations could adversely affect us; as regulatory actions taken by the FDA against those manufacturers can result in product shortages, recalls or modifications.

We could be subject to substantial fines or damages and possible exclusion from participation in federal health care programs if we fail to comply with the laws and regulations applicable to our business.

We are subject to stringent laws and regulations at both the federal and state levels governing the participation of durable medical equipment suppliers in federal and state health care programs. In addition, in 2011 we entered into a five-year Corporate Integrity Agreement with the U.S. Federal government, which imposes on us additional contractual obligations.

From time to time, the government seeks additional information related to our claims submissions, and in some instances government contractors perform audits of payments made to us under Medicare, Medicaid, and other federal health care programs. On occasion, these reviews identify overpayments for which we submit refunds. At other times, our own internal audits identify the need to refund payments. The frequency and intensity of government audits and review processes has intensified and we expect this will continue in the future, due to increased resources allocated to these activities at both the federal and state Medicaid level, and greater sophistication in data review techniques.

If we are deemed to have violated these laws and regulations, or are found to have violated our Corporate Integrity Agreement, we could be subject to substantial fines, damages, possible exclusion from participation in federal health care programs such as Medicare and Medicaid and possible recoupment of overpayments. While we believe that our practices materially comply with applicable state and federal requirements, the requirements may be interpreted in a manner inconsistent with our interpretation. Failure to comply with applicable laws and regulations, even if inadvertent, could have a material adverse impact on our business.

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We participate in a highly competitive industry that is subject to the risk of declining demand and pricing pressures, which could adversely affect our operating results.

Demand for our products and services depend in large part on overall demand in the health care market. Additionally, with the health care market’s increased focus on hospital asset and resource efficiency as well as reimbursement constraints, spending for many of our products is on a long-term declining trend. Further, the competitive pressures in our industry could cause us to lose market share unless we increase our expenditures or reduce our prices, which would adversely impact our operating results. The nature of this highly competitive marketplace demands that we successfully introduce new products into the market in a cost effective manner (more fully detailed below). These factors, along with others, may result in significant shifts in market share among the industry's major participants, including us. Accordingly, if we are unable to effectively differentiate ourselves from our competitors in terms of both new products and diversification of our product portfolio through business acquisitions, then our market share, sales and profitability could be adversely impacted through lower volume or decreased prices.

Our future financial performance will depend in part on the successful introduction of new products into the marketplace on a cost-effective basis.

Our future financial performance will depend in part on our ability to influence, anticipate, identify and respond to changing consumer preferences and needs. We can provide no assurances that our new products will achieve the same degree of success as in the past. We may not correctly anticipate or identify trends in consumer preferences or needs, or may identify them later than competitors do. In addition, difficulties in manufacturing or in obtaining regulatory approvals may delay or prohibit introduction of new products into the marketplace. Further, we may not be able to develop and produce new products at a cost that allows us to meet our goals for profitability. Warranty claims and service costs relating to our products may be greater than anticipated, and we may be required to devote significant resources to address any quality issues associated with our new products, which could reduce the resources available for further new product development and other matters. In addition, the introduction of new products may also cause customers to defer purchases of existing products.

Failure to successfully introduce new products on a cost-effective basis, or delays in customer purchasing decisions related to the evaluation of new products, could cause us to lose market share and could materially adversely affect our business, financial condition, results of operations and cash flow.

Adverse developments in general domestic and worldwide economic conditions and instability and disruption of credit markets could have an adverse effect on our operating results, financial condition, or liquidity.

We are subject to risks arising from adverse changes in general domestic and global economic conditions, including recession or economic slowdown and disruption of domestic and international credit markets. The credit and capital markets experienced extreme volatility and disruption over the past several years, leading to periods of recessionary conditions and depressed levels of consumer and commercial spending. These recessionary conditions caused customers to reduce, modify, delay or cancel plans to purchase our products and services. If our customers reduce investments in capital expenditures or utilize their limited capital funds to invest in products that we do not offer or that do not comprise a large percentage of our product portfolio, it could negatively impact our operating results. Moreover, even if our revenue remains constant, our profitability could decline if there is a shift to sales of product mix or geographic locations with less favorable margins. If worldwide economic conditions worsen, we would expect our customers to scrutinize costs resulting from pressures on operating margin due to rising supply costs, reduced investment income and philanthropic giving, increased interest expense, reimbursement pressure, reduced elective healthcare spending and uncompensated care.

We may not be able to grow if we are unable to successfully acquire and integrate, or form business relationships with, other companies.

We have in the past, and expect in the future, to grow our business through mergers, acquisitions and other similar business arrangements. We may not be able to identify suitable acquisition candidates or business relationships, negotiate acceptable terms for such acquisitions or relationships or receive necessary financing on acceptable terms. Additionally, we may become responsible for liabilities associated with businesses that we acquire to the extent they are not covered by indemnification from the sellers or by insurance. Even if we are able to consummate acquisitions, such acquisitions could be dilutive to earnings, and we could overpay for such acquisitions. Additionally, we may not be fully successful in our integration efforts or fully realize expected benefits from the integration. Our integration efforts may divert management and other resources from other important matters, and we could experience delays or unusual expenses in the integration process, including intangible asset impairments which could result in significant charges in our Statements of Consolidated Income. Moreover, the margins for these companies may differ from our historical gross and operating margins resulting in a material adverse effect on our results of operations.

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The assets in our pension plans are subject to market disruptions. In addition, our pension plans are underfunded.

Our primary pension plan invests in a variety of equity and debt securities subject to market risks. Our pension plans were underfunded at September 30, 2015 by approximately $96.4 million. Market volatility and disruption could cause further declines in asset values or fluctuations in assumptions used to value our liability and expenses. If this occurs, we may need to make additional pension plan contributions and our pension expense in future years may increase.

Our business is significantly dependent on major contracts with GPOs, IDNs, and certain other distributors and purchasers.

A majority of our North American hospital sales and rentals are made pursuant to contracts with hospital GPOs. At any given time, we are typically at various stages of responding to bids and negotiating and renewing expiring GPO agreements. Failure to be included in certain of these agreements could have a material adverse effect on our business, including capital and rental revenue.

Participation by us in such programs often requires increased discounting or restrictions on our ability to raise prices, and failure to participate or to be selected for participation in such programs may result in a reduction of sales to the member hospitals. In addition, the industry is showing an increased focus on contracting directly with health systems or IDNs (which typically represents influential members and owners of GPOs). IDNs and health systems often make key purchasing decisions and have influence over the GPO’s contract decisions, and often request additional discounts or other enhancements. In addition, certain other distributors and purchasers have similar processes to the GPOs and IDNs and failure to be included in agreements with these other purchasers could have a material adverse effect on our business.

Increased prices for, or unavailability of, raw materials or sub-assemblies used in our products could adversely affect profitability or revenue. In particular, our results of operations could be adversely affected by high prices for metals, fuel, plastics and other petroleum based products. We also procure several raw materials and sub-assemblies from single suppliers.

Our profitability is affected by the prices of the raw materials and sub-assemblies used in the manufacture of our products. These prices may fluctuate based on a number of factors beyond our control, including changes in supply and demand, general economic conditions, labor costs, fuel related delivery costs, competition, import duties, tariffs, currency exchange rates, and government regulation. Significant increases in the prices of raw materials or sub-assemblies that cannot be recovered through increases in the prices of our products could adversely affect our results of operations. There can be no assurance that the marketplace will support higher prices or that such prices and productivity gains will fully offset any commodity price increases in the future. We generally have not engaged in hedging transactions with respect to raw material purchases, but do enter into fixed price supply contracts at times. Future decisions not to engage in hedging transactions or ineffective hedging transactions may result in increased price volatility, potentially adversely impacting our profitability.

Our dependency upon regular deliveries of supplies from particular suppliers means that interruptions or stoppages in such deliveries could adversely affect our operations until arrangements with alternate suppliers could be made. Several of the raw materials and sub-assemblies used in the manufacture of our products currently are procured only from a single source. If any of these sole-source suppliers were unable or unwilling to deliver these materials for an extended period of time we may not be able to manufacture one or more products for a period of time, and our business could suffer. We may not be able to find acceptable alternatives, and any such alternatives could result in increased costs. Difficulties in the credit markets could adversely affect our suppliers’ access to capital and therefore their ability to continue to provide an adequate supply of the materials we use in our products.

The majority of our products are manufactured at a single facility or location, and the loss of one or more of these facilities or locations could prevent us from manufacturing all the various products we sell.

We manufacture the majority of our products in only a single facility or location. If an event occurred that resulted in material damage to one or more of these manufacturing facilities or we lacked sufficient labor to fully operate the facility, we may be unable to transfer the manufacture of the relevant products to another facility or location in a cost-effective or timely manner, if at all. This potential inability to transfer production could occur for a number of reasons, including but not limited to a lack of necessary relevant manufacturing capability at another facility, or the regulatory requirements of the FDA or other governmental regulatory bodies. Such an event would materially negatively impact our financial condition, results of operations and cash flows.

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Our international sales and operations are subject to risks and uncertainties that vary by country which could have a material adverse effect on our business and/or results of operations.

International sales accounted for approximately 36 percent of our net sales in fiscal 2015. We anticipate that international sales will continue to represent a significant portion of our total sales in the future. In addition, we have multiple manufacturing facilities and third-party suppliers that are located outside of the U.S.  As a result, our international sales, as well as our sales in the U.S. of products produced or sourced internationally, are subject to risks and uncertainties that can vary by country, such as political instability, economic conditions, foreign currency exchange rate fluctuations, changes in tax laws, regulatory and reimbursement programs and policies, and the protection of intellectual property rights.  In addition, our collections of international receivables are subject to economic pressures and the actions of some governmental authorities who have initiated various austerity measures to control healthcare and other governmental spending.

Unfavorable outcomes related to uncertain tax positions could result in significant tax liabilities.

We have recorded tax benefits related to various uncertain tax positions taken or expected to be taken in a tax return. While we believe our positions are appropriate, the Internal Revenue Service (“IRS”), state or foreign tax authorities could disagree with our positions, resulting in a significant tax payment.

We are involved on an ongoing basis in claims, lawsuits and governmental proceedings relating to our operations, as well as product liability or other liability claims that could expose us to adverse judgments or could affect the sales of our products.

We are involved in the design, manufacture and sale of health care products, which face an inherent risk of exposure to product liability claims if our products are alleged to have caused injury or are found to be unsuitable for their intended use. Amongst other claims, we are, from time to time, a party to claims and lawsuits alleging that our products have caused injury or death or are otherwise unsuitable. It is possible that we will receive adverse judgments in such lawsuits, and any such adverse judgments could be material. Although we do carry insurance with respect to such matters, this insurance is subject to varying deductibles and self-insured retentions and may not be adequate to cover the full amount of any particular claim. In addition, any such claims could negatively impact the sales of products that are the subject of such claims or other products.

We may not be able to attract, retain and develop key personnel.

Our future performance depends in significant part upon the continued service of our executive officers and other key personnel. The loss of the services of one or more of our executive officers or other key employees could have a material adverse effect on our business, prospects, financial condition and results of operations. Our success also depends on our continuing ability to attract, retain and develop highly qualified personnel, and as competition for such personnel is intense, there can be no assurance that we can do so in the future.

The combined company’s business may suffer if it does not retain its senior management.

After the Welch Allyn acquisition, the combined company’s future success requires it to continue to attract and retain competent personnel. In particular, the combined company’s future success will depend on its senior management. As a result of the merger, Hill-Rom’s and Welch Allyn’s current and prospective employees could experience uncertainty about their future roles and the integration process. The loss of services of members of the combined company’s senior management team could adversely affect its business until suitable replacements can be found. There may be a limited number of persons with the requisite skills to serve in these positions, and the combined company may be unable to locate or employ qualified personnel on acceptable terms.

A portion of our workforce is unionized, and we could face labor disruptions that would interfere with our operations.

Approximately 7 percent of our employees as part of our logistics and manufacturing operations in the U.S. work under collective bargaining agreements. We are also subject to various collective bargaining arrangements or national agreements outside the U.S. covering approximately 18 percent of our employees. Although we have not recently experienced any significant work stoppages as a result of labor disagreements, we cannot ensure that such a stoppage will not occur in the future. Our primary labor contract expires in January 2016. Inability to negotiate satisfactory new agreements or a labor disturbance at one of our principal facilities could have a material adverse effect on our operations.

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We may be adversely affected by new regulations relating to conflict minerals.

In August 2012, the SEC adopted new disclosures and reporting requirements for companies whose products contain certain minerals and their derivatives, namely tin, tantalum, tungsten or gold, known as conflict minerals. As of May 2014, companies are required to report annually whether or not such minerals originate from the Democratic Republic of the Congo (DRC) and/or adjoining countries and in some cases to perform extensive due diligence on their supply chains for such minerals. The implementation of these new requirements could adversely affect the sourcing, availability and pricing of materials used in the manufacturing of our products. In addition, we will incur additional costs to comply with the disclosure requirements, including cost related to determining the source of any of the relevant minerals used in our products. Since our supply chain is complex and multilayered, we may be unable to ascertain with sufficient certainty the origins for these minerals or make a determination that that these minerals are DRC conflict free despite our due diligence procedures, which in turn may harm our reputation. We may also face difficulties in satisfying customers who may require that our products be certified as DRC conflict free, which could harm our relationships with these customers and/or lead to a loss of revenue. These requirements also could have the effect of limiting the pool of suppliers from which we source these minerals, and we may be unable to obtain conflict-free minerals at prices similar to the past, which could increase our costs and adversely affect our manufacturing operations and our profitability.

We may not be successful in achieving expected operating efficiencies and sustaining or improving operating expense reductions, and may experience business disruptions and adverse tax consequences associated with restructuring, realignment and cost reduction activities.

Over the past few years we have initiated several restructuring, realignment and cost reduction initiatives. In the third quarter of 2015, we announced plans to close two facilities in a continuing effort to rationalize our global footprint. Also, in the second quarter of fiscal 2014, we initiated a restructuring program to improve our cost structure by reducing our European manufacturing capacity and streamlining our global operations by, among other things, executing a back office process transformation program in Europe. While we expect to realize efficiencies from these actions, these activities may not produce the full efficiency and cost reduction benefits we expect. Further, such benefits may be realized later than expected, and the ongoing costs of implementing these measures may be greater than anticipated. If these measures are not successful or sustainable, we may undertake additional realignment and cost reduction efforts, which could result in future charges. Moreover, our ability to achieve our other strategic goals and business plans may be adversely affected and we could experience business disruptions with customers and elsewhere if our restructuring and realignment efforts prove ineffective.

These actions, the resulting costs, and delays or lower than anticipated benefits will also impact our foreign tax positions and may require us to record tax reserves against certain deferred tax assets in our international business, similar to the provision we recognized during the second quarter of fiscal 2014 with respect to France.

We are increasingly dependent on consistent functioning of our information technology systems and if we are exposed to any intrusions or if we fail to maintain the integrity of our data, our business could be materially affected.

We are increasingly dependent on consistent functioning of our information technology systems for our infrastructure and products. Our information systems require an ongoing commitment of significant resources to maintain, protect, and enhance existing systems and develop new systems to keep pace with continuing changes in information processing technology, evolving systems and regulatory standards, integration of acquisitions, and the increasing need to protect patient and customer information. In addition, third parties may attempt to hack into our products or systems and may obtain proprietary information. If we fail to maintain or protect our information systems and data integrity effectively, we could lose existing customers or suppliers, have difficulty attracting new customers or suppliers, have problems that adversely impact internal controls, have difficulty preventing, detecting, and controlling fraud, have disputes with customers and suppliers, have regulatory sanctions or penalties imposed, have increases in operating expenses, incur expenses or lose revenues as a result of a data privacy breach, or suffer other adverse consequences. Any significant breakdown, intrusion, interruption, corruption, or destruction of these systems, as well as any data breaches, could have a material adverse effect on our business.

We expect to incur substantial expenses related to the integration of Welch Allyn.

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We expect to incur substantial expenses in connection with the integration of Welch Allyn. There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including purchasing, accounting and finance, sales, billing, payroll, manufacturing, marketing and employee benefits. While we expect to incur integration and restructuring costs and other costs incurred to execute the transaction following completion of the merger in 2015 that are estimated to range between $35 million and $40 million, many of the expenses that will be incurred are, by their nature, difficult to estimate accurately. These expenses could, particularly in the near term, exceed the savings that we expect to achieve from elimination of duplicative expenses and the realization of economies of scale and cost savings. Although we expect that the realization of efficiencies related to the integration of the businesses will offset incremental transaction, merger-related and restructuring costs over time, we cannot give any assurance that this net benefit will be achieved in the near term, or at all.

Successful integration of Welch Allyn with Hill-Rom and successful operation of the combined company are not assured. Also, integrating Hill-Rom’s business with that of Welch Allyn may divert the attention of management away from operations.

Welch Allyn is now a wholly-owned subsidiary of Hill-Rom but will, at least initially, continue its operations on a basis that is largely separate from Hill-Rom’s previously existing operations. There can be no assurance that Welch Allyn will be able to maintain and grow its business and operations. In addition, the market segments in which Welch Allyn operates may experience declines in demand and/or new competitors. Integrating and coordinating certain aspects of the operations and personnel of Welch Allyn with Hill-Rom will involve complex operational, technological and personnel-related challenges. This process will be time-consuming and expensive, may disrupt the businesses of either or both of the companies and may not result in the full benefits expected from the merger, including cost synergies expected to arise from supply chain efficiencies and overlapping general and administrative functions. The potential difficulties, and resulting costs and delays, include:

· managing a larger combined company;

· consolidating corporate and administrative infrastructures;

· issues in integrating manufacturing, warehouse and distribution facilities, research and development and sales forces;

· difficulties attracting and retaining key personnel;

· loss of customers and suppliers and inability to attract new customers and suppliers;

· unanticipated issues in integrating information technology, communications and other systems;

· incompatibility of purchasing, logistics, marketing, administration and other systems and processes; and

· unforeseen and unexpected liabilities related to the merger or Welch Allyn’s business.

Additionally, the integration of Welch Allyn’s operations, products and personnel may place a significant burden on management and other internal resources. The diversion of management’s attention, and any difficulties encountered in the transition and integration process, could harm the Company’s business, financial condition and operating results.

We have incurred substantial additional indebtedness in connection with the Welch Allyn acquisition, and may not be able to meet all of our debt obligations.

As stated in our Notes to Consolidated Financial Statements, we have entered into several new credit facilities which have resulted in a substantially higher level of leverage compared with prior periods. Based on assumed interest rates, leverage ratios and credit ratings, we expect our debt service obligations, comprised of principal and interest (excluding capital leases), during the 12 months following the completion of the merger to be approximately $150 million. As a result of this increase in debt, demands on our cash resources have increased. The increased level of debt could, among other things:

· require us to dedicate a large portion of its cash flow from operations to the servicing and repayment of its debt, thereby reducing funds available for working capital, capital expenditures, research and development expenditures and other general corporate requirements;

· limit our ability to obtain additional financing to fund future working capital, capital expenditures, research and development expenditures and other general corporate requirements;

· limit our flexibility in planning for, or reacting to, changes in its business and the industry in which we operate;

· restrict our ability to make strategic acquisitions or dispositions or to exploit business opportunities;

· place us at a competitive disadvantage compared to competitors that have less debt;

· adversely affect our credit rating, with the result that the cost of servicing our indebtedness might increase;

· adversely affect the market price of Hill-Rom common stock; and

· limit our ability to apply proceeds from an offering or asset sale to purposes other than the servicing and repayment of debt.

Item 1B. UNRESOLVED STAFF COMMENTS

We have not received any comments from the staff of the SEC regarding our periodic or current reports that remain unresolved.

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Item 2. PROPERTIES

The principal properties used in our operations are listed below. All facilities are suitable for their intended purpose, are being efficiently utilized and are believed to provide adequate capacity to meet demand for the next several years.

Location	Description and Primary Use	Owned/Leased
Acton, MA	Light manufacturing, development and distribution of health care equipment; Office administration	Leased
Batesville, IN	Manufacturing, development and distribution of health care equipment; Office administration	Owned
Beaverton, OR	Development of heath care equipment; Office administration	Leased
Caledonia, MI	Manufacturing, development and distribution of surgical products; Office administration	Leased
Carol Stream, IL	Manufacturing, development and distribution of health care equipment; Office administration	Leased
Cary, NC	Development of health care equipment; Office administration	Leased
Charleston, SC	Light manufacturing and distribution of health care equipment; Office administration	Owned/Leased
Chicago, IL	Office administration	Leased
St. Paul, MN	Office administration	Leased
Skaneateles Falls, NY	Manufacturing, development and distribution of health care equipment; Office administration	Owned
Jiangsu, China	Manufacturing of health care equipment	Leased
Taicang, China	Light manufacturing and distribution of health care equipment	Leased
Montpellier, France	Manufacturing and development of health care equipment	Owned
Pluvigner, France	Manufacturing, development and distribution of health care equipment; Office administration	Owned
Hainichen, Germany*	Manufacturing and distribution of health care equipment	Owned
Puchheim, Germany	Manufacturing and distribution of health care equipment	Owned
Saalfeld, Germany	Manufacturing, development and distribution of health care equipment; Office administration	Owned
Witten, Germany	Manufacturing, development and distribution of health care equipment; Office administration	Owned
Navan, County Meath, Ireland	Office administration	Owned
Kawagawa, Japan	Office administration	Leased
Tijuana, Mexico	Manufacturing and distribution of health care equipment; Office administration	Leased
Monterrey, Mexico	Manufacturing of health care equipment	Owned
Las Piedras, Puerto Rico	Manufacturing of surgical products	Owned
Singapore	Manufacturing and development of health care equipment; Office administration	Leased
Lulea, Sweden	Manufacturing, development and distribution of health care equipment; Office administration	Owned
Redditch, UK*	Manufacturing of surgical products; Office administration	Leased

* denotes properties where plans are in process to close, consolidate, or repurpose the facility

In addition to the foregoing, we lease or own a number of other facilities, warehouse distribution centers, service centers and sales offices throughout the U.S., Canada, Western Europe, Mexico, Australia, Middle East, the Far East, and Latin America.

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Item 3. LEGAL PROCEEDINGS

See Note 13 of Notes to Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K for information regarding legal proceedings in which we are involved.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is traded on the New York Stock Exchange under the ticker symbol “HRC”. The closing price of our common stock on the New York Stock Exchange on November 12, 2015 was $51.21 per share. The following table reflects the range of high and low selling prices of our common stock and cash dividends declared by quarter for each of the last two fiscal years.

	Years Ended September 30
	2015						2014
Quarter Ended:	High		Low		Cash Dividends Declared		High		Low		Cash Dividends Declared
December 31	$	47.32	$	39.58	$	0.1525	$	42.56	$	35.64	$	0.1375
March 31	$	49.35	$	44.69	$	0.1600	$	44.64	$	34.94	$	0.1525
June 30	$	57.95	$	48.16	$	0.1600	$	41.66	$	35.45	$	0.1525
September 30	$	58.73	$	49.30	$	0.1600	$	44.46	$	38.85	$	0.1525

Holders

As of November 12, 2015, there were approximately 20,800 shareholders of record.

Dividends

The declaration and payment of cash dividends is at the sole discretion of our Board of Directors (“Board”) and depends upon many factors, including our financial condition, earnings potential, capital requirements, alternative uses of cash, covenants associated with debt obligations, legal requirements, and other factors deemed relevant by our Board. We have paid cash dividends on our common stock every quarter since our initial public offering in 1971. We intend to continue to pay quarterly cash dividends comparable to those paid in the periods covered by these financial statements.

Issuer Purchases of Equity Securities

							Maximum
					Total Number		Approximate
					of Shares		Dollar Value
	Total				Purchased as		of Shares That
	Number		Average		Part of Publicly		May Yet Be
	of Shares		Price Paid		Announced Plans or		Purchased Under
Period	Purchased (1)		per Share		Programs (2)		the Programs (2)
July 1, 2015 - July 31, 2015		426	$	54.21		-	$	64.7
August 1, 2015 - August 31, 2015		728	$	53.43		-	$	64.7
September 1, 2015 - September 30, 2015		113,222	$	51.91		-	$	64.7
Total		114,376	$	51.93		-	$	64.7

(1) Shares purchased during the quarter ended September 30, 2015 were in connection with employee payroll tax withholding for restricted and deferred stock distributions.

(2) In September 2013, the Board approved an expansion of its previously announced share repurchase authorization to a total of $190.0 million. As of September 30, 2015, a cumulative total of $125.3 million has been used under this existing authorization. The plan does not have an expiration date and currently there are no plans to terminate this program in the future.

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Stock Performance Graph

The following graph compares the return on our common stock with that of Standard & Poor’s 500 Stock Index (“S&P 500 Index”), and our Peer Group* for the five years ended September 30, 2015. The graph assumes that the value of the investment in our common stock, the S&P 500 Index, and our Peer Group was $100 on October 1, 2010 and that all dividends were reinvested.

	2010	2011	2012	2013	2014	2015
HRC	$100	$   83	$  82	$103	$121	$153
S & P 500	$100	$   99	$126	$147	$172	$168
Peer Group	$100	$104	$135	$141	$166	$196

* For purposes of the Stock Performance Graph above, our Peer Group is comprised of: Alere Inc.; CR Bard Inc.; Chemed Corp.; CONMED Corporation; DENTSPLY International Inc.; Edwards Lifesciences Corp.; Hologic Inc.; IDEXX Laboratories, Inc.; Integra Lifesciences Holdings Corporation; Intuitive Surgical, Inc.; Invacare Corporation; MEDNAX, Inc.; PerkinElmer Inc.; ResMed Inc.; Sirona Dental Systems Labs Inc.; Steris Corp.; Teleflex Incorporated.; The Cooper Companies Inc.; Varian Medical Systems, Inc.; and West Pharmaceutical Services, Inc.

Certain other information required by this item will be contained under the caption “Equity Compensation Plan Information” in our definitive Proxy Statement to be delivered to shareholders in connection with the Annual Meeting of Shareholders to be held on March 15, 2016, and such information is incorporated herein by reference.

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Item 6. SELECTED FINANCIAL DATA

The following table presents our selected consolidated financial data for each of the last five fiscal years ended September 30. Refer to Note 2 of Notes to Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K for disclosure of business combinations for each of the last three fiscal years. Also see Note 12 of Notes to Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K for selected unaudited quarterly financial information for each of the last two fiscal years.

	2015			2014			2013			2012			2011
Net revenue	$	1,988.2		$	1,686.1		$	1,716.2		$	1,634.3		$	1,591.7
Net income	$	46.8		$	60.6		$	105.0		$	120.8		$	133.5
Net income attributable to common shareholders	$	47.7		$	60.6		$	105.0		$	120.8		$	133.3
Net income attributable to common shareholders per share - Basic	$	0.83		$	1.05		$	1.75		$	1.94		$	2.11
Net income attributable to common shareholders per share - Diluted	$	0.82		$	1.04		$	1.74		$	1.94		$	2.09
Total assets	$	4,457.6		$	1,751.3		$	1,586.8		$	1,627.6		$	1,299.1
Long-term obligations	$	2,175.2		$	364.1		$	225.8		$	237.5		$	50.8
Cash flows from operating activities	$	213.8		$	210.3		$	263.2		$	261.7		$	222.5
Capital expenditures	$	121.3		$	62.7		$	65.3		$	77.8		$	68.9
Cash flows from investing activities	$	(1,756.4	)	$	(294.5	)	$	(58.6	)	$	(539.5	)	$	(78.0	)
Cash flows from financing activities	$	1,642.7		$	63.8		$	(161.5	)	$	135.6		$	(101.9	)
Cash dividends per share	$	0.6325		$	0.5950		$	0.5250		$	0.4875		$	0.4300

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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a leading global medical technology company with more than 10,000 employees worldwide. We partner with health care providers in more than 100 countries by focusing on patient care solutions that improve clinical and economic outcomes in five core areas: Advancing Mobility, Wound Care and Prevention, Clinical Workflow, Surgical Safety and Efficiency, and Respiratory Health. Around the world, Hill-Rom's people, products, and programs work towards one mission: Enhancing outcomes for patients and their caregivers.

Key Factors Impacting Our Business

Industry-wide Demand and Cost Pressures. We believe that over the long term, overall patient and provider demand for health care products and services will continue to grow as a result of a number of factors, including an aging population, longer life expectancies, and an increasing number of sicker patients across all care settings, including hospitals, extended care facilities and in the home. In contrast, however, health care providers across the care continuum are under continued pressure to improve efficiency and control costs, possibly reducing demand for our products and services. These pressures may occur for a number of reasons, including declining commercial third-party payer reimbursement rates, government regulation, and hospital consolidation. In addition, an increasing number of our customers are purchasing through GPO agreements or other large contracts, where they may be able to purchase at lower prices than they would be able to individually. Moreover, general economic pressures have caused some governmental authorities to initiate various austerity measures to control healthcare spending, reducing direct spending in addition to governmental reimbursement rates. We believe these factors may decrease demand for our products, decrease payments to us, or both; however, we may be able to offset some or all of this decreased demand through effective research and development leading to new product introductions, as well as providing demonstrable clinical and economic value to our customers.

Customer Consolidation. Economic considerations, competition and other factors have led to on-going consolidation of customers and the centralization of purchasing decision making. We believe this has influenced the criteria customers use to evaluate the value proposition offered by Hill-Rom for various product and service offerings. Economic decision-makers partner with clinical decision-makers to determine product selection. This has caused Hill-Rom to adjust the way we go to market and the structure of our sales and distribution channels, particularly in North America. Among other measures, Hill-Rom established Strategic Partnership Teams as an adjunct to our traditional sales representatives to better address customer needs for products and services that deliver solutions for more cost-effective patient care. With the acquisition of Welch Allyn, we also added a significant distributor component serving primary care. The extent to which Hill-Rom effectively addresses evolving needs brought about by customer consolidation could significantly impact the success of our revenue and profitability.

Mergers and Acquisitions.We have made several recent acquisitions, most notably the acquisitions of Welch Allyn Holdings, Inc. (“Welch Allyn”), Trumpf Medical (“Trumpf”), and Virtus, Inc. (“Virtus”), and we plan to make additional acquisitions in the future. Our past and future acquisitions (to the extent that we make them) may materially impact our results of operations, by increasing our revenue and revenue growth rates, increasing our ongoing operational selling and administrative expenses, adding incremental acquisition and integration related costs, and creating additional non-cash charges associated with the amortization of tangible and intangible assets resulting from purchase accounting. Moreover, to the extent that we acquire businesses that have financial drivers different than our current businesses, our future results of operations will be subject to additional or different factors impacting our financial performance.

Growing Desire Among Developing Countries to Invest in Health Care. While industry growth rates in more mature geographic regions such as western and northern Europe and Japan have moderated, in many other geographic markets, where the relative spending on health care is increasing, we expect long-term increasing demand for medical technologies. New hospital construction and hospital refurbishments are expected in regions such as Latin America, the Middle East and many parts of Asia. This could increase overall demand for our products and services.

Changing Acuities and Technological Impact.As a result of the growing population of the elderly and obese, health care systems are challenged to treat rising incidences of complex diseases and conditions such as diabetes, congestive heart failure and respiratory disease. However, at the same time, patients are being moved through the hospital faster and generally desire to rapidly move to lower acuity settings as quickly as possible. We believe that this trend increases the demand for more solutions to care for these patients in lower acuity settings, such as improved medical technologies, communication tools and information technologies. The increasing utilization of these technologies and our ability to meet changing demand with new differentiated products will impact our ability to increase revenue and improve margins in the future.

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Increasing Operational Efficiency. We have and will continue to undertake initiatives to improve our operating efficiency, including business realignments, employee reductions in force, product rationalizations, lower sourcing costs and continuous improvement activities in our manufacturing facilities and back office functions. We believe our operating expenses and margins will be positively impacted by these actions, but it is possible these activities may not produce the full efficiency and cost reduction benefits we expect, in a timely fashion, or at all. Further, we may utilize savings produced to reinvest in (or fund) other business priorities.

Patient and Caregiver Safety, Quality, and Economic Outcomes. We believe an increasing emphasis is being placed within hospitals to assure quality of care through increased accountability and public disclosure. At the same time, we believe caregiver shortages, worker related injuries, the aging workforce, and other staffing requirements have led to increasing emphasis on caregiver injury prevention. Several pieces of legislation have been enacted over the past few years to address these areas including the "pay for performance" initiative by the Centers for Medicare and Medicaid Services ("CMS") which aims to better align reimbursement with improved patient outcomes and the reduction of adverse events including bedsores (or pressure ulcers), ventilator associated pneumonia, patient falls, deep vein thrombosis and patient entrapment. Hospitals may experience reduced reimbursement for hospital acquired adverse events, making a stronger connection with these adverse events and revenue levels. Therefore, we believe that healthcare providers will seek to do business with partners that can demonstrate improved clinical, and consequently, economic, outcomes. A number of the top adverse events and preventable medical errors in U.S. hospitals, including those listed above, can be mitigated in part by our technologies, processes and services. We believe we are well positioned to benefit from the emphasis being placed on patient safety due to our products and technologies that are designed to assist providers in materially improving outcomes associated with patients across all care settings, and we believe that an effective program of new product innovation focusing on these trends will ultimately benefit our revenue growth. Overall increasing emphasis on patient and caregiver safety and quality could increase demand for our products and services.

Use of Non-GAAP Financial Measures

The accompanying consolidated financial statements, including the related notes, set forth in Part II, Item 8 of this Form 10-K are presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). We provide non-GAAP measures, including adjusted income before taxes, income tax expense and diluted earnings per share results, because we use these measures internally for planning, forecasting, and evaluating the performance of the business.

In addition, we analyze net revenue on a constant currency basis to better measure the comparability of results between periods. We believe that evaluating growth in net revenue on a constant currency basis provides an additional and meaningful assessment to both management and investors.

We use these measures internally for planning, forecasting, and evaluating the performance of the business. These measures should not, however, be considered in isolation, as a substitute for, or as superior to measures of financial performance prepared in accordance with GAAP.

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RESULTS OF OPERATIONS

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

	Years Ended September 30
				% of Related						% of Related						% of Related
(Dollars in millions except per share data)	2015			Revenue			2014			Revenue			2013			Revenue
Net Revenue
Capital sales	$	1,604.5			80.7	%	$	1,301.4			77.2	%	$	1,308.3			76.2	%
Rental revenue		383.7			19.3	%		384.7			22.8	%		407.9			23.8	%
Total Revenue		1,988.2			100.0	%		1,686.1			100.0	%		1,716.2			100.0	%
Gross Profit
Capital sales		683.3			42.6	%		571.2			43.9	%		560.5			42.8	%
Rental revenue		197.0			51.3	%		208.7			54.3	%		219.8			53.9	%
Total Gross Profit		880.3			44.3	%		779.9			46.3	%		780.3			45.5	%
Research and development expenses		91.8			4.6	%		71.9			4.3	%		70.2			4.1	%
Selling and administrative expenses		664.2			33.4	%		548.3			32.5	%		549.5			32.0	%
Special charges		41.2			2.1	%		37.1			2.2	%		5.7			0.3	%
Operating Profit		83.1			4.2	%		122.6			7.3	%		154.9			9.0	%
Other income (expense), net		(18.0	)		-0.9	%		(7.4	)		-0.4	%		(10.9	)		-0.6	%
Income Before Income Taxes		65.1			3.3	%		115.2			6.8	%		144.0			8.4	%
Income tax expense		18.3			0.9	%		54.6			3.2	%		39.0			2.3	%
Net Income		46.8			2.4	%		60.6			3.6	%		105.0			6.1	%
Less:  Net income attributable to noncontrolling interest		(0.9	)		-			-			-			-			-
Net Income Attributable to Common Shareholders	$	47.7			2.4	%	$	60.6			3.6	%	$	105.0			6.1	%
Net Income Attributable to Common Shareholders
per Common Share - Diluted	$	0.82					$	1.04					$	1.74

Note: Certain percentage amounts may not add due to rounding.

Fiscal Year Ended September 30, 2015 Compared to Fiscal Year Ended September 30, 2014

Consolidated Results of Operations

In this section, we provide a high-level overview of our consolidated results of operations. Immediately following this section is a discussion of our results of operations by reportable segment. We disclose segment information that is consistent with the way in which management operates and views the business.

Our performance under each reportable segment is measured on a divisional income basis before non-allocated operating and administrative costs, acquisition-related intangible asset amortization, impairments, litigation, special charges, acquisition and integration costs, and other unusual events. Divisional income generally represents the division’s gross profit less its direct operating costs along with an allocation of manufacturing and distribution costs, research and development, and certain corporate functional expenses.

Non-allocated operating and administrative costs include functional expenses that support the entire organization such as administration, finance, legal, and human resources, expenses associated with strategic developments, acquisition-related intangible asset amortization, and other events that are not indicative of operating trends. We exclude such amounts from divisional income to allow management to evaluate and understand divisional operating trends without the effects of such items.

22

Net Revenue

	Years Ended September 30				Percentage Change
								Constant
(Dollars in millions)	2015		2014		As Reported			Currency
Revenue:
Capital sales	$	1,604.5	$	1,301.4		23.3			29.9
Rental revenue		383.7		384.7		(0.3	)		1.7
Total Revenue	$	1,988.2	$	1,686.1		17.9			23.5

Capital sales increased, due primarily to the impact of the Trumpf and Welch Allyn acquisitions which added over $225 million in sales. Higher patient support systems and clinical workflow solutions sales in our North America segment and organic sales increases in our Surgical and Respiratory Care segment also contributed to the increase, partially offset by lower sales in our International segment. Order trends in our North America segment show significant growth compared to prior periods, while orders in our International segment continue to be volatile due to a higher dependency on large tenders and the effects of significant economic uncertainty in Europe and the Middle East. Excluding the impact of the Trumpf and Welch Allyn acquisitions, sales increased 4.5 percent on a reported basis and 8.9 percent on a constant currency basis.

Rental revenue decreased slightly from the prior year as lower revenue in the International segment was offset by increases in the North America and Surgical and Respiratory Care segments. The North America increase was driven by improving volumes in the last half of the year due to recent contract wins, which more than offset the decline from the discontinuance of third-party payer therapy product rentals. International rental revenue was down sharply on a reported basis as a result of foreign currency fluctuations, and down on a constant currency basis by 4.3 percent.

Gross Profit

	Years Ended September 30
							Percentage
(Dollars in millions)	2015			2014			Change
Gross Profit
Capital sales	$	683.3		$	571.2			19.6
Percent of Related Revenue		42.6	%		43.9	%
Rental revenue	$	197.0		$	208.7			(5.6	)
Percent of Related Revenue		51.3	%		54.3	%
Total Gross Profit	$	880.3		$	779.9			12.9
Percent of Related Revenue		44.3	%		46.3	%

Capital gross profit increased by $112.1 million on higher revenue while gross margin decreased 130 basis points. The gross margin decrease is primarily driven by the impact of dilutive Trumpf margins, incremental field corrective action charges of $6.2 million, and the prior year recognition of a $2.8 million benefit from a change in our employee benefits program. Margins were also negatively impacted by the inventory step-up associated with purchase accounting for acquisitions, which was $16.2 million in 2015, compared with $6.0 million in 2014. Excluding the aforementioned items, organic capital margins increased 60 basis points as the impacts of pricing pressure were more than offset by portfolio mix.

Rental gross profit decreased $11.7 million and gross margin decreased 300 basis points. The margin decrease is partially due to the prior year recognition of a $2.8 million benefit from the employee benefit program change referenced earlier, in addition to continued pricing pressure and higher field service costs and depreciation on the incremental capital expenditures necessary to serve recent contract wins in North America.

23

Other

	Years Ended September 30
							Percentage
(Dollars in millions)	2015			2014			Change
Research and development expenses	$	91.8		$	71.9			27.7
Percent of Total Revenue		4.6	%		4.3	%
Selling and administrative expenses	$	664.2		$	548.3			21.1
Percent of Total Revenue		33.4	%		32.5	%
Special charges	$	41.2		$	37.1			11.1
Interest expense	$	(18.4	)	$	(9.8	)		87.8
Investment income and other, net	$	0.4		$	2.4			(83.3	)

Research and development expenses increased 27.7 percent primarily due to the addition of Trumpf and Welch Allyn spending, accompanied by additional investment in organic product development initiatives, as well as the prior year benefit of $1.2 million associated with the aforementioned employee benefit program change.

Selling and administrative expenses as a percent of total revenue increased 90 basis points. Selling and administrative expenses include acquisition and integration costs, acquisition-related intangible asset amortization, FDA remediation expenses, a supplemental stock compensation charge, and litigation settlements and expenses that totaled $90.0 million in 2015, compared with $43.6 in the prior year. Excluding these items, as well as the favorable impact of the employee benefit program change of $6.6 million recorded in 2014, selling and administrative expenses decreased 140 basis points as a percentage of revenue. The improvements were due to operating leverage associated with higher revenue and ongoing cost control initiatives.

Welch Allyn Integration

In conjunction with the acquisition of Welch Allyn in September 2015, we eliminated approximately 80 positions, primarily in Welch Allyn’s corporate support and administrative functions, which became redundant as a result of merging into Hill-Rom. We recorded $14.4 million of special charges in conjunction with this action in fiscal 2015 for severance and employee benefits provided to affected employees. Many of the affected employees must continue service for a specified period of time after completion of the merger in order to receive the severance benefits offered. As a result, additional charges related to this action of approximately $3 million will be recorded in fiscal 2016 until those service obligations are fulfilled. Cash payments related to this action will continue throughout fiscal 2016.

Pension Settlement Charge

As disclosed in Note 6, we offered lump sum settlements to all terminated vested participants in our domestic master defined benefit retirement plan, which resulted in a settlement charge of $9.6 million. This charge was recorded as a component of special charges in fiscal 2015.

Site Consolidation

In the third quarter of fiscal 2015, we initiated a plan to streamline our operations and simplify our supply chain by consolidating certain manufacturing and distribution operations. As part of this action, we announced the closure of sites in Redditch, England and Charleston, South Carolina. Upon closure, each site’s operations will either be relocated to other existing Company facilities or outsourced to third-party suppliers. For the year ended September 30, 2015, we recorded severance and benefit charges of $2.7 million for approximately 160 employees to be displaced by the closures, as well as $1.8 million of other related costs. We expect to incur approximately $3 million of additional charges in the first half of fiscal 2016 for personnel costs and site closure expenses related to this action until the closures are complete. Cash payments related to these actions will continue throughout fiscal 2016.

24

Global Restructuring Program

During the second quarter of fiscal 2014, we announced a global restructuring program focused on improving our cost structure. This action included early retirement and reduction in force programs that eliminated over 200 net positions, primarily in the U.S., where the action was substantially completed in fiscal 2014 with cash expenditures continuing during fiscal 2015. The program also included a reduction of our European manufacturing capacity and a streamlining of global operations by, among other things, executing a back office process transformation program in Europe. The restructuring in Europe is in process and has resulted in severance and benefit charges of $6.0 million for the year ended September 30, 2015, as well as other costs of $7.2 million related to legal and professional fees, temporary labor, project management, and other administrative functions. In the second quarter of fiscal 2015, we also reversed $0.5 million of previously recorded severance and benefit charges due to certain plan participants declining continuing healthcare coverage.

Since the inception of the global restructuring program through September 30, 2015, we have recognized aggregate special charges of $37.6 million, which are recorded in both fiscal 2014 and 2015. Charges of $24.9 million were recorded in the year ended September 30, 2014, net of reversals. We expect to incur $5 to $10 millionof additional European restructuring costs through the completion of the program.

Discontinuance of Third-Party Payer Rentals

Also during the second quarter of fiscal 2014, we initiated a plan to discontinue third-party payer rentals of therapy products occurring primarily in home care settings. Special charges recorded for this action included a $7.7 million non-cash tangible asset impairment charge, a $2.0 million charge for severance and other benefits for approximately 70 eliminated positions, and $1.6 million in other related costs, net of a reversal of $0.2 million which was recorded in the third quarter of fiscal 2014. This action is substantially complete.

Batesville Manufacturing Early Retirement Program

During the first quarter of fiscal 2014, we initiated a plan to improve our cost structure and streamline our organization by offering an early retirement program to certain manufacturing employees in our Batesville, Indiana plant, meeting specific eligibility requirements, and other minor reduction in force actions. These programs resulted in the elimination of approximately 35 positions and required recognition of a special charge of approximately $1 million for lump sum payments under the program and severance and other benefits provided to other affected employees. This action was substantially complete by the end of the second quarter of fiscal 2014.

Interest expense was higher compared with the prior year due to incremental borrowings made in connection with the Trumpf and Welch Allyn acquisitions.

GAAP and Adjusted Earnings

Income before income taxes, income tax expense, and earnings attributable to common shareholders per diluted share are summarized in the table below. GAAP amounts are adjusted for certain items to aid management in evaluating the performance of the business.

	Years Ended September 30
	2015												2014
(Dollars in millions, except for per share amounts)	Income Before Income Taxes			Income Tax Expense			NCI			Diluted EPS			Income Before Income Taxes			Income Tax Expense			Diluted EPS1
GAAP Earnings	$	65.1		$	18.3		$	(0.9	)	$	0.82		$	115.2		$	54.6		$	1.04
Adjustments:
Acquisition and integration costs		62.8			18.0			-			0.76			16.3			5.0			0.19
Acquisition-related intangible asset amortization		34.1			9.8			-			0.42			28.8			8.7			0.34
Employee benefits change		-			-			-			-			(13.4	)		(5.1	)		(0.14	)
FDA remediation expenses		3.8			1.2			-			0.04			4.5			1.7			0.05
Field corrective actions		4.5			1.4			-			0.05			(1.7	)		(0.6	)		(0.02	)
Litigation settlements and expenses		(0.6	)		(0.2	)		-			(0.01	)		-			-			-
Special charges		41.2			10.7			-			0.52			37.1			10.9			0.45
Supplemental stock compensation charge		6.1			2.2			-			0.07			-			-			-
Foreign valuation allowance and acquisition dividend tax		-			1.9			-			(0.03	)		-			(20.3	)		0.35
Adjusted Earnings	$	217.0		$	63.3		$	(0.9	)	$	2.64		$	186.8		$	54.9		$	2.25

1 Total does not add due to rounding

NCI = Net loss attributable to noncontrolling interests

The effective tax rate for fiscal 2015 was 28.1 percent compared to 47.4 percent in the prior year. The effective tax rate for fiscal 2015 is lower than fiscal 2014 due primarily to the $19.6 million of tax expense recognized in the prior year to establish a valuation allowance on the net deferred tax assets in France, primarily net operating losses. This compares to $3.3 million of tax benefits in the current year primarily related to the reversal of previously recorded valuation allowances in Australia and the one-time catch-up tax benefit from the reinstatement of the research and development tax credit.

25

On December 19, 2014, the Tax Increase Prevention Act of 2014 (the Tax Act) was signed into law. The Tax Act retroactively extended the research and development tax credit for one year beginning January 1, 2014 through December 31, 2014. This credit had previously expired effective December 31, 2013. The reinstatement of the research and development tax credit favorably impacted the effective tax rate for fiscal 2015 by approximately $2 million through a combination of a one-time catch-up adjustment from the reinstatement of the credit recorded in our first quarter of fiscal 2015 and the inclusion of the limited current year research credit into the fiscal 2015 effective tax rate.

The adjusted effective tax rates were 29.2 and 29.4 percent for fiscal years 2015 and 2014.

Net income attributable to common shareholders was $47.7 million in fiscal 2015 compared to $60.6 million in the prior year. On an adjusted basis, net income attributable to common shareholders increased $22.7 million, or 17.2 percent compared with the prior year. Diluted earnings per share decreased 21.2 percent on a reported basis and increased 17.3 percent on an adjusted basis over the same period.

Business Segment Results of Operations

	Years Ended September 30				Percentage Change
								Constant
(Dollars in millions)	2015		2014		As Reported			Currency
Revenue:
North America	$	1,002.0	$	888.9		12.7			13.4
Surgical and Respiratory Care		506.6		301.6		68.0			78.3
International		429.4		495.6		(13.4	)		(2.1	)
Welch Allyn1		50.2		-		N/M			N/M
Total revenue	$	1,988.2	$	1,686.1		17.9			23.5
Divisional income:
North America	$	204.1	$	165.0		23.7
Surgical and Respiratory Care		80.5		68.6		17.3
International		12.8		24.9		(48.6	)

1 Welch Allyn is not considered a reportable segment but is presented as a reconciling item to total consolidated revenue.

N/M = Not meaningful

North America

North America revenue increased 12.7 percent. Capital sales were up 17.2 percent due to higher sales of patient support systems and clinical workflow solutions products. Rental revenue increased by 2.4 percent as improved volumes from recent contract wins were partially offset by the discontinuance of third-party payer therapy product rentals in the second half of fiscal 2014, along with continued pricing pressure. Excluding the effects of the discontinuance of third-party payer therapy product rentals, rental revenue increased 7.6 percent compared with the prior year.

North America divisional income increased 23.7 percent due primarily to increased revenue and the resulting increase in gross profit. Capital margins increased 60 basis points compared with the prior year primarily due to favorable changes in product mix. Rental margins declined as a result of continued pricing pressure, along with our increased investment in additional capacity to meet the higher volumes in fiscal 2015 from recent contract wins. Divisional income also benefited from improved leverage of operating expenses on higher revenue.

26

Surgical and Respiratory Care

Surgical and Respiratory Care revenue increased 68.0 percent on a reported basis, and 78.3 percent on a constant currency basis. Excluding the impact of the Trumpf acquisition, revenue increased 3.2 percent on a reported basis driven by higher respiratory and surgical sales. Capital sales increased 84.8 percent primarily due to Trumpf, while rental revenue in respiratory care was relatively flat year over year.

Surgical and Respiratory Care divisional income increased 17.3 percent due to the incremental gross profit from Trumpf, but at a lower rate given the lower Trumpf margins. Divisional income excluding acquisitions was impacted by increased investments in research and development and sales channel to support growth initiatives.

International

International revenue decreased 13.4 percent on a reported basis, and 2.1 percent on a constant currency basis. International capital sales decreased 12.9 percent, or 1.8 percent on a constant currency basis due primarily to weaker sales in Europe, the Middle East, and Latin America. Sales in this segment continue to face significant volatility as result of continued economic uncertainty in various regions around the world. International rental revenue decreased 16.8 percent on a reported basis and 4.3 percent on a constant currency basis due to continued volume and pricing pressures.

International divisional income decreased 48.6 percent due primarily to lower revenue and the resulting decline in gross profit, partially offset by lower selling and administrative expenses, along with some unfavorable foreign currency impact. Capital margins declined 70 basis points from the prior year. Rental margins decreased due to reduced leverage of fleet and field service infrastructure as revenue has declined more quickly than our field service costs, along with continued pricing pressure.

Fiscal Year Ended September 30, 2014 Compared to Fiscal Year Ended September 30, 2013

Consolidated Results of Operations

In this section, we provide a high-level overview of our consolidated results of operations. Immediately following this section is a discussion of our results of operations by reportable segment. We disclose segment information that is consistent with the way in which management operates and views the business.

Net Revenue

	Years Ended September 30				Percentage Change
								Constant
(Dollars in millions)	2014		2013		As Reported			Currency
Revenue:
Capital sales	$	1,301.4	$	1,308.3		(0.5	)		(1.1	)
Rental revenue		384.7		407.9		(5.7	)		(6.0	)
Total Revenue	$	1,686.1	$	1,716.2		(1.8	)		(2.2	)

Capital sales decreased, due primarily to lower patient support system sales in our North America and International segments, which were partially offset by sales increases within the Surgical and Respiratory Care segment. Surgical and Respiratory Care sales increased due to strong organic growth and the acquisition of Trumpf in the fourth quarter of fiscal 2014. In both our North America and International segments, capital order trends continue to be volatile as our customers continue to closely watch their expenditures, looking for clarity in the evolving healthcare marketplace.

Rental revenue declined in the North America segment primarily due to lower volumes, continued pricing pressure, and our discontinuance of third-party payer therapy product rentals. Surgical and Respiratory Care rental revenue was flat for fiscal 2014, with international rental revenue also flat on a constant currency basis.

27

Gross Profit

	Years Ended September 30
							Percentage
(Dollars in millions)	2014			2013			Change
Gross Profit
Capital sales	$	571.2		$	560.5			1.9
Percent of Related Revenue		43.9	%		42.8	%
Rental revenue	$	208.7		$	219.8			(5.1	)
Percent of Related Revenue		54.3	%		53.9	%
Total Gross Profit	$	779.9		$	780.3			(0.1	)
Percent of Related Revenue		46.3	%		45.5	%

Capital gross profit and gross margin increased by $10.7 million and 110 basis points during fiscal 2014. The gross profit increase, despite somewhat lower revenue, comes from improved gross margin rates, driven by the effects of the items outlined below. Gross margin was favorably impacted by reversals of $1.7 million associated with previously recorded field corrective actions compared to charges of $12.2 million in the prior year. The recognition of a $2.8 million benefit from a change in our employee benefit program also favorably impacted gross margin in fiscal 2014. Further, the margin increase was partially offset by $6.0 million of inventory step-up associated with fiscal 2014 acquisitions compared to $2.5 million of inventory step-up recognized in fiscal 2013 resulting from the Aspen Surgical acquisition. In addition, we experienced improved margins in our International segment and in certain Surgical and Respiratory Care product lines, but these were offset by weaker margins in our North America segment and the impact of the Trumpf acquisition.

Rental gross profit decreased $11.1 million, but gross margin increased 40 basis points for fiscal 2014. The margin increase is due to the recognition of a $2.8 million benefit from an employee benefit program change, coupled with lower depreciation expense and field service costs.

Other

	Years Ended September 30
							Percentage
(Dollars in millions)	2014			2013			Change
Research and development expenses	$	71.9		$	70.2			2.4
Percent of Total Revenue		4.3	%		4.1	%
Selling and administrative expenses	$	548.3		$	549.5			(0.2	)
Percent of Total Revenue		32.5	%		32.0	%
Special charges	$	37.1		$	5.7			550.9
Interest expense	$	(9.8	)	$	(9.5	)		3.2
Investment income and other, net	$	2.4		$	(1.4	)		(27.4	)

Research and development expenses increased 2.4 percent, net of a $1.2 million benefit associated with the employee benefit program change. The increase in expenses is due to higher spending on new product development initiatives and incremental spend related to the recent Trumpf acquisition. Selling and administrative expenses decreased $1.2 million. Selling and administrative expenses were favorably impacted by various cost control initiatives previously implemented, lower variable compensation expenses, and an employee benefit adjustment of $6.6 million referenced earlier. This decrease was partially offset by $10.3 million of acquisition and integration costs compared to $6.3 million in fiscal 2013 and an incremental $8.3 million of Trumpf-related selling and administrative expenses, along with higher medical device tax of $1.6 million. Despite the lower overall spend, selling and administrative expenses were up slightly as a percentage of revenue on the lower revenue.

28

During the second quarter of fiscal 2014, we announced a global restructuring program to improve our cost structure. As part of this program, we offered an early retirement program to certain U.S. employees. Through this program, other reduction in force actions, and the elimination of certain contractor and open positions, we eliminated over 200 net positions primarily in the U.S. This portion of the program resulted in a special charge of $11.0 million related to severance and other benefits to be provided to affected employees. We also recorded a $3.2 million charge related to special pension and postretirement healthcare plan benefits granted to employees eligible for the early retirement program. The severance and other benefits and postretirement benefit charge balances reflect a $1.3 million reclassification compared to the original charge recorded in the second quarter of 2014. Subsequently during the fiscal year, we reversed $0.7 million of the severance and other benefits accrual due to certain plan participants declining continuing healthcare coverage, as well as other changes in circumstances affecting the estimated future payments to be made. This portion of the restructuring program is substantially complete, but cash expenditures will continue into fiscal year 2015. The global restructuring program is also reducing our European manufacturing capacity and streamlining our global operations by, among other things, executing a back office process transformation program in Europe. The restructuring in Europe is in process and has resulted in year to date severance and benefit charges of $6.8 million. We have also incurred other costs associated with the global restructuring program of $4.6 million related to legal and professional fees, temporary labor, project management, and other administrative functions. All these actions are anticipated to yield annual cost savings of approximately $30 million after full implementation.

Also during the second quarter of fiscal 2014, we initiated a plan to discontinue third-party payer rentals of therapy products occurring primarily in home care settings. We intend to continue renting these products to facilities and customers who are billed directly for the product. Due to this action, we recorded a non-cash impairment charge of $7.7 million for certain tangible assets for which the carrying values could not be fully recovered as a result of this strategic decision. We also eliminated approximately 70 positions and recognized a special charge of $2.0 million related to severance and other benefits for affected employees and $1.8 million in other related costs. Over the remainder of the fiscal year, we reversed $0.2 million of the other related costs as original estimates charged were excessive. The exit of this business was substantially complete by the first quarter of fiscal 2015, but certain cash expenditures extended through fiscal 2015.

During the first quarter of fiscal 2014, we initiated a plan to improve our cost structure and streamline our organization by offering an early retirement program to certain manufacturing employees in our Batesville, Indiana plant, meeting specific eligibility requirements, and other minor reduction in force actions. These programs resulted in the elimination of approximately 35 positions and required recognition of a special charge of approximately $1 million for lump sum payments under the program and severance and other benefits provided to other affected employees. This action was substantially complete by the end of the second quarter of fiscal 2014.

During the second quarter of fiscal 2013, we announced a plan to improve our cost structure and streamline our organization by eliminating in excess of 100 positions across the Company, roughly half of which were contract and open positions. This resulted in a special charge of $1.7 million related to severance and other benefits to be provided to affected employees. We also incurred a contract termination charge of $0.6 million, a non-cash asset impairment charge of $0.2 million related to a product discontinuance action and $1.0 million in other related costs. We reversed $0.6 million of a fiscal 2012 severance and other benefits charge that was determined to be excessive during the second quarter of fiscal 2013. During the third and fourth quarters of fiscal 2013, we continued actions under the previously announced plan and incurred charges of $0.8 million and $2.0 million, respectively. These actions and the related cash expenditures are complete.

Interest expense was higher for fiscal 2014 due to incremental borrowings made in connection with acquisitions.

29

GAAP and Adjusted Earnings

Income before income taxes, income tax expense, and earnings attributable to common shareholders per diluted share are summarized in the table below. GAAP amounts are adjusted for certain items to aid management in evaluating the performance of the business.

	Years Ended September 30
	2014									2013
(Dollars in millions, except for per share amounts)	Income Before Income Taxes			Income Tax Expense			Diluted EPS1			Income Before Income Taxes		Income Tax Expense		Diluted EPS
GAAP Earnings	$	115.2		$	54.6		$	1.04		$	144.0	$	39.0	$	1.74
Adjustments:
Acquisition and integration costs		16.3			5.0			0.19			8.8		2.9		0.10
Acquisition-related intangible asset amortization		28.8			8.7			0.34			27.7		10.1		0.29
Field corrective actions		(1.7	)		(0.6	)		(0.02	)		12.2		4.0		0.14
Employee benefits change		(13.4	)		(5.1	)		(0.14	)		-		-		-
FDA remediation expenses		4.5			1.7			0.05			6.1		2.3		0.06
Litigation charge		-			-			-			0.5		0.5		-
Special charges		37.1			10.9			0.45			5.7		1.8		0.06
Foreign valuation allowance and acquisition dividend tax		-			(20.3	)		0.35			-		-		-
International tax reorganization		-			-			-			-		0.8		(0.01	)
Adjusted Earnings	$	186.8		$	54.9		$	2.25		$	205.0	$	61.4	$	2.38

1  Total does not add due to rounding

The tax rate for fiscal 2014 was 47.4 percent compared to 27.1 percent in the prior year. The effective tax rate for fiscal 2014 is higher than fiscal 2013 due primarily to the tax expense recognized in the second quarter of this year to establish a full valuation allowance in France of $19.6 million related to its net deferred tax assets, primarily net operating losses. The effective rate for 2013 was favorably impacted by $5.4 million of period tax benefits consisting primarily of the one-time “catch-up” for the reinstatement of the research and development tax credit, the release of various tax reserves upon statute expiration and the favorable impact of tax law changes in select countries.

The adjusted effective tax rates were 29.4 and 30.0 percent for fiscal years 2014 and 2013.

Net income was $60.6 million in fiscal 2014 compared to $105.0 million in the prior year period, a decrease of 42.3 percent. On an adjusted basis, net income decreased $11.7 million, or 8.1 percent in 2014 compared to 2013. Diluted earnings per share decreased 40.2 percent on a reported basis and 5.5 percent on an adjusted basis over the same period.

Business Segment Results of Operations

	Years Ended September 30				Percentage Change
								Constant
(Dollars in millions)	2014		2013		As Reported			Currency
Revenue:
North America	$	888.9	$	958.3		(7.2	)		(6.9	)
Surgical and Respiratory Care		301.6		245.8		22.7			22.0
International		495.6		512.1		(3.2	)		(5.1	)
Total revenue	$	1,686.1	$	1,716.2		(1.8	)		(2.2	)
Divisional income:
North America	$	165.0	$	201.7		(18.2	)
Surgical and Respiratory Care		68.6		56.8		20.8
International		24.9		33.5		(25.7	)

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North America

North America revenue decreased 7.2 percent. Capital sales were down 6.6 percent related primarily to volume declines in our patient support systems sales, which were down in a challenging and uncertain North American healthcare environment where there is continued pressure on capital spending. Rental revenue declined by 8.6 percent primarily due to lower volumes, continued pricing pressure, and our discontinuance of third-party payer therapy product rentals.

North America divisional income decreased due primarily to lower revenue and the resulting decline in gross profit. The lower gross profit and somewhat higher research and development expenses were only partially offset by lower operating expenses, most notably lower selling and variable compensation costs, along with benefits from previously implemented restructuring programs. Capital margins were down primarily on lower volumes and unfavorable product mix. Rental margins were down as the impact of the lower revenue could not be fully offset by lower depreciation expense and reduced field service costs.

Surgical and Respiratory Care

Surgical and Respiratory Care revenue increased 22.7 percent. Capital sales increased 30.1 percent related to higher sales volumes primarily in our surgical businesses and the impact of the Trumpf acquisition. Excluding the Trumpf acquisition, capital sales increased 8.9 percent. Rental revenue increased slightly on improved volumes, offsetting continued pricing pressure.

Surgical and Respiratory Care divisional income increased on the higher sales volumes and the resulting higher gross profit, despite somewhat lower gross margins due to the dilutive impact of the Trumpf acquisition. The higher gross profit was partially offset by increased research and development and other operating expense spending, generally driven by the Trumpf acquisition and higher corporate expense allocations of $2.8 million. Overall, Trumpf contributed favorably to the improvement in divisional income.

International

International revenue decreased 3.2 percent. International capital sales decreased 4 percent, or 5.7 percent on a constant currency basis. These declines are due primarily to weaker sales in the Middle East and Europe. Sales in the Middle East region tend to fluctuate based on the timing of large tender deals, while Europe’s healthcare environment continues to face pressure on capital spending similar to that in North America. Rental revenue increased 3.9 percent and was flat on a constant currency basis.

International divisional income decreased 25.7 percent. Despite lower revenue, overall gross profit was only down slightly as higher margins on improved product mix offset most of the impacts of lower volumes. However, higher operating expenses were driven by increased research and development spending and higher operating costs associated with the employee related investments in developing markets and higher corporate allocations of $1.5 million.

LIQUIDITY AND CAPITAL RESOURCES

	Years Ended September 30
(Dollars in millions)	2015			2014			2013
Cash Flows Provided By (Used In):
Operating activities	$	213.8		$	210.3		$	263.2
Investing activities		(1,756.4	)		(294.5	)		(58.6	)
Financing activities		1,642.7			63.8			(161.5	)
Effect of exchange rate changes on cash		(6.6	)		(7.7	)		-
Increase (Decrease) in Cash and Cash Equivalents	$	93.5		$	(28.1	)	$	43.1

Net cash flows from operating activities and selected borrowings have represented our primary sources of funds for growth of the business, including capital expenditures and acquisitions. Our financing agreements contain certain restrictions relating to dividend payments, working capital or additional unsecured indebtedness, and stronger limitations with respect to secured indebtedness. Our debt agreements also contain no credit rating triggers. Credit rating changes can, however, impact the cost of borrowings under our credit facility described below and any potential future borrowings.

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Operating Activities

Cash provided by operating activities during fiscal 2015 was driven by net income, adjusted up for non-cash expenses including depreciation, amortization, stock compensation, and a pension settlement charge, offset by the provision for deferred income taxes and by changes in working capital. Cash provided by operating activities increased 1.7 percent from fiscal 2014, driven by improved working capital management, which more than offset lower net income, as adjusted for non-cash transactions.

Cash provided by operating activities during fiscal 2014 was driven primarily by net income, adjusted for the non-cash effects of depreciation and amortization, stock compensation, an impairment loss, and the provision for deferred taxes. The collection of receivables outstanding as of our previous year end and subsequent to the Trumpf acquisition date also contributed to operating cash flow. These sources of cash were only partially offset by other working capital activities. Cash provided by operating activities was down compared to the prior year on lower net income and lower net cash provided by working capital activities, primarily associated with lower receivable collections. These reductions were partially offset by lower tax payments in fiscal 2014.

Cash provided by operating activities during fiscal 2013 was driven by net income and improved working capital, including strong collections on receivables, adjusted by non-cash expenses related to depreciation and amortization, stock compensation, and deferred taxes.

Investing Activities

Cash used for investing activities during 2015 consisted mainly of capital expenditures and payments for acquisitions. Capital expenditures increased from the prior year due to investments in our rental fleet to support volume increases from recent contract wins. Payments for acquisitions increased due to the acquisition of Welch Allyn in September 2015.

Cash used for investing activities during 2014 consisted mainly of capital expenditures and payments for acquisitions. Capital expenditures decreased compared to the prior year, but payments for acquisitions increased primarily due to the purchases of Virtus and Trumpf.  

Cash used for investing activities during fiscal 2013 was driven by capital expenditures.

Financing Activities

Cash provided by financing activities during fiscal 2015 consisted mainly of new borrowings which were used to fund the Welch Allyn acquisition. Borrowings under our prior credit facility were also used to fund the higher rental fleet investment previously discussed. This was offset by treasury stock acquired, dividend payments, and payments to retire previously outstanding debt as this was replaced with the financing obtained in conjunction with the Welch Allyn acquisition. During the year ended September 30, 2015, we increased our dividends paid by $0.0375 per share compared to the prior year. This higher utilization of cash compared to the prior year period was more than offset by lower purchases of treasury stock and our borrowing activity.

Cash provided by financing activities during fiscal 2014 consisted mainly of borrowings on our existing credit facility which were used to fund acquisition activity. This was offset by treasury stock acquired of $71.8 million, payments on outstanding debt of $95.2 million, and dividend payments of $34.2 million. During the year ended September 30, 2014, we increased our dividends paid by $0.07 per share compared to the prior year. This higher utilization of cash was more than offset by our borrowing activity, lower purchases of treasury stock, and higher proceeds on the exercise of stock options.

Cash used in financing activities in fiscal 2013 primarily related to treasury stock acquired of $94.0 million, revolving and long-term debt payments of $45.1 million, and dividend payments to our shareholders of $31.2 million. These uses of cash were partially offset by cash proceeds from stock option exercises and other stock issuances under our employee stock purchase plan.

The treasury stock acquired balances referenced above refer to purchases in the open market and the repurchases of shares associated with employee payroll tax withholdings for restricted and deferred stock distributions.

Our debt-to-capital ratio was 65.9, 37.8, and 26.3 percent at September 30, 2015, 2014 and 2013. The increase in fiscal 2015 was attributable to the funding of the Welch Allyn acquisition, including the new borrowings obtained. Shareholders’ equity was also negatively impacted by treasury stock acquired and the other comprehensive losses associated with foreign currency translation. The increase in fiscal 2014 was attributable to increased borrowings used to fund the Trumpf acquisition and a decrease in shareholders’ equity due to treasury stock acquired and other comprehensive losses recognized associated with foreign currency translation and an increase in our net pension obligation.

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Other Liquidity Matters

In September 2015, the Company entered into four new credit facilities for purposes of financing the Welch Allyn acquisition as well as refinancing our previously outstanding revolving credit facility. These new facilities consisted of the following:

· $1.0 billion senior secured Term Loan A facility (“TLA Facility”), maturing in September 2020

· $800.0 million senior secured Term Loan B facility (“TLB Facility”), maturing in September 2022

· Senior secured revolving credit facility (“Revolving Credit Facility”), providing borrowing capacity of up to $500.0 million, maturing in September 2020

· $425.0 million of senior unsecured notes (“Senior Notes”), maturing in September 2023

The TLA Facility, TLB Facility, and Revolving Credit Facility (collectively, the “Senior Secured Credit Facilities”) all bear interest at variable rates which are currently less than 4.0 percent. These interest rates are based primarily on the London Interbank Offered Rate (LIBOR), but under certain conditions could also be based on the U.S. Federal Funds Rate or the U.S. Prime Rate, at the Company’s option. The TLA Facility and TLB Facility have required principal payments. The TLA Facility requires minimum principal payments of $50.0 million in fiscal 2016, $75.0 million in fiscal 2017, and $100.0 million annually thereafter, with the remaining unpaid principal balance due at maturity. The TLB Facility requires annual principal payments of $8.0 million with the remaining unpaid principal balance due at maturity. We will be able to voluntarily prepay outstanding loans under the TLA Facility and the TLB Facility at any time.

At September 30, 2015, there were no borrowings on the Revolving Credit Facility, but available borrowing capacity was $490.9 million after giving effect to $9.1 million of outstanding standby letters of credit. At September 30, 2014, there were $42.4 million of outstanding standby letters of credit under our previous revolving credit agreements, $39.8 million of which pertained to one standby letter of credit issued in connection with the Trumpf acquisition, which expired in January 2015. The availability of borrowings under our Revolving Credit Facility is subject to our ability at the time of borrowing to meet certain specified conditions, including compliance with covenants contained in the governing credit agreement.

The Senior Secured Credit Facilities are held with a syndicate of banks, which includes over 20 institutions. The general corporate assets of the Company and its subsidiaries collateralize these obligations. The credit agreement governing these facilities contains financial covenants which specify a maximum secured net leverage ratio and a minimum interest coverage ratio, as such terms are defined in the credit agreement. These financial covenants are measured at the end of each fiscal quarter, with the first measurement date on December 31, 2015. The required ratios vary through December 31, 2019 providing a gradually decreasing maximum secured net leverage ratio and a gradually increasing minimum interest coverage ratio, as set forth in the table below:

Fiscal Quarter Ended	Maximum Secured Net Leverage Ratio	Minimum Interest Coverage Ratio
December 31, 2015	4.75x	3.25x
December 31, 2016	4.50x	3.25x
December 31, 2017	4.00x	3.50x
December 31, 2018	3.50x	3.75x
December 31, 2019 and thereafter	3.00x	4.00x

The Senior Notes bear interest at a fixed rate of 5.75 percent annually. These notes were issued at par in a private placement offering and are not registered on any public market. All of the Senior Notes are outstanding as of September 30, 2015. We are not required to make any mandatory redemption or sinking fund payments with respect to the Notes, other than in certain circumstances such as a change in control or material sale of assets. We may redeem the notes prior to maturity, but doing so prior to September 1, 2021 would require payment of a premium on any amounts redeemed, the amount of which varies based on the timing of the redemption. The indenture governing the Senior Notes contains certain covenants which impose limitations on the amount of dividends we may pay and the amount of common shares we may repurchase in the open market, but we do not expect these covenants to affect our current dividend policy or open share repurchase program. The terms of this indenture also impose certain restrictions on the amount and type of additional indebtedness we may obtain in the future, as well as the types of liens and guarantees we may provide.

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We are in compliance with all applicable financial covenants as of September 30, 2015 and November 12, 2015.

We also have $43.4 million of unsecured debentures outstanding at various fixed interest rates as of September 30, 2015, classified as long-term in the Consolidated Balance Sheet.

Our primary pension plan invests in a variety of equity and debt securities. At September 30, 2015, our latest measurement date, our pension plans were underfunded by approximately $96.4 million. Based on our current funded status, we currently do not anticipate any contributions to our primary pension plan in fiscal 2016.

We intend to continue to pay quarterly cash dividends comparable to those paid in the periods covered by these financial statements. However, the declaration and payment of dividends by us will be subject to the sole discretion of our Board and will depend upon many factors, including our financial condition, earnings, capital requirements, covenants associated with debt obligations, legal requirements and other factors deemed relevant by our Board.

On September 8, 2015, we completed the acquisition of Welch Allyn for a purchase price of $2.1 billion, including the value of 8.1 million shares of common stock which were issued to the seller as consideration for the transaction. The cash portion of the purchase price was funded with the new credit facilities previously discussed. On August 1, 2014, we completed the acquisition of Trumpf for $223.6 million (net of cash acquired). We funded this transaction with a combination of cash on hand and borrowings under our prior revolving credit facility.

Over the long term, we intend to continue to pursue inorganic growth in certain areas of our business, but the timing, size or success of any acquisition effort and the related potential capital commitments cannot be predicted. 

During fiscal 2015, we purchased 1.2 million shares of our common stock for $54.8 million in the open market, leaving 64.7 million available for purchase. The common stock was acquired under a $190 million share repurchase program approved by the Board of Directors in September 2013, which does not have an expiration date. There are no plans to terminate this program in the future, but with the acquisition of Welch Allyn and the increased borrowings obtained to finance the transaction, we will suspend our share repurchase activity temporarily to focus on deleveraging. Repurchases may be made on the open market or via private transactions, and are used for general business purposes.

We believe that cash on hand and generated from operations, along with amounts available under our credit facility, will be sufficient to fund operations, working capital needs, capital expenditure requirements, and financing obligations for at least the next twelve months. However, disruption and volatility in the credit markets could impede our access to capital. Our $500.0 million revolving credit facility is with a syndicate of banks, which we believe reduces our exposure to any one institution and would still leave us with significant borrowing capacity in the event that any one of the institutions within the group is unable to comply with the terms of our agreement.

As of September 30, 2015, approximately 49 percent of the Company’s cash and cash equivalents are held by our subsidiaries in foreign countries. Portions of this may be subject to U.S. income taxation if repatriated to the U.S. However, cash and cash equivalents held by foreign subsidiaries are largely used for operating needs outside the U.S. Therefore, we have no need to repatriate this cash for other uses. We believe that cash on hand and generated from operations, along with amounts available under our credit facility, will be sufficient to fund operations, working capital needs, capital expenditure requirements and financing obligations.

Credit Ratings

During fiscal 2015, Standard and Poor’s Rating Services and Moody’s Investor Service issued credit ratings for Hill-Rom of BB+ and Ba2, respectively, with stable outlooks.

Other Uses of Cash

We expect capital spending in 2016 to be approximately $110 to $120 million. Capital spending will be monitored and controlled as the year progresses.

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements.

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Contractual Obligations, Contingent Liabilities and Commitments

To give a clear picture of matters potentially impacting our liquidity position, the following table outlines our contractual obligations as of September 30, 2015:

	Payments Due by Period
			Less Than			1 - 3		3 - 5	After 5
(Dollars in millions)	Total		1 Year			Years		Years	Years
Contractual Obligations
Long-term debt obligations	$	2,272.3	$	58.0	$	194.3	$	791.2	$	1,228.8
Interest payments relating to long-term debt (1)		561.3		78.7		166.2		164.0		152.4
Operating lease obligations		73.8		28.2		30.5		9.5		5.6
Pension and postretirement
health care benefit funding (2)		31.7		2.9		6.0		6.3		16.5
Purchase obligations (3)		174.8		132.0		31.3		11.2		0.3
Other long-term liabilities (4)		38.5		-		15.4		15.2		7.9
Total contractual cash obligations	$	3,152.4	$	299.8	$	443.7	$	997.4	$	1,411.5

(1) Interest payments on our long-term debt are projected based on the contractual rates of remaining debt securities.

(2) Based on our funded status as of September 30, 2015, we currently do not anticipate any further contributions to our master pension plan in fiscal 2016.

(3) Purchase obligations represent contractual obligations under various take-or-pay arrangements executed in the normal course of business. These commitments represent future purchases in line with expected usage to obtain favorable pricing. Also included are obligations arising from purchase orders for which we have made firm commitments. As a result, we believe that the purchase obligations portion of our contractual obligations is substantially those obligations for which we are certain to pay, regardless of future facts and circumstances. We expect to fund purchase obligations with operating cash flows and current cash balances.

(4) Other long-term liabilities include deferred compensation arrangements, self-insurance reserves, and other various liabilities.

We also had commercial commitments related to standby letters of credit at September 30, 2015 of $9.1 million.

In addition to the contractual obligations and commercial commitments disclosed above, we also have a variety of other agreements related to the procurement of materials and services and other commitments. While many of these agreements are long-term supply agreements, some of which are exclusive supply or complete requirements-based contracts, we are not committed under these agreements to accept or pay for requirements which are not needed to meet production needs. Also, we have an additional $5.8 million of other liabilities as of September 30, 2015, which represent uncertain tax positions for which it is not possible to determine in which future period the tax liability might be settled.

In conjunction with our acquisition and divestiture activities, we have entered into certain guarantees and indemnifications of performance, as well as, non-competition agreements for varying periods of time. Potential losses under the indemnifications are generally limited to a portion of the original transaction price, or to other lesser specific dollar amounts for certain provisions. Guarantees and indemnifications with respect to acquisition and divestiture activities, if triggered, could have a materially adverse impact on our financial condition and results of operations.

We are also subject to potential losses from adverse litigation results that are not accounted for by a self-insurance or other reserves; however, such potential losses are not quantifiable at this time, and may never occur.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our accounting policies, including those described below, require management to make significant estimates and assumptions using information available at the time the estimates are made. Such estimates and assumptions significantly affect various reported amounts of assets, liabilities, revenue and expenses. If future experience differs materially from these estimates and assumptions, results of operations and financial condition could be affected. Our most critical accounting policies are described below.

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Revenue Recognition

Net revenue reflects gross revenue less sales discounts and allowances and customer returns for product sales and rental revenue reserves. Revenue is evaluated under the following criteria and recognized when each is met:

• Evidence of an arrangement: An agreement with the customer reflecting the terms and conditions to deliver products or services serves as evidence of an arrangement.

• Delivery: For products, delivery is considered to occur upon receipt by the customer and the transfer of title and risk of loss. For rental services, delivery is considered to occur when the services are rendered.

• Fixed or determinable price: The sales price is considered fixed or determinable if it is not subject to refund or adjustment.

• Collection is deemed probable: At or prior to the time of a transaction, credit reviews of each customer are performed to determine the creditworthiness of the customer. Collection is deemed probable if the customer is expected to be able to pay amounts under the arrangement as those amounts become due. If collection is not probable, revenue is recognized when collection becomes probable, generally upon cash collection.

As a general interpretation of the above guidelines, revenue for health care and surgical products are generally recognized upon delivery of the products to the customer and their assumption of risk of loss and other risks and rewards of ownership. Local business customs and non-standard sales terms can sometimes result in deviations to this normal practice in certain instances; however, in no case is revenue recognized prior to the transfer of risk of loss and rewards of ownership.

For non-invasive therapy products and medical equipment management services, the majority of product offerings are rental products for which revenue is recognized consistent with the rendering of the service and use of products. For The Vest® product, revenue is generally recognized at the time of receipt of authorization for billing from the applicable paying entity as this serves as evidence of the arrangement and sets a fixed or determinable price.

For health care products and services aimed at improving operational efficiency and asset utilization, various revenue recognition techniques are used, depending on the offering. Arrangements to provide services, routinely under separately sold service and maintenance contracts, result in the deferral of revenue until specified services are performed. Service contract revenue is generally recognized ratably over the contract period, if applicable, or as services are rendered. Product-related goods are generally recognized upon delivery to the customer.

Revenue and Accounts Receivable Reserves

Revenue is presented in the Statements of Consolidated Income net of certain discounts, GPO fees, and sales adjustments. For product sales, we record reserves resulting in a reduction of revenue for contractual discounts, as well as price concessions and product returns. Likewise, rental revenue reserves, reflecting contractual and other routine billing adjustments, are recorded as a reduction of revenue. Reserves for revenue are estimated based upon historical rates for revenue adjustments.

Provisions for doubtful accounts are recorded as a component of operating expenses and represent our best estimate of the amount of probable credit losses and collection risk in our existing accounts receivable. We determine such reserves based on historical write-off experience by industry. Receivables are generally reviewed on a pooled basis based on historical collection experience for each receivable type and are also reviewed individually for collectability. Account balances are charged against the allowance when we believe it is probable the receivable will not be recovered. We do not have any off-balance sheet credit exposure related to our customers.

If circumstances change, such as higher than expected claims denials, payment defaults, changes in our business composition or processes, adverse changes in general economic conditions, instability or disruption of credit markets, or an unexpected material adverse change in a major customer’s or payer’s ability to meet its obligations, our estimates of the realizability of trade receivables could be reduced by a material amount.

Liabilities for Loss Contingencies Related to Lawsuits

We are involved on an ongoing basis in claims, investigations and lawsuits relating to our operations, including patent infringement, business practices, commercial transactions and other matters. The ultimate outcome of these actions 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 claims, investigations and lawsuits. The ultimate outcome of these actions could have a material adverse effect on our financial condition, results of operations and cash flow.

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We are also involved in other possible claims, including product and general liability, workers’ compensation, auto liability and employment related matters. Such claims in the United States have deductibles and self-insured retentions ranging from $25 thousand to $1.0 million per occurrence or per claim, depending upon the type of coverage and policy period. International deductibles and self-insured retentions are lower. We are also generally self-insured up to certain stop-loss limits for certain employee health benefits, including medical, drug and dental. Our policy is to estimate reserves based upon a number of factors including known claims, estimated incurred but not reported claims and outside actuarial analysis, which are based on historical information along with certain assumptions about future events. Such estimated reserves are classified as Other Current Liabilities and Other Long-Term Liabilities within the Consolidated Balance Sheets.

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 could differ from those estimates. 

Goodwill and Intangible Assets

We account for acquired businesses using the acquisition method of accounting. This method requires that the identifiable assets acquired and liabilities assumed be measured at their fair value, with goodwill being the excess value of consideration paid less the fair value of the net identifiable assets acquired. Judgments and estimates are required in the determination of fair values, including the setting of discount rates, growth rates and forecasted business results for the acquired business and portions of the acquired business, along with estimated useful lives. Changes in these judgments or estimates can have a material impact on the valuation of the respective assets and liabilities acquired and our results of operations.

We perform an impairment assessment on goodwill and other indefinite-lived intangibles annually during the third fiscal quarter, or whenever events or changes in circumstances indicate that the carrying value of a reporting unit may not be recoverable. These events or conditions include, but are not limited to, a significant adverse change in the business environment; regulatory environment or legal factors; a current period operating or cash flow loss combined with a history of such losses or a projection of continuing losses; a substantial decline in market capitalization of our stock; or a sale or disposition of a significant portion of a reporting unit.

The goodwill impairment assessment requires either evaluating qualitative factors or performing a quantitative assessment to determine if a reporting unit’s carrying value is likely to exceed its fair value. The qualitative goodwill impairment assessment requires evaluating factors to determine that a reporting unit’s carrying value would not more likely than not exceed its fair value. As part of our goodwill qualitative testing process for each reporting unit, when utilized, we evaluate various factors that are specific to the reporting unit as well as industry and macroeconomic factors in order to determine whether it is reasonably likely to have a material impact on the fair value of our reporting units. Examples of the factors that are considered include the results of the most recent impairment test, current and long-range forecasted financial results, and changes in the strategic outlook or organizational structure of the reporting units. The long-range financial forecasts of the reporting units, which are based upon management’s long-term view of our markets and are used by senior management and the Board of Directors to evaluate operating performance, are compared to the forecasts used in the prior year analysis to determine if management expectations for the business have changed. Management changes in strategic outlook or organizational structure represent internally driven strategic or organizational changes that could have a material impact on our results of operations or product offerings. Industry, market changes and macroeconomic indicators represent our view on changes outside of the Company that could have a material impact on our results of operations, product offerings or future cash flow forecasts. In the event we were to determine that a reporting unit’s carrying value would more likely than not exceed its fair value, quantitative testing would be performed comparing carrying values to estimated fair values. Changes in management intentions, market conditions, operating performance and other similar circumstances could affect the assumptions used in this qualitative impairment test. Changes in the assumptions could result in impairment charges that could be material to our Consolidated Financial Statements in any given period.

Quantitative testing involves a two-step process. The first step, used to identify potential impairment, is a comparison of each reporting unit’s estimated fair value to its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, applicable goodwill is considered not to be impaired. If the carrying value exceeds fair value, there is an indication of impairment and the second step is performed to measure the amount of the impairment. The second step requires us to calculate an implied fair value of goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination, which is the excess of the fair value of the reporting unit, as determined in the first step, over the aggregate fair values of the individual assets, liabilities and identifiable intangibles as if the reporting unit was being acquired in a business combination. If the goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded for the excess.

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Measurement of the fair value of reporting units in the first step of a quantitative impairment process requires significant management judgment with respect to forecasted sales, gross margin and selling, general and administrative expenses, capital expenditures, the selection and use of an appropriate discount rate, the selection of comparable public companies and the determination of an appropriate control premium. In addition, the use of third-party appraisals of significant tangible and intangible assets as part of the second step of the impairment test also requires management judgment related to certain inputs and assumptions. There are inherent uncertainties related to each of the above listed assumptions and inputs, and our judgment in applying them. The use of different assumptions, estimates or judgments in either step of the process could trigger the need for an impairment charge, or materially increase or decrease the amount of any such impairment charge.

Retirement Benefit Plans

We sponsor retirement and postretirement benefit plans covering select employees. Expense recognized in relation to these defined benefit retirement and postretirement health care plans is based upon actuarial valuations and inherent in those valuations are key assumptions including discount and mortality rates, and where applicable, expected returns on assets, projected future salary rates and projected health care cost trends. The discount rates used in the valuation of our defined benefit pension and postretirement plans are evaluated annually based on current market conditions. In setting these rates we utilize long-term bond indices and yield curves as a preliminary indication of interest rate movements, and then make adjustments to the respective indices to reflect differences in the terms of the bonds covered under the indices in comparison to the projected outflow of our obligations. Our overall expected long-term rate of return on pension assets is based on historical and expected future returns, which are inflation adjusted and weighted for the expected return for each component of the investment portfolio. Our rate of assumed compensation increase is also based on our specific historical trends of past wage adjustments.

Changes in retirement and postretirement benefit expense and the recognized obligations may occur in the future as a result of a number of factors, including changes to any of these assumptions. Our expected rate of return on pension plan assets was 6.8 percent for fiscal 2015 and 7.0 percent for fiscal 2014 and 2013. At September 30, 2015, we had pension plan assets of $219.1 million. A 25 basis point increase in the expected rate of return on pension plan assets reduces annual pension expense by approximately $0.6 million. Differences between actual and projected investment returns, especially in periods of significant market volatility, can also impact estimates of required pension contributions. The discount rate for our retirement obligation was 4.4 percent in 2015, 4.5 percent in 2014 and 5.0 percent in 2013. The discount rate for our postretirement obligations may vary up to 200 basis points from that of our retirement obligations. For each 50 basis point change in the discount rate, the impact to annual pension expense ranges from an increase of $2.4 million to a decrease of $2.2 million, while the impact to our postretirement health care expense would be less than $0.1 million. Impacts from assumption changes could be positive or negative depending on the direction of the change in rates.

Income Taxes

We compute our income taxes using an asset and liability approach to reflect the net tax effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and the corresponding income tax amounts. We have a variety of deferred tax assets in numerous tax jurisdictions. These deferred tax assets are subject to periodic assessment as to recoverability and if it is determined that it is more likely than not that the benefits will not be realized, valuation allowances are recognized. We have recorded valuation allowances against certain of our deferred tax assets, primarily those related to foreign tax attributes in countries with poor operating results and certain other domestic tax attributes. In evaluating whether it is more likely than not that we would recover these deferred tax assets, future taxable income, the reversal of existing temporary differences and tax planning strategies are considered.

We believe that our estimates for the valuation allowances recorded against deferred tax assets are appropriate based on current facts and circumstances. We currently have $40.7 million of valuation allowances on deferred tax assets, on a tax-effected basis, relating primarily to certain foreign deferred tax attributes and state tax credit carryforwards.

We account for uncertain income tax positions using a threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The difference between the tax benefit recognized in the financial statements for an uncertain income tax position and the tax benefit claimed in the tax return is referred to as an unrecognized tax benefit.

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We also have on-going audits in various stages of completion with the IRS and several state and foreign jurisdictions, one or more of which may conclude within the next 12 months. Such settlements could involve some or all of the following: the payment of additional taxes, the adjustment of certain deferred taxes and/or the recognition of previously unrecognized tax benefits. The resolution of these matters, in combination with the expiration of certain statutes of limitations in various jurisdictions, make it reasonably possible that our unrecognized tax benefits may decrease as a result of either payment or recognition by approximately $0.5 to $1.5 million in the next twelve months, excluding interest.

Guarantees

We routinely grant limited warranties on our products with respect to defects in material and workmanship. The terms of these warranties are generally one year, however, certain components and products have substantially longer warranty periods. We recognize a reserve with respect to these obligations at the time of product sale, with subsequent warranty claims recorded directly against the reserve. The amount of the warranty reserve is determined based on historical trend experience for the covered products. For more significant warranty-related matters which might require a broad-based correction, separate reserves are established when such events are identified and the cost of correction can be reasonably estimated.

Inventory

We review the net realizable value of inventory on an ongoing basis, considering factors such as excess, obsolescence, and other items. We record an allowance for estimated losses when the facts and circumstances indicate that particular inventories will not be sold at prices in excess of current carrying costs. These estimates are based on historical experience and expected future trends. If future market conditions vary from those projected, and our estimates prove to be inaccurate, we may be required to write down inventory values and record an adjustment to cost of revenue.

Recently Issued Accounting Guidance

For a summary of recently issued accounting guidance applicable to us, see Note 1 of Notes to Consolidated Financial Statements included under Part II, Item 8 of this Form 10-K.

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Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, including fluctuations in interest rates, the impact of economic downturns, collection risk associated with our accounts and notes receivable portfolio, including the effects of various austerity measures initiated by some governmental authorities, and variability in currency exchange rates. We have established policies, procedures and internal processes governing our management of market risks and the use of financial instruments to manage our exposure to such risks.

We are subject to variability in foreign currency exchange rates in our international operations. Exposure to this variability is periodically managed primarily through the use of natural hedges, whereby funding obligations and assets are both managed in the local currency. We, from time-to-time, enter into currency exchange agreements to manage our exposure arising from fluctuating exchange rates related to specific and forecasted transactions. We operate this program pursuant to documented corporate risk management policies and do not enter into derivative transactions for speculative purposes. The sensitivity of earnings and cash flows to variability in exchange rates is assessed by applying an appropriate range of potential rate fluctuations to our assets, obligations and projected results of operations denominated in foreign currencies.

Our currency risk consists primarily of foreign currency denominated firm commitments and forecasted foreign currency denominated intercompany and third-party transactions. At September 30, 2015, we had outstanding foreign exchange derivative contracts in notional amounts of $6.7 million with the fair value of these contracts approximating original contract value. The maximum length of time over which we hedge transaction exposure is 15 months. Derivative gains/ (losses), initially reported as a component of accumulated other comprehensive income (loss), are reclassified to earnings in the period when the forecasted transaction affects earnings.

We are exposed to market risk from fluctuations in interest rates. The Company sometimes manages its exposure to interest rate fluctuations through the use of interest rate swaps (cash flow hedges). As of September 30, 2015, we did not have any outstanding interest rate swaps.

Our pension plan assets, which were approximately $219.1 million at September 30, 2015, are also subject to volatility that can be caused by fluctuations in general economic conditions. Our pension plans were underfunded at September 30, 2015 by approximately $96.4 million, an increase over the prior year based upon a decrease in the discount rate and lower returns on plan assets. Continued market volatility and disruption could cause declines in asset values and low interest rates could continue to keep our pension obligation high. Should such trends continue, we may need to make additional pension plan contributions and our pension expense in future years may increase. Investment strategies and policies are set by the plan’s fiduciaries. Long-term strategic investment objectives utilize a diversified mix of equity and fixed income securities to preserve the funded status of the trusts and balance risk and return. The plan fiduciaries oversee the investment allocation process, which includes selecting investment managers, setting long-term strategic targets and monitoring asset allocations. Target allocation ranges are guidelines, not limitations, and plan fiduciaries may occasionally approve allocations above or below a target range or elect to rebalance the portfolio within the targeted range.

Trust assets are invested subject to the following policy restrictions: short-term securities must be rated A2/P2 or higher; all fixed-income securities shall have a credit quality rating “BBB” or higher; investments in equities in any one company may not exceed 10 percent of the equity portfolio.

40

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Financial Statements:
Management’s Report on Internal Control Over Financial Reporting	42
Report of Independent Registered Public Accounting Firm	43
Statements of Consolidated Income for the fiscal years ended September 30, 2015, 2014 and 2013	44
Statements of Consolidated Comprehensive Income (Loss) for the fiscal years ended September 30, 2015, 2014 and 2013	45
Consolidated Balance Sheets at September 30, 2015 and 2014	46
Statements of Consolidated Cash Flows for the fiscal years ended September 30, 2015, 2014 and 2013	47
Statements of Consolidated Shareholders’ Equity for the fiscal years ended September 30, 2015, 2014 and 2013	48
Notes to Consolidated Financial Statements	49
Financial Statement Schedule for the fiscal years ended September 30, 2015, 2014 and 2013:
Schedule II — Valuation and Qualifying Accounts	83
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto.

41

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting for Hill-Rom Holdings, Inc. (“we” or “our”). Our internal control over financial reporting is a process designed, under the supervision of our principal executive, principal financial and principal accounting officers, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our Consolidated Financial Statements for external purposes in accordance with accounting principles generally accepted in the United States. Our internal control over financial reporting includes policies and procedures that:

1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of our Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States and that our receipts and expenditures are being made only in accordance with authorizations of our management and our Board of Directors; and

3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our Consolidated Financial Statements.

Because of its inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Management performed an assessment of the effectiveness of our internal control over financial reporting as of September 30, 2015 using criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on these criteria, management concluded that we maintained effective internal control over financial reporting as of September 30, 2015.

The effectiveness of our internal control over financial reporting as of September 30, 2015 has been audited by PricewaterhouseCoopers LLP, our independent registered public accounting firm, who also audited our Consolidated Financial Statements, as stated in their report included herein.

We have excluded Welch Allyn Holdings, Inc. and its subsidiaries (collectively, “Welch Allyn”) from our assessment of internal control over financial reporting as of September 30, 2015, because Welch Allyn was acquired by us in a purchase business combination in the fourth quarter of 2015. Welch Allyn is a wholly-owned subsidiary whose total assets and total revenue represent 9 percent and 3 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended September 30, 2015.

/s/ John J. Greisch

John J. Greisch

President and Chief Executive Officer

/s/ Steven J. Strobel

Steven J. Strobel

Senior Vice President and Chief Financial Officer

/s/ Richard G. Keller

Richard G. Keller

Vice President, Controller and Chief Accounting Officer

42

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Hill-Rom Holdings, Inc.

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Hill-Rom Holdings, Inc. and its subsidiaries at September 30, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2015 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integratedaudits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in Management's Report on Internal Control over Financial Reporting, management has excluded Welch Allyn Holdings, Inc. and its subsidiaries (collectively, “Welch Allyn”) from its assessment of internal control over financial reporting as of September 30, 2015, because they were acquired by the Company in a purchase business combination during 2015. We have also excluded Welch Allyn from our audit of internal control over financial reporting. Welch Allyn is a wholly-owned subsidiary whose total assets and total revenue represent 9 percent and 3 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended September 30, 2015.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Indianapolis, Indiana

November 19, 2015

43

Hill-Rom Holdings, Inc. and Subsidiaries

STATEMENTS OF CONSOLIDATED INCOME

(In millions, except per share data)

	Years Ended September 30
	2015			2014			2013
Net Revenue
Capital sales	$	1,604.5		$	1,301.4		$	1,308.3
Rental revenue		383.7			384.7			407.9
Total revenue		1,988.2			1,686.1			1,716.2
Cost of Revenue
Cost of goods sold		921.2			730.2			747.8
Rental expenses		186.7			176.0			188.1
Total cost of revenue		1,107.9			906.2			935.9
Gross Profit		880.3			779.9			780.3
Research and development expenses		91.8			71.9			70.2
Selling and administrative expenses		664.2			548.3			549.5
Special charges (Note 8)		41.2			37.1			5.7
Operating Profit		83.1			122.6			154.9
Interest expense		(18.4	)		(9.8	)		(9.5	)
Investment income and other, net		0.4			2.4			(1.4	)
Income Before Income Taxes		65.1			115.2			144.0
Income tax expense (Note 9)		18.3			54.6			39.0
Net Income		46.8			60.6			105.0
Less:  Net loss attributable to noncontrolling interests		(0.9	)		-			-
Net Income Attributable to Common Shareholders	$	47.7		$	60.6		$	105.0
Net Income Attributable to Common Shareholders
per Common Share - Basic	$	0.83		$	1.05		$	1.75
Net Income Attributable to Common Shareholders
per Common Share - Diluted	$	0.82		$	1.04		$	1.74
Dividends per Common Share	$	0.6325		$	0.5950		$	0.5250
Average Common Shares Outstanding - Basic (thousands) (Note 10)		57,249			57,555			59,910
Average Common Shares Outstanding - Diluted (thousands) (Note 10)		58,536			58,523			60,250

See Notes to Consolidated Financial Statements.

44

Hill-Rom Holdings, Inc. and Subsidiaries

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

(In millions)

	Years Ended September 30
	2015			2014			2013
Net Income	$	46.8		$	60.6		$	105.0
Other Comprehensive Income (Loss), Net of Tax:
Available-for-sale securities and currency hedges		-			0.3			0.1
Foreign currency translation adjustment		(58.6	)		(29.6	)		12.6
Change in pension and postretirement defined benefit plans		(8.1	)		(9.1	)		29.6
Total Other Comprehensive Income (Loss), Net of Tax		(66.7	)		(38.4	)		42.3
Total Comprehensive Income (Loss)		(19.9	)		22.2			147.3
Less:  Comprehensive loss attributable to noncontrolling interests		(0.9	)		-			-
Total Comprehensive Income (Loss) Attributable to Common Shareholders	$	(19.0	)	$	22.2		$	147.3

See Notes to Consolidated Financial Statements.

45

Hill-Rom Holdings, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In millions, except share amounts)

	September 30
	2015			2014
ASSETS
Current Assets
Cash and cash equivalents	$	192.8		$	99.3
Trade accounts receivable, less allowances of $26.0 in 2015 and $31.4 in 2014 (Note 1)		494.7			411.0
Inventories (Note 1)		267.4			176.2
Deferred income taxes (Notes 1 and 9)		77.0			40.9
Other current assets		109.1			51.9
Total current assets		1,141.0			779.3
Property, plant, and equipment (Note 1)		976.4			849.6
Less accumulated depreciation		(598.0	)		(588.1	)
Property, plant, and equipment, net		378.4			261.5
Intangible assets:
Goodwill (Notes 1, 2 and 3)		1,610.5			399.8
Software and other, net (Notes 1 and 2)		1,247.7			261.1
Deferred income taxes (Notes 1 and 9)		21.6			23.0
Other assets		58.4			26.6
Total Assets	$	4,457.6		$	1,751.3
LIABILITIES
Current Liabilities
Trade accounts payable	$	136.3		$	112.7
Short-term borrowings (Note 4)		58.0			126.9
Accrued compensation		171.8			89.2
Accrued product warranties (Note 1)		32.1			28.4
Accrued rebates		33.7			7.1
Other current liabilities		146.9			78.0
Total current liabilities		578.8			442.3
Long-term debt (Note 4)		2,175.2			364.1
Accrued pension and postretirement benefits (Note 6)		118.8			76.9
Deferred income taxes (Notes 1 and 9)		380.6			31.0
Other long-term liabilities		47.3			30.5
Total Liabilities		3,300.7			944.8
Commitments and Contingencies (Note 13)
SHAREHOLDERS' EQUITY (Note 7)
Capital Stock:
Preferred stock - without par value:
Authorized - 1,000,000 shares; none issued or outstanding		-			-
Common stock - without par value:
Authorized - 199,000,000
Issued - 88,457,634 shares in 2015 and 80,323,912 shares in 2014		4.4			4.4
Additional paid-in-capital		562.0			134.1
Retained earnings		1,509.9			1,499.8
Accumulated other comprehensive loss  (Note 1)		(140.8	)		(74.1	)
Treasury stock, common shares at cost:  2015 - 23,291,738 and 2014 - 22,884,001		(788.6	)		(757.7	)
Total Shareholders' Equity Attributable to Common Shareholders		1,146.9			806.5
Noncontrolling interests		10.0			-
Total Shareholders' Equity		1,156.9			806.5
Total Liabilities and Shareholders' Equity	$	4,457.6		$	1,751.3

See Notes to Consolidated Financial Statements.

46

Hill-Rom Holdings, Inc. and Subsidiaries

STATEMENTS OF CONSOLIDATED CASH FLOWS

(In millions)

	Years Ended September 30
	2015			2014			2013
Operating Activities
Net income	$	46.8		$	60.6		$	105.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		73.6			65.4			71.2
Amortization		10.5			12.2			17.9
Acquisition-related intangible asset amortization		34.1			28.8			27.7
Provision for deferred income taxes		(22.3	)		3.9			(14.8	)
Loss on disposal of property, equipment leased to others,
intangible assets and impairments		0.5			7.2			1.5
Pension settlement charge		9.6			-			-
Stock compensation		25.0			18.0			13.5
Excess tax benefits from employee stock plans		(3.6	)		0.3			(0.3	)
Change in working capital excluding cash, current debt,
acquisitions and dispositions:
Trade accounts receivable		(39.7	)		17.1			30.8
Inventories		11.0			9.1			8.4
Other current assets		(7.7	)		(2.6	)		(6.5	)
Trade accounts payable		0.7			7.0			0.1
Accrued expenses and other liabilities		53.8			(12.5	)		(0.2	)
Other, net		21.5			(4.2	)		8.9
Net cash provided by operating activities		213.8			210.3			263.2
Investing Activities
Capital expenditures and purchases of intangible assets		(121.3	)		(62.7	)		(65.3	)
Proceeds on sale of property and equipment leased to others		1.5			2.4			5.9
Payment for acquisition of businesses, net of cash acquired		(1,638.7	)		(239.5	)		-
Refund on acquisition of businesses		-			4.6			0.8
Other		2.1			0.7			-
Net cash used in investing activities		(1,756.4	)		(294.5	)		(58.6	)
Financing Activities
Net change in short-term debt		(0.7	)		(0.2	)		-
Borrowings on revolving credit facility		95.0			252.0			-
Payments on revolving credit facility		(135.0	)		(57.0	)		(35.0	)
Proceeds from long-term debt		2,225.0			0.8			-
Payment of long-term debt		(401.6	)		(11.4	)		(10.1	)
Payment of acquired debt		-			(26.8	)		-
Repurchase of registered debentures		(5.9	)		-			-
Debt issuance costs		(50.3	)		-			-
Purchase of noncontrolling interest of former joint venture		(1.9	)		(1.3	)		(1.6	)
Payment of cash dividends		(37.1	)		(34.2	)		(31.2	)
Proceeds from exercise of stock options		12.1			11.5			7.6
Proceeds from stock issuance		2.8			2.5			2.5
Excess tax benefits from employee stock plans		3.6			(0.3	)		0.3
Treasury stock acquired		(63.3	)		(71.8	)		(94.0	)
Net cash provided by (used in) financing activities		1,642.7			63.8			(161.5	)
Effect of exchange rate changes on cash		(6.6	)		(7.7	)		-
Net Cash Flows		93.5			(28.1	)		43.1
Cash and Cash Equivalents
At beginning of period		99.3			127.4			84.3
At end of period	$	192.8		$	99.3		$	127.4
Supplemental cash flow information:
Cash paid for income taxes	$	49.1		$	44.4		$	68.1
Cash paid for interest	$	6.3		$	7.8		$	7.5
Non-cash investing and financing activities:
Treasury stock issued under stock compensation plans	$	32.4		$	20.6		$	18.4
Common stock issued for acquisition of businesses	$	416.3		$	-		$	-

See Notes to Consolidated Financial Statements.

47

Hill-Rom Holdings, Inc. and Subsidiaries

STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ EQUITY

(In millions, except share amounts)

											Accumulated									Total Equity
	Common Stock										Other			Common Stock						Attributable to
	Shares					Additional		Retained			Comprehensive			in Treasury						Common			Noncontrolling
	Outstanding			Amount		Paid-in-Capital		Earnings			Income (Loss)			Shares			Amount			Shareholders			Interests			Total
Balance at September 30, 2012		60,796,923		$	4.4	$	116.8	$	1,400.3		$	(78.0	)		19,526,989		$	(630.9	)	$	812.6		$	-		$	812.6
Net income		-			-		-		105.0			-			-			-			105.0			-			105.0
Other comprehensive income, net of tax of ($18.1)		-			-		-		-			42.3			-			-			42.3			-			42.3
Dividends		-			-		0.3		(31.5	)		-			-			-			(31.2	)		-			(31.2	)
Treasury shares acquired		(2,844,765	)		-		-		-			-			2,844,765			(94.0	)		(94.0	)		-			(94.0	)
Stock awards and option exercises		571,234			-		5.6		-			-			(571,234	)		18.4			24.0			-			24.0
Balance at September 30, 2013		58,523,392			4.4		122.7		1,473.8			(35.7	)		21,800,520			(706.5	)		858.7						858.7
Net income		-			-		-		60.6			-			-			-			60.6			-			60.6
Other comprehensive loss, net of tax of $4.9		-			-		-		-			(38.4	)		-			-			(38.4	)		-			(38.4	)
Dividends		-			-		0.4		(34.6	)		-			-			-			(34.2	)		-			(34.2	)
Treasury shares acquired		(1,709,523	)		-		-		-			-			1,709,523			(71.8	)		(71.8	)		-			(71.8	)
Stock awards and option exercises		626,042			-		11.0		-			-			(626,042	)		20.6			31.6			-			31.6
Balance at September 30, 2014		57,439,911			4.4		134.1		1,499.8			(74.1	)		22,884,001			(757.7	)		806.5						806.5
Net income		-			-		-		47.7			-			-			-			47.7			(0.9	)		46.8
Consolidation of noncontrolling interest		-			-		-		-			-			-			-			-			10.9			10.9
Other comprehensive loss, net of tax of $5.1		-			-		-		-			(66.7	)		-			-			(66.7	)		-			(66.7	)
Dividends		-			-		0.5		(37.6	)		-			-			-			(37.1	)		-			(37.1	)
Issuance of common stock		8,133,722			-		416.3		-			-			-			-			416.3			-			416.3
Treasury shares acquired		(1,373,321	)		-		-		-			-			1,373,321			(63.3	)		(63.3	)		-			(63.3	)
Stock awards and option exercises		965,584			-		11.1		-			-			(965,584	)		32.4			43.5			-			43.5
Balance at September 30, 2015		65,165,896		$	4.4	$	562.0	$	1,509.9		$	(140.8	)		23,291,738		$	(788.6	)	$	1,146.9		$	10.0		$	1,156.9

See Notes to Consolidated Financial Statements.

48

Hill-Rom Holdings, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in millions except per share data)

Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Hill-Rom Holdings, Inc. (the “Company,” “Hill-Rom,” “we,” “us,” or “our”) was incorporated on August 7, 1969 in the State of Indiana and is headquartered in Chicago, Illinois. We are a leading global medical technology company with more than 10,000 employees worldwide. We partner with health care providers in more than 100 countries by focusing on patient care solutions that improve clinical and economic outcomes in five core areas: Advancing Mobility, Wound Care and Prevention, Clinical Workflow, Surgical Safety and Efficiency, and Respiratory Health. Around the world, Hill-Rom's people, products, and programs work towards one mission: Enhancing outcomes for patients and their caregivers.

Basis of Presentation and Principles of Consolidation

The Consolidated Financial Statements include the accounts of Hill-Rom and its wholly-owned subsidiaries. In addition, we also consolidate variable interest entities (VIEs) where Hill-Rom is deemed to have a controlling financial interest. Intercompany accounts and transactions have been eliminated in consolidation, including the intercompany transactions with consolidated VIEs. Where our ownership interest is less than 100 percent, the noncontrolling interests are reported in our Consolidated Financial Statements. Certain prior year amounts have been reclassified to conform to current year presentation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. Examples of such estimates include our accounts receivable reserves (Note 1), accrued warranties (Note 1), the impairment of intangibles and goodwill (Note 3), income taxes (Notes 1 and 9) and commitments and contingencies (Note 13), among others.

Cash and Cash Equivalents

We consider investments in marketable securities and other highly liquid instruments with a maturity of three months or less at date of purchase to be cash equivalents. Investments which have no stated maturity are also considered cash equivalents. All of our marketable securities may be freely traded.

Trade Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and do not bear interest, unless the transaction is an installment sale with payment terms exceeding one year. Reserves for uncollectible accounts represent our best estimate of the amount of probable credit losses and collection risk in our existing accounts receivable. We determine such reserves based on historical write-off experience by industry and reimbursement platform. Receivables are generally reviewed on a pooled basis based on historical collection experience for each reimbursement and receivable type. Receivables for sales transactions are also reviewed individually for collectability. Account balances are charged against the allowance when we believe it is probable the receivable will not be recovered. We do not have any off-balance sheet credit exposure related to our customers. If circumstances change, such as higher than expected claims denials, payment defaults, changes in our business composition or processes, adverse changes in general economic conditions, unfavorable impacts of austerity measures initiated by some governmental authorities, instability or disruption of credit markets, or an unexpected material adverse change in a major customer’s or payer’s ability to meet its obligations, our estimates of the realizability of trade receivables could be reduced by a material amount.

Within rental revenue, the domestic third-party payers’ reimbursement process requires extensive documentation, which has had the effect of slowing both the billing and cash collection cycles relative to the rest of the business, and therefore, increasing total accounts receivable. Because of the extensive documentation required and the requirement to settle a claim with the primary payer prior to billing the secondary and/or patient portion of the claim, the collection period for a claim in a portion of our business may, in some cases, be extended.

49

We generally hold our trade accounts receivable until they are paid. Certain long-term receivables are occasionally sold to third parties; however, any recognized gain or loss on such sales has historically not been material.

Inventories

Inventories are valued at the lower of cost or market. Inventory costs are determined by the last-in, first-out (“LIFO”) method for approximately 21 and 29 percent of our inventories at September 30, 2015 and 2014. Costs for other inventories have been determined principally by the first-in, first-out (“FIFO”) method. Inventories consist of the following:

	September 30
	2015		2014
Finished products	$	133.2	$	93.5
Work in process		46.1		17.3
Raw materials		88.1		65.4
Total	$	267.4	$	176.2

If the FIFO method of inventory accounting, which approximates current cost, had been used for all inventories, they would have been approximately $3.2 million and $4.0 million higher than reported at September 30, 2015 and 2014.

Property, Plant and Equipment

Property, plant and equipment is recorded at cost and depreciated over the estimated useful life of the assets using principally the straight-line method. Ranges of estimated useful lives are as follows:

	Useful Life
Land improvements	6 - 15 years
Buildings and building equipment	10 - 40 years
Machinery and equipment	3 - 10 years
Equipment leased to others	2 -10 years

When property, plant and equipment is retired from service or otherwise disposed of, the cost and related amount of depreciation or amortization are eliminated from the asset and accumulated depreciation accounts. The difference, if any, between the net asset value and the proceeds on sale are charged or credited to income. Total depreciation expense for fiscal years 2015, 2014 and 2013 was $73.6 million, $65.4 million and $71.2 million. The major components of property and the related accumulated depreciation were as follows:

	September 30
	2015				2014
			Accumulated				Accumulated
	Cost		Depreciation		Cost		Depreciation
Land and land improvements	$	23.3	$	2.8	$	19.4	$	2.3
Buildings and building equipment		196.2		90.3		158.3		88.6
Machinery and equipment		369.5		226.5		321.3		213.7
Equipment leased to others		387.4		278.4		350.6		283.5
Total	$	976.4	$	598.0	$	849.6	$	588.1

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Intangible Assets

Intangible assets are stated at cost and consist predominantly of goodwill, software, patents, acquired technology, trademarks, and acquired customer relationship assets. With the exception of goodwill and certain trademarks, our intangible assets are amortized on a straight-line basis over periods generally ranging from 3 to 20 years.

We assess the carrying value of goodwill and non-amortizable intangibles annually, during the third quarter of each fiscal year, or more often if events or changes in circumstances indicate there may be impairment. Goodwill is allocated among the reporting units based on the relative fair value of those units.

The majority of our goodwill and many of our intangible assets are not deductible for income tax purposes. A summary of intangible assets and the related accumulated amortization and impairment losses follows:

	September 30
	2015				2014
			Amortization				Amortization
	Cost		and Impairment		Cost		and Impairment
Goodwill	$	2,083.3	$	472.8	$	872.6	$	472.8
Software		181.7		139.2		170.5		146.6
Patents and Trademarks		497.6		16.9		67.1		16.0
Other		872.8		148.3		306.8		120.7
Total	$	3,635.4	$	777.2	$	1,417.0	$	756.1

Amortization expense for fiscal years 2015, 2014 and 2013 was $44.6 million, $41.0 million and $45.6 million. As further discussed in Note 3, we have various indefinite-lived intangible assets representing trade names with a carrying value of $466.9 million at September 30, 2015 and $32.9 million at September 30, 2014. Amortization expense for all other intangibles is expected to approximate the following for each of the next five fiscal years and thereafter:

	Amount
2016	$	92.9
2017	$	85.8
2018	$	81.6
2019	$	78.0
2020	$	74.4
2021 and beyond	$	368.1

Software consists mainly of capitalized costs associated with internal use software, including applicable costs associated with the implementation/upgrade of our Enterprise Resource Planning systems. In addition, software includes capitalized development costs for software products to be sold. The net book value of computer software costs, included within intangible assets, was $42.5 million and $23.9 million at September 30, 2015 and 2014. Capitalized software costs are amortized on a straight-line basis over periods ranging from three to ten years. Software amortization expense approximated $9.8 million, $11.5 million and $17.8 million for fiscal years 2015, 2014 and 2013, and is included in the total intangibles amortization presented earlier.

Fair Value Measurements

Fair value measurements are classified and disclosed in one of the following three categories:

· Level 1:  Financial instruments with unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities.

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· Level 2:  Financial instruments with observable inputs other than those included in Level 1 such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

· Level 3:  Financial instruments with unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Unobservable inputs reflect our own assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs shall be developed based on the best information available in the circumstances, which might include our own data.

We record cash and cash equivalents, as disclosed on our Consolidated Balance Sheets, as Level 1 instruments and certain other investments and insignificant derivatives as either Level 2 or 3 instruments. Refer to Note 4 for disclosure of our debt instrument fair values.

Guarantees

We routinely grant limited warranties on our products with respect to defects in material and workmanship. The terms of these warranties are generally one year, however, certain components and products have substantially longer warranty periods. We recognize a reserve with respect to these obligations at the time of product sale, with subsequent warranty claims recorded directly against the reserve. The amount of the warranty reserve is determined based on historical trend experience for the covered products. For more significant warranty-related matters which might require a broad-based correction, separate reserves are established when such events are identified and the cost of correction can be reasonably estimated.

A reconciliation of changes in our warranty reserve is as follows:

	2015			2014			2013
Balance at October 1	$	28.4		$	38.1		$	42.2
Provision for warranties during the period		14.7			9.8			29.2
Warranty reserves acquired		7.1			3.0			(2.6	)
Warranty claims incurred during the period		(18.1	)		(22.5	)		(30.7	)
Balance at September 30	$	32.1		$	28.4		$	38.1

In the normal course of business we enter into various other guarantees and indemnities in our relationships with suppliers, service providers, customers, business partners and others. Examples of these arrangements would include guarantees of product performance, indemnifications to service providers and indemnifications of our actions to business partners. These guarantees and indemnifications have not historically nor do we expect them to have a material impact on our financial condition or results of operations, although indemnifications associated with our actions generally have no dollar limitations.

In conjunction with our acquisition and divestiture activities, we have entered into select guarantees and indemnifications of performance with respect to the fulfillment of our commitments under applicable purchase and sale agreements. The arrangements generally indemnify the buyer or seller for damages associated with breach of contract, inaccuracies in representations and warranties surviving the closing date and satisfaction of liabilities and commitments retained under the applicable contract. With respect to sale transactions, we also routinely enter into non-competition agreements for varying periods of time. Guarantees and indemnifications with respect to acquisition and divestiture activities, if triggered, could have a materially adverse impact on our financial condition and results of operations.

Accrued Rebates

We provide rebates and sales incentives to certain customer groups and distributors. Provisions for rebates are recorded as a reduction in net revenue when revenue is recognized. In some cases, rebates may be payable directly to the customer or distributor. We also have arrangements where we provide rebates to certain distributors that sell to end-user customers at prices determined under a contract between us and the end-user customer.

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Employee Benefits Change

During the second quarter of fiscal 2014, we implemented a new paid time off policy as part of our employee benefits programs, replacing certain previously existing vacation and sick time policies. In conjunction with these changes in policies, the vesting provisions with respect to the accumulation of paid time off were delayed resulting in the recognition and utilization of paid time off in the same benefits year. As a result of this change, significant portions of our existing accrued vacation balance were no longer necessary and we reversed $12.2 million in the second quarter of fiscal 2014 and an additional $1.2 million in the third quarter of fiscal 2014 to reflect the change in vesting provisions. All accounting with respect to this change in policy is complete.

Retirement Plans

We sponsor retirement and postretirement plans covering select employees. Expense recognized in relation to these defined benefit retirement plans and postretirement health care plans in the U.S. is based upon actuarial valuations and inherent in those valuations are key assumptions including discount rates, and where applicable, expected returns on assets, projected future salary rates and projected health care cost trends. The discount rates used in the valuation of our defined benefit pension and postretirement plans are evaluated annually based on current market conditions. In setting these rates we utilize long-term bond indices and yield curves as a preliminary indication of interest rate movements, and then make adjustments to the respective indices to reflect differences in the terms of the bonds covered under the indices in comparison to the projected outflow of our obligations. Our overall expected long-term rate of return on pension assets is based on historical and expected future returns, which are inflation adjusted and weighted for the expected return for each component of the investment portfolio. Our rate of assumed compensation increase is also based on our specific historical trends of wage adjustments.

We account for our defined benefit pension and other postretirement plans by recognizing the funded status of a benefit plan in the statement of financial position. We also recognize in accumulated other comprehensive income (loss) certain gains and losses that arose during the period. See Note 6 for key assumptions and further discussion related to our pension and postretirement plans.

Environmental Liabilities

Expenditures that relate to an existing condition caused by past operations, and which do not contribute to future revenue generation, are expensed. A reserve is established when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These reserves are determined without consideration of possible loss recoveries from third parties.

Specific costs included in environmental expense and reserves include site assessment, development of a remediation plan, clean-up costs, post-remediation expenditures, monitoring, fines, penalties and legal fees. Reserve amounts represent the expected undiscounted future cash outflows associated with such plans and actions.

Self Insurance

We are also involved in other possible claims, including product and general liability, workers’ compensation, auto liability and employment related matters. Such claims in the United States have deductibles and self-insured retentions ranging from $25 thousand to $1.0 million per occurrence or per claim, depending upon the type of coverage and policy period. International deductibles and self-insured retentions are lower. We are also generally self-insured up to certain stop-loss limits for certain employee health benefits, including medical, drug and dental. Our policy is to estimate reserves based upon a number of factors including known claims, estimated incurred but not reported claims and outside actuarial analysis, which are based on historical information along with certain assumptions about future events. Such estimated reserves are classified as Other Current Liabilities and Other Long-Term Liabilities within the Consolidated Balance Sheets.

Treasury Stock

Treasury stock consists of our common shares that have been issued, but subsequently reacquired. We account for treasury stock purchases under the cost method. When these shares are reissued, we use an average-cost method to determine cost. Proceeds in excess of cost are credited to additional paid-in capital.

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Revenue Recognition — Sales and Rentals

Net revenue reflects gross revenue less sales discounts and allowances and customer returns for product sales and rental revenue reserves. Revenue is evaluated under the following criteria and recognized when each is met:

• Evidence of an arrangement: An agreement with the customer reflecting the terms and conditions to deliver products or services serves as evidence of an arrangement.

• Delivery: For products, delivery is considered to occur upon transfer of title and risk of loss per the respective sales terms. For rental services, delivery is considered to occur when the services are rendered.

• Fixed or determinable price: The sales price is considered fixed or determinable if it is not subject to refund or measurable adjustment.

• Collection is deemed probable: At or prior to the time of a transaction, credit reviews of each customer are performed to determine the creditworthiness of the customer. Collection is deemed probable if the customer is expected to be able to pay amounts under the arrangement as those amounts become due. If collection is not probable, revenue is recognized when collection becomes probable, generally upon cash collection.

As a general interpretation of the above guidelines, revenue for health care and surgical products is generally recognized upon the assumption of risk of loss and other risks and rewards of ownership by the customer. Local business customs and non-standard sales terms can sometimes result in deviations to this normal practice in certain instances; however, in no case is revenue recognized prior to the transfer of risk of loss and rewards of ownership.

For non-invasive therapy products and medical equipment management services, the majority of product offerings are rental products for which revenue is recognized consistent with the rendering of the service and use of products. For The Vest® product, revenue is generally recognized at the time of receipt of authorization for billing from the applicable paying entity as this serves as evidence of the arrangement and sets a fixed or determinable price.

For health care products and services in the information technology space, various revenue recognition techniques are used, depending on the offering. Arrangements to provide services, routinely under separately sold service and maintenance contracts, result in the deferral of revenue until specified services are performed. Service contract revenue is generally recognized ratably over the contract period, if applicable, or as services are rendered. Product-related goods are generally recognized upon delivery to the customer.

Revenue is presented in the Statements of Consolidated Income net of certain discounts, GPO fees, and sales adjustments. For product sales, we record reserves resulting in a reduction of revenue for contractual discounts, as well as price concessions and product returns. Likewise, rental revenue reserves, reflecting contractual and other routine billing adjustments, are recorded as a reduction of revenue. Reserves for revenue are estimated based upon historical rates for revenue adjustments.

Taxes Collected from Customers and Remitted to Governmental Units

Taxes assessed by a governmental authority that are directly imposed on a revenue producing transaction between us and our customers, including but not limited to sales taxes, use taxes, and value added taxes, are accounted for on a net (excluded from revenue and cost) basis.

Cost of Revenue

Cost of goods sold for product sales consists primarily of purchased material costs, fixed manufacturing expense, variable direct labor, overhead costs and costs associated with the distribution and delivery of products to our customers. Rental expenses consist of costs associated directly with rental revenue, including depreciation, maintenance, logistics and service center facility and personnel costs.

Research and Development Costs

Research and development costs are expensed as incurred. Costs were $91.8 million, $71.9 million and $70.2 million for fiscal years 2015, 2014 and 2013.

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In addition, certain costs for software development technology held for sale are capitalized as intangibles and are amortized over a period of three to five years once the software is ready for its intended use. The amount capitalized during fiscal years 2015, 2014 and 2013 was approximately $2.6 million, $2.6 million and $2.4 million.

Advertising Costs

Advertising costs are expensed as incurred. Costs were $6.8 million, $7.3 million and $7.4 million for fiscal years 2015, 2014 and 2013.

Comprehensive Income

We include the net-of-tax effect of unrealized gains or losses on our available-for-sale securities, foreign currency translation adjustments and pension or other defined benefit postretirement plans’ actuarial gains or losses and prior service costs or credits in comprehensive income. See Note 5 for further details.

Foreign Currency Translation

The functional currency of foreign operations is generally the local currency in the country of domicile. Assets and liabilities of foreign operations are primarily translated into U.S. dollars at year-end rates of exchange and the income statements are translated at the average rates of exchange prevailing during the year. Adjustments resulting from translation of the financial statements of foreign operations into U.S. dollars are excluded from the determination of net income, but included as a component of accumulated other comprehensive income (loss). Foreign currency gains and losses resulting from foreign currency transactions are included in our results of operations and are not material.

Stock-Based Compensation

We account for stock-based compensation under fair value provisions. Stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period. In order to determine the fair value of stock options and other performance-based stock awards on the date of grant, we utilize a Binomial model. Inherent in this model are assumptions related to a volatility factor, expected life, risk-free interest rate, dividend yield and expected forfeitures. The risk-free interest rate is based on factual data derived from public sources. The volatility factor, expected life, dividend yield and expected forfeiture assumptions require judgment utilizing historical information, peer data and future expectations. Deferred stock (also known as restricted stock units (“RSUs”)) is measured based on the fair market price of our common stock on the date of grant, as reported by the New York Stock Exchange, multiplied by the number of units granted. See Note 7 for further details.

Income Taxes

The Company and our eligible domestic subsidiaries file a consolidated U.S. income tax return. Foreign operations file income tax returns in a number of jurisdictions. Deferred income taxes are computed using an asset and liability approach to reflect the net tax effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and the corresponding income tax amounts. We have a variety of deferred tax assets in numerous tax jurisdictions. These deferred tax assets are subject to periodic assessment as to recoverability. If it is determined that it is more likely than not that the benefits will not be realized, valuation allowances are recognized. In evaluating whether it is more likely than not that we would recover these deferred tax assets, future taxable income, the reversal of existing temporary differences and tax planning strategies are considered.

We account for uncertain income tax positions using a threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The difference between the tax benefit recognized in the financial statements for an uncertain income tax position and the tax benefit claimed in the tax return is referred to as an unrecognized tax benefit. See Note 9 for further details.

Derivative Instruments and Hedging Activity

We use derivative financial instruments to manage the economic impact of fluctuations in currency exchange and interest rates. Derivative financial instruments related to currency exchange rates include forward purchase and sale agreements which generally have terms no greater than 15 months. Additionally, interest rate swaps are sometimes used to convert some or all of our long-term debt to either a fixed or variable rate.

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Derivative financial instruments are recognized on the Consolidated Balance Sheets as either assets or liabilities and are measured at fair value. Changes in the fair value of derivatives are recorded each period in the Statement of Consolidated Income or the Statement of Consolidated Comprehensive Income, depending on whether a derivative is designated and considered effective as part of a hedge transaction, and if it is, the type of hedge transaction. Gains and losses on derivative instruments reported in accumulated other comprehensive income (loss) are subsequently included in the Statement of Consolidated Income in the periods in which earnings are affected by the hedged item. These activities have not had a material effect on our financial position or results of operations for the periods presented herein.

Recently Issued Accounting Guidance

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers”, which provides guidance for revenue recognition. The standard’s core principle, as further amended, is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 which delayed the effective date of the new revenue guidance by one year. As a result, the provisions of ASU 2014-09 will be effective for us in the first quarter of fiscal 2019, ending December 31, 2018. Early adoption is permitted as of the original effective date, but not earlier. We are currently in the process of evaluating the impact of adoption of this ASU on our Consolidated Financial Statements.

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU No. 2015-15, “Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.” This standard permits an entity to defer and present debt issuance costs related to line-of-credit arrangements as an asset and to subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. These new standards do not affect the recognition and measurement of debt issuance costs. As permitted, the Company has elected to early-adopt these standards in the fourth quarter of fiscal 2015. This guidance is effective on a retrospective basis, as a change in accounting principle. The impact of the early adoption on our Consolidated Balance Sheet as of September 30, 2014 was a decrease to other assets and a decrease to long-term debt of $0.8 million.

In September 2015, the Company adopted ASU 2015-16, "Simplifying the Accounting for Measurement Period Adjustments." This update eliminates the need to retrospectively adjust prior period information in the financial statements for acquisition adjustments to goodwill during the measurement period. The impact of ASU 2015-16 will be dependent on any future measurement period adjustments for acquisitions.

In February 2013, an accounting standards update was issued that amends the reporting of amounts reclassified out of accumulated other comprehensive income (loss). This standard does not change the current requirements for reporting net income or other comprehensive income (loss) in the financial statements. However, the guidance requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income (loss) by component, either on the face of the financial statement where net income is presented or in the notes to the financial statements. The company adopted this standard in fiscal 2014, and the disclosures of reclassifications out of accumulated other comprehensive loss are included in Note 5.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.

NOTE 2. ACQUISITIONS

Welch Allyn

On September 8, 2015, we completed the acquisition of Welch Allyn Holdings, Inc. and its subsidiaries (collectively, “Welch Allyn”) for a consideration of $1,687.3 million in cash ($1,633.6 million, net of cash acquired) and 8,133,722 shares of Hill-Rom common stock for a total combined purchase price of approximately $2.1 billion. Welch Allyn is a leading manufacturer of medical diagnostic equipment and offers a diversified portfolio of devices that assess, diagnose, treat, and manage a wide variety of illnesses and diseases.

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The cash portion of the consideration is preliminary and subject to adjustment for various true-up provisions as described in the terms of the merger agreement. The transaction was funded with new borrowings, including $1.8 billion in term loans and $425.0 million of senior notes issued in a private placement debt offering. Funds from this new financing were also used to retire pre-existing debt. Refer to Note 4 for additional information regarding our debt obligations.

The following summarizes the fair value of assets acquired and liabilities assumed at the date of the acquisition. These results are preliminary and subject to normal true-up provisions in the purchase agreement and other fair value adjustments.

	Amount
Trade receivables	$	63.2
Inventory		110.5
Other current assets		52.7
Current deferred income taxes		27.3
Property, plant, and equipment		93.2
Goodwill		1,203.5
Trade name (indefinite life)		434.0
Customer relationships (12-year useful life)		516.8
Developed technology (7-year weighted average useful life)		54.0
Other intangibles		19.9
Other noncurrent assets		30.6
Current liabilities		(161.5	)
Noncurrent deferred income taxes		(368.7	)
Other noncurrent liabilities		(25.6	)
Total purchase price, net of cash acquired	$	2,049.9
Fair value of common stock issued	$	416.3
Cash payment, net of cash acquired		1,633.6
Total consideration	$	2,049.9

Goodwill from the Welch Allyn acquisition, which is not deductible for tax purposes, is primarily due to enhanced customer relevance and a stronger competitive position resulting from the business combination, including a complementary commercial position, product portfolio, and enhanced synergies. As stated in Note 11, Welch Allyn is reported as a reconciling item in our segment disclosures for the year ended September 30, 2015. Accordingly, the goodwill from the Welch Allyn acquisition has not yet been allocated to a reportable segment.

Our total revenue on an unaudited pro forma basis, as if the Welch Allyn acquisition had been consummated at the beginning of our 2014 fiscal year, would have been higher by approximately $638 million and $677 million for the years ended September 30, 2015 and 2014, respectively. On the same unaudited pro forma basis, our net income would have been lower by approximately $59 million and $61 million for the years ended September 30, 2015 and 2014, respectively. The pro forma net income in each year has been adversely impacted by significant costs related to the transaction including deal costs, financing costs, restructuring costs incurred in relation to our synergy initiatives, costs associated with triggering the change-in-control provisions of certain equity-based compensation programs at Welch Allyn, and purchase price accounting, including the nonrecurring effects of the inventory step-up. These results are not indicative of expected future performance.

The unaudited pro forma results are based on the Company’s historical financial statements and those of the Welch Allyn business and do not necessarily indicate the results of operations that would have resulted had the acquisition been completed at the beginning of the comparable period presented and are not indicative of the results of operations in future periods.

Trumpf Medical

On August 1, 2014, we completed the acquisition of Trumpf Medical (“Trumpf”) and funded the transaction with a combination of cash on hand and borrowings. Trumpf Medical provides a portfolio of well-established operating room (OR) infrastructure products such as surgical tables, surgical lighting, and supply units and expands our product offerings in the surgical suite. 

The purchase price was $232.9 million ($226.6 million net of cash acquired). The results of Trumpf are included in the Consolidated Financial Statements since the date of acquisition. Our reported revenue included $39.0 million for the year ended September 30, 2014 related to Trumpf products and the impact to net income was not significant.

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The following summarizes the fair value of assets acquired and liabilities assumed at the date of the acquisition. These results are now considered final.

	Amount
Trade receivables	$	67.6
Inventory		63.6
Other current assets		23.4
Property, plant, and equipment		42.1
Goodwill		66.0
Trade name (5-year useful life)		6.7
Customer relationships (10-year weighted average useful life)		15.8
Developed technology (8-year weighted average useful life)		17.8
Other intangibles		4.8
Other noncurrent assets		0.7
Deferred tax asset		12.9
Current liabilities		(74.4	)
Long term debt		(6.0	)
Noncurrent liabilities		(8.1	)
Total purchase price	$	232.9

Goodwill was allocated entirely to our Surgical and Respiratory Care segment. The goodwill related to the acquired German operations will be tax deductible while the remaining goodwill will not be deductible for tax purposes.

Our total revenue on an unaudited pro forma basis, as if the Trumpf acquisition had been consummated at the beginning of our 2013 fiscal year, would have been higher by approximately $218 million and $235 million for the years ended September 30, 2014 and 2013. The impact to net income on an unaudited pro forma basis would not have been significant to our financial results for those years. The unaudited pro forma results are based on the Company’s historical financial statements and those of the Trumpf business and do not necessarily indicate the results of operations that would have resulted had the acquisition been completed at the beginning of the comparable period presented and are not indicative of the results of operations in future periods.

Virtus, Inc.

On March 31, 2014 we completed a stock purchase agreement with the stockholders of Virtus, Inc. (“Virtus”) to acquire the entire equity interest in Virtus: a supplier of finished surfaces and components for our bed and stretcher products. The acquisition of Virtus insources a component of our supply chain.

The purchase price was $17.6 million ($13.0 million net of cash acquired). We funded the transaction primarily with borrowings. The results of Virtus are included in the Consolidated Financial Statements since the date of acquisition.

The following summarizes the fair value of assets acquired and liabilities assumed at the date of the acquisition. During the third quarter of fiscal 2014, the remaining provisions of the stock purchase agreement were settled and the purchase price is now final.

	Amount
Inventory	$	2.6
Other current assets		5.4
Property, plant, and equipment		1.9
Goodwill		9.4
Current liabilities		(1.6	)
Deferred tax liability		(0.1	)
Total purchase price	$	17.6

Goodwill is not deductible for tax purposes and was allocated to both our North America and International segments.

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The impact to our total revenue and net income on an unaudited proforma basis, as if the Virtus acquisition had been consummated at the beginning of our 2013 fiscal year, would not have been significant for the fiscal years ended September 30, 2014 and 2013.  

Other

We have used cash on hand for other business acquisitions and equity investments which we do not consider individually material to the Company’s financial position or results of operations. These included one equity investment in which the investee was determined to be a VIE and Hill-Rom was determined to have a controlling financial interest, resulting in consolidation of the investee. The portion of this investee’s assets, liabilities, and operating results which are not attributable to Hill-Rom’s equity investment are recognized in our Consolidated Financial Statements as attributable to noncontrolling interests.

NOTE 3. GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS

The following summarizes goodwill activity by reportable segment:

	North America			Surgical and Respiratory Care			International			Welch Allyn		Total
Balances at September 30, 2013:
Goodwill	$	383.0		$	279.0		$	153.6		$	-	$	815.6
Accumulated impairment losses		(358.1	)		-			(114.7	)		-		(472.8	)
Goodwill, net at September 30, 2013		24.9			279.0			38.9			-		342.8
Changes in Goodwill during the period:
Goodwill related to acquisitions		7.6			57.3			(2.8	)		-		62.1
Currency translation effect		-			(2.8	)		(2.3	)		-		(5.1	)
Balances at September 30, 2014:
Goodwill		390.6			333.5			148.5			-		872.6
Accumulated impairment losses		(358.1	)		-			(114.7	)		-		(472.8	)
Goodwill, net at September 30, 2014		32.5			333.5			33.8			-		399.8
Changes in Goodwill during the period:
Goodwill related to acquisitions		-			22.1			-			1,203.5		1,225.6
Currency translation effect		-			(11.8	)		(3.1	)		-		(14.9	)
Balances at September 30, 2015:
Goodwill		390.6			343.8			145.4			1,203.5		2,083.3
Accumulated impairment losses		(358.1	)		-			(114.7	)		-		(472.8	)
Goodwill, net at September 30, 2015	$	32.5		$	343.8		$	30.7		$	1,203.5	$	1,610.5

We acquired Welch Allyn on September 8, 2015 and Trumpf on August 1, 2014. All goodwill associated with the Welch Allyn acquisition is presented as a reconciling item in the table above, as it has not yet been assigned to a reportable segment. All goodwill related to the Trumpf acquisition was assigned to the Surgical and Respiratory Care segment. During fiscal 2015, we recorded adjustments to goodwill related to the Trumpf acquisition completed during the fourth quarter of fiscal 2014. We also consolidated an investment made in fiscal 2015 that was determined to be a VIE in which we have a controlling financial interest. The consolidation resulted in $12.1 million of goodwill being recorded within our Surgical and Respiratory Care segment. We acquired Virtus on March 31, 2014 and recorded goodwill of $9.4 million. This goodwill was allocated between our North America and International segments based on the expected benefits resulting from the acquisition. Refer to Note 2 for additional information regarding these acquisitions.

As discussed in Note 11, we operate in three reportable business segments. Goodwill impairment testing is performed at the reporting unit level, which is one level below a reportable business segment. We have determined that we have ten reporting units, with the Welch Allyn reporting units yet to be defined. Goodwill is assigned to reporting units at the date the goodwill is initially recorded and has been reallocated as necessary based on the restructuring of reporting units over time. Once goodwill has been assigned to reporting units, it no longer retains its association with a particular acquisition, and all of the activities within a reporting unit, whether acquired or organically grown, are available to support the value of the goodwill.

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Testing for impairment must be performed annually, or on an interim basis upon the occurrence of a triggering event or change in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The annual evaluation of goodwill performed during the third quarter of fiscal 2015 and 2014 did not result in any impairments.

A 10 percent reduction in the fair value of any of our reporting units would not result in an impairment charge.

Indefinite-lived intangible assets

We have various indefinite-lived intangible assets representing trade names with a carrying value of $466.9 million at September 30, 2015 and $32.9 million at September 30, 2014. Testing for impairment must be performed annually, or on an interim basis upon the occurrence of a triggering event or change in circumstances that would more likely than not reduce the fair value of an indefinite-lived intangible asset below its carrying amount. The annual evaluation of indefinite-lived intangible assets performed during the third quarter of fiscal 2015 and 2014 did not result in impairment.

NOTE 4. FINANCING AGREEMENTS

Total debt consists of the following:

	September 30
	2015		2014
Revolving credit facilities	$	-	$	265.0
Current portion of long-term debt		58.0		16.2
Senior secured Term Loan A, long-term portion		931.7		-
Senior secured Term Loan B, long-term portion		778.3		-
Senior unsecured 5.75% notes due on September 1, 2023		418.2		-
Term loan under August 2012 credit facility, long-term portion		-		159.6
Unsecured 7.00% debentures due on February 15, 2024		13.8		19.2
Unsecured 6.75% debentures due on December 15, 2027		29.6		29.6
Other		3.6		1.4
Total debt		2,233.2		491.0
Less current portion of debt		58.0		126.9
Total long-term debt	$	2,175.2	$	364.1

The following table summarizes the scheduled maturities of long-term debt for fiscal years 2016 through 2020:

	Term Loan A		Term Loan B		Total
2016	$	50.0	$	8.0	$	58.0
2017	$	75.0	$	8.0	$	83.0
2018	$	100.0	$	8.0	$	108.0
2019	$	100.0	$	8.0	$	108.0
2020	$	675.0	$	8.0	$	683.0

In September 2015, the Company entered into four new credit facilities for purposes of financing the Welch Allyn acquisition as well as refinancing our previously outstanding revolving credit facility. These new facilities consisted of the following:

· $1.0 billion senior secured Term Loan A facility (“TLA Facility”), maturing in September 2020

· $800.0 million senior secured Term Loan B facility (“TLB Facility”), maturing in September 2022

· Senior secured revolving credit facility (“Revolving Credit Facility”), providing borrowing capacity of up to $500.0 million, maturing in September 2020

· $425.0 million of senior unsecured notes (“Senior Notes”), maturing in September 2023

The TLA Facility, TLB Facility, and Revolving Credit Facility (collectively, the “Senior Secured Credit Facilities”) all bear interest at variable rates which are currently less than 4.0 percent. These interest rates are based primarily on the London Interbank Offered Rate (LIBOR), but under certain conditions could also be based on the U.S. Federal Funds Rate or the U.S. Prime Rate, at the Company’s option. The TLA Facility and TLB Facility have required principal payments. The TLA Facility requires minimum principal payments of $50.0 million in fiscal 2016, $75.0 million in fiscal 2017, and $100.0 million annually thereafter, with the remaining unpaid principal balance due at maturity. The TLB Facility requires annual principal payments of $8.0 million with the remaining unpaid principal balance due at maturity. We will be able to voluntarily prepay outstanding loans under the TLA Facility and the TLB Facility at any time.

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At September 30, 2015, there were no borrowings on the Revolving Credit Facility, but available borrowing capacity was $490.9 million after giving effect to $9.1 million of outstanding standby letters of credit. At September 30, 2014, there were $42.4 million of outstanding standby letters of credit under our previous revolving credit agreements, $39.8 million of which pertained to one standby letter of credit issued in connection with the Trumpf acquisition, which expired in January 2015. The availability of borrowings under our Revolving Credit Facility is subject to our ability at the time of borrowing to meet certain specified conditions, including compliance with covenants contained in the governing credit agreement.

The Senior Secured Credit Facilities are held with a syndicate of banks, which includes over 20 institutions. The general corporate assets of the Company and its subsidiaries collateralize these obligations. The credit agreement governing these facilities contains financial covenants which specify a maximum secured net leverage ratio and a minimum interest coverage ratio, as such terms are defined in the credit agreement. These financial covenants are measured at the end of each fiscal quarter, with the first measurement date on December 31, 2015. The required ratios vary through December 31, 2019 providing a gradually decreasing maximum secured net leverage ratio and a gradually increasing minimum interest coverage ratio, as set forth in the table below:

Fiscal Quarter Ended	Maximum Secured Net Leverage Ratio	Minimum Interest Coverage Ratio
December 31, 2015	4.75x	3.25x
December 31, 2016	4.50x	3.25x
December 31, 2017	4.00x	3.50x
December 31, 2018	3.50x	3.75x
December 31, 2019 and thereafter	3.00x	4.00x

The Senior Notes bear interest at a fixed rate of 5.75 percent annually. These notes were issued at par in a private placement offering and are not registered securities on any public market. All of the Senior Notes are outstanding as of September 30, 2015. We are not required to make any mandatory redemption or sinking fund payments with respect to the Notes, other than in certain circumstances such as a change in control or material sale of assets. We may redeem the notes prior to maturity, but doing so prior to September 1, 2021 would require payment of a premium on any amounts redeemed, the amount of which varies based on the timing of the redemption. The indenture governing the Senior Notes contains certain covenants which impose limitations on the amount of dividends we may pay and the amount of common shares we may repurchase in the open market, but we do not expect these covenants to affect our current dividend policy or open share repurchase program. The terms of this indenture also impose certain restrictions on the amount and type of additional indebtedness we may obtain in the future, as well as the types of liens and guarantees we may provide.

We are in compliance with all applicable financial covenants as of September 30, 2015.

In conjunction with the issuance of the Senior Secured Credit Facilities and the Senior Notes, the Company incurred $48.7 million of debt issuance costs. As stated in Note 1, the Company has elected to early-adopt ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” Following this guidance, as of September 30, 2015, unamortized debt issuance costs of $39.1 million have been recorded as a reduction of the carrying value of the related debt, in addition to $9.4 million attributable to the Revolving Credit Facility, which are recorded as a component of other long-term assets on the Consolidated Balance Sheet. These costs will amortize into interest expense over the terms of the related credit facilities.

Unsecured debentures outstanding at September 30, 2015 and September 30, 2014 have fixed rates of interest. We have deferred gains included in the amounts above from the termination of previous interest rate swap agreements, and those deferred gains amounted to less than $1.0 million at both September 30, 2015 and September 30, 2014. The deferred gains on the termination of the swaps are being amortized and recognized as a reduction of interest expense over the remaining term of the related debt, and as a result, the effective interest rates on that debt have been and will continue to be lower than the stated interest rates on the debt.

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From August 2012 through April 2015, we had a credit facility that provided for revolving loans of up to $500.0 million, plus a term loan in the aggregate amount of $200.0 million. In May 2015, we entered into an Amended and Restated Credit Agreement which provided for revolving loans of up to $900.0 million and a term loan of $165.0 million, which replaced the remaining unpaid principal balance of the term loan from the August 2012 credit facility. A portion of the proceeds from the issuance of the Senior Secured Credit Facility and the Senior Notes in September 2015 were used to fully repay these previously outstanding credit facilities, which are now terminated. The termination of these facilities resulted in a charge of $2.6 million due to acceleration of debt issuance costs which were unamortized as of September 2015.

We are exposed to market risk from fluctuations in interest rates. The Company sometimes manages its exposure to interest rate fluctuations through the use of interest rate swaps (cash flow hedges). As of September 30, 2014, we had one interest rate swap agreement to hedge the variability of cash flows associated with a portion of the variable interest rate payments on then-outstanding term loans. The interest rate swap was designated as a cash flow hedge and was an asset with a fair value of less than $1.0 million as of September 30, 2014. We classify fair value measurements on our interest rate swaps as Level 2, as described in Note 1. Effective with the issuance of the Senior Secured Credit Facilities, the interest rate swap was terminated at an immaterial loss.

The fair value of our debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same remaining maturities. The book values of our short-term debt instruments approximate fair value. The estimated fair values of our long-term debt instruments are described in the table below:

	September 30
	2015		2014
Senior secured Term Loan A	$	990.7	$	-
Senior secured Term Loan B		780.7		-
Senior unsecured 5.75% notes due on September 1, 2023		428.4		-
Term loan under August 2012 credit facility		-		175.2
Unsecured debentures		43.4		55.5
Total debt	$	2,243.2	$	230.7

The estimated fair values of our long-term unsecured debentures were based on observable inputs such as quoted prices in markets that are not active. The estimated fair values of our term loans and the Senior Notes were based on quoted prices for similar liabilities. These fair value measurements were classified as Level 2, as described in Note 1.

NOTE 5. OTHER COMPREHENSIVE INCOME

The following tables represent the changes in accumulated other comprehensive loss by component for the year to date periods ended September 30, 2015 and 2014:

	Year Ended September 30, 2015
	Other comprehensive income (loss)													Accumulated other comprehensive loss
	Prior to reclassification			Reclassification from		Pre-tax			Tax effect		Net of tax			Beginning balance			Net activity			Ending balance
Available-for-sale securities     and currency hedges	$	(0.6	)	$	0.6	$	-		$	-	$	-		$	-		$	-		$	-
Foreign currency translation      adjustment		(58.6	)		-		(58.6	)		-		(58.6	)		(34.2	)		(58.6	)		(92.8	)
Change in pension and postretirement      defined benefit plans		(28.7	)		15.5		(13.2	)		5.1		(8.1	)		(39.9	)		(8.1	)		(48.0	)
Total	$	(87.9	)	$	16.1	$	(71.8	)	$	5.1	$	(66.7	)	$	(74.1	)	$	(66.7	)	$	(140.8	)

	Year Ended September 30, 2014
	Other comprehensive income (loss)														Accumulated other comprehensive loss
	Prior to reclassification			Reclassification from		Pre-tax			Tax effect			Net of tax			Beginning balance			Net activity			Ending balance
Available-for-sale securities     and currency hedges	$	0.3		$	0.1	$	0.4		$	(0.1	)	$	0.3		$	(0.3	)	$	0.3		$	-
Foreign currency translation      adjustment		(29.6	)		-		(29.6	)		-			(29.6	)		(4.6	)		(29.6	)		(34.2	)
Change in pension and postretirement      defined benefit plans		(16.8	)		2.7		(14.1	)		5.0			(9.1	)		(30.8	)		(9.1	)		(39.9	)
Total	$	(46.1	)	$	2.8	$	(43.3	)	$	4.9		$	(38.4	)	$	(35.7	)	$	(38.4	)	$	(74.1	)

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The following table represents the items reclassified out of accumulated other comprehensive loss and the related tax effects during fiscal 2015 and 2014:

	Years Ended September 30
	2015							2014
	Amount reclassified		Tax effect			Net of tax		Amount reclassified		Tax effect			Net of tax
Change in pension and postretirement      defined benefit plans (1)	$	15.5	$	(5.6	)	$	9.9	$	2.7	$	(1.0	)	$	1.7
Available-for-sale securities     and currency hedges (2)	$	0.6	$	(0.2	)	$	0.4	$	0.1	$	-		$	0.1

(1) Reclassified from accumulated other comprehensive loss into cost of goods sold and selling and administrative expenses.

      These components are included in the computation of net periodic pension and postretirement benefit expense.

(2) Reclassified from accumulated other comprehensive loss into other income (expense), net.

NOTE 6. RETIREMENT AND POSTRETIREMENT BENEFIT PLANS

Our retirement plans consist of defined benefit plans, postretirement healthcare plans, and defined contribution savings plans. Plans cover certain employees both in and outside of the U.S.

Retirement Plans

We sponsor five defined benefit plans. Those plans include a master defined benefit retirement plan, a nonqualified supplemental executive defined benefit retirement plan, and three defined benefit retirement plans covering employees in Germany and France. Benefits for such plans are based primarily on years of service and the employee’s level of compensation during specific periods of employment. We contribute funds to trusts as necessary to provide for current service and for any unfunded projected future benefit obligation over a reasonable period of time. All of our plans have a September 30 measurement date.

Effect on Operations

The components of net periodic benefit cost for our defined benefit retirement plans were as follows:

	Years Ended September 30
	2015			2014			2013
Service cost	$	5.4		$	5.0		$	6.1
Interest cost		14.6			14.4			13.2
Expected return on plan assets		(16.7	)		(16.7	)		(15.9	)
Amortization of unrecognized prior service cost, net		0.6			0.6			0.6
Amortization of net loss		5.2			3.2			7.8
Net periodic benefit cost		9.1			6.5			11.8
Settlement charge		9.6			-			-
Special termination benefits		-			2.4			-
Net pension expense	$	18.7		$	8.9		$	11.8

In April, 2015, we offered all terminated vested participants of our domestic master defined benefit retirement plan an option to receive a lump sum cash payout in lieu of their right to future periodic benefit payments under the plan upon their retirement. Lump sums of $42.3 million were paid to participants in September 2015, triggering a plan settlement charge of $9.6 million, which is recorded as a component of Special charges on the Statements of Consolidated Income.

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During the second quarter of fiscal 2014, we initiated a domestic early retirement program, which offered certain special termination benefits relating to our pension and postretirement health care plans. This program and the related special termination benefits resulted in a non-cash charge of $3.2 million, of which $2.4 million related to our master defined benefit retirement plan and $0.8 million for our postretirement health care plan. The $0.8 million postretirement healthcare charge also reflects a $1.3 million reversal recorded as certain participants elected alternative coverage separate from the postretirement health care plan. The employee elections were not known until the third and fourth quarters of fiscal 2014. The reversal was recorded to the special charges caption and is offset by charges recorded to reflect our incremental cost associated with the alternative coverage. Refer to Note 8 for more details.

Obligations and Funded Status

The change in benefit obligations, plan assets and funded status, along with amounts recognized in the Consolidated Balance Sheets for our defined benefit retirement plans were as follows:

	Years Ended September 30
	2015			2014
Change in benefit obligation:
Benefit obligation at beginning of year	$	343.8		$	297.9
Service cost		5.4			5.0
Interest cost		14.6			14.4
Actuarial loss		12.5			31.4
Benefits paid		(54.0	)		(10.2	)
Acquisitions		-			4.3
Special termination benefits		-			2.4
Plan settlement		(4.4	)		-
Exchange rate gain		(2.4	)		(1.4	)
Benefit obligation at end of year		315.5			343.8
Change in plan assets:
Fair value of plan assets at beginning of year		276.1			254.4
Actual return on plan assets		(3.9	)		30.9
Employer contributions		0.9			1.0
Benefits paid		(54.0	)		(10.2	)
Fair value of plan assets at end of year		219.1			276.1
Funded status and net amounts recognized	$	(96.4	)	$	(67.7	)
Amounts recorded in the Consolidated Balance Sheets:
Accrued pension benefits, current portion	$	(1.0	)	$	(1.0	)
Accrued pension benefits, long-term		(95.4	)		(66.7	)
Net amount recognized	$	(96.4	)	$	(67.7	)

In addition to the amounts above, net actuarial losses of $79.3 million and prior service costs of $1.0 million, less an applicable aggregate tax effect of $30.0 million are included as components of accumulated other comprehensive loss at September 30, 2015. In addition to the amounts above, net actuarial losses of $65.0 million and prior service costs of $1.7 million, less an applicable aggregate tax effect of $24.8 million are included as components of accumulated other comprehensive loss at September 30, 2014

The estimated net actuarial loss and prior service cost for our defined benefit retirement plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year are $4.5 million and $0.3 million, respectively.

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Accumulated Benefit Obligation

The accumulated benefit obligation for all defined benefit pension plans was $296.7 million and $325.9 million at September 30, 2015 and 2014. Selected information for our plans, including plans with accumulated benefit obligations exceeding plan assets, was as follows:

	September 30
	2015						2014
	PBO		ABO		Plan Assets		PBO		ABO		Plan Assets
Master plan	$	292.5	$	275.3	$	218.9	$	319.1	$	303.2	$	275.8
International plans		17.9		16.3		0.2		20.3		18.5		0.3
Supplemental executive plan		5.1		5.1		-		4.4		4.2		-
	$	315.5	$	296.7	$	219.1	$	343.8	$	325.9	$	276.1

Actuarial Assumptions

The weighted average assumptions used in accounting for our domestic pension plans were as follows:

	2015	2014	2013
Weighted average assumptions to determine benefit
obligations at the measurement date:
Discount rate for obligation	4.4%	4.5%	5.0%
Rate of compensation increase	3.0%	3.0%	3.3%
Weighted average assumptions to determine benefit
cost for the year:
Discount rate for expense	4.5%	5.0%	4.1%
Expected rate of return on plan assets	6.8%	7.0%	7.0%
Rate of compensation increase	3.0%	3.3%	3.3%

The discount rates used in the valuation of our defined benefit pension plans are evaluated annually based on current market conditions. In setting these rates we utilize long-term bond indices and yield curves as a preliminary indication of interest rate movements, and then make adjustments to the respective indices to reflect differences in the terms of the bonds covered under the indices in comparison to the projected outflow of our pension obligations. The overall expected long-term rate of return is based on historical and expected future returns, which are inflation adjusted and weighted for the expected return for each component of the investment portfolio, as well as taking into consideration economic and capital market conditions. The rate of assumed compensation increase is also based on our specific historical trends of past wage adjustments. The weighted average discount rate assumptions used for our international plans are lower than our domestic plan assumptions and do not significantly affect the consolidated net benefit obligation or net periodic benefit cost balances.

Plan Assets

The weighted average asset allocations of our master defined benefit retirement plan at September 30, 2015 and 2014, by asset category, along with target allocations, are as follows:

	2015	2014	2015	2014
	Target	Target	Actual	Actual
	Allocation	Allocation	Allocation	Allocation
Equity securities	39 - 49%	40 - 60%	42%	52%
Fixed income securities	51 - 61%	40 - 60%	58%	48%
Total			100%	100%

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We have a Plan Committee that sets investment guidelines with the assistance of an external consultant. These guidelines are established based on market conditions, risk tolerance, funding requirements and expected benefit payments. The Plan Committee also oversees the investment allocation process and monitors asset performance. As pension liabilities are long-term in nature, we employ a long-term total return approach to maximize the long-term rate of return on plan assets for a prudent level of risk. Target allocations are guidelines, not limitations, and plan fiduciaries may occasionally approve allocations above or below a target range or elect to rebalance the portfolio within the targeted range.

The investment portfolio contains a diversified portfolio of primarily equities and fixed income securities. Securities are also diversified in terms of domestic and international securities, short- and long-term securities, growth and value styles, large cap and small cap stocks. The primary investment strategy is a dynamic target allocation method that periodically rebalances among various investment categories depending on the current funded positions. This program is designed to actively move from return-seeking investments (such as equities) toward liability-hedging investments (such as long-duration fixed income) as funding levels improve.

Trust assets are invested subject to the following policy restrictions: short-term securities must be rated A2/P2 or higher; all fixed-income securities shall have a credit quality rating “BBB” or higher; investments in equities in any one company may not exceed 10 percent of the equity portfolio.

Fair Value Measurements of Plan Assets

The following table summarizes the valuation of our pension plan assets by pricing categories:

			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Balance at		Assets		Inputs		Inputs
	September 30, 2015		(Level 1)		(Level 2)		(Level 3)
Cash	$	3.5	$	3.5	$	-	$	-
Equities
U.S. companies		47.1		-		47.1		-
International companies		44.8		-		44.8		-
Fixed income securities		123.7		-		123.7		-
Total plan assets at fair value	$	219.1	$	3.5	$	215.6	$	-

			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Balance at		Assets		Inputs		Inputs
	September 30, 2014		(Level 1)		(Level 2)		(Level 3)
Cash	$	2.1	$	2.1	$	-	$	-
Equities
U.S. companies		101.7		101.7		-		-
International companies		38.7		38.7		-		-
Fixed income securities		133.2		66.8		66.4		-
Other		0.4		0.4		-		-
Total plan assets at fair value	$	276.1	$	209.7	$	66.4	$	-

The Level 2 investments are commingled funds and/or collective trusts valued using the net asset value (“NAV”) unit price provided by the fund administrator. The NAV is based on the value of the underlying assets owned by the fund. For further descriptions of the asset Levels used in the above chart, refer to Note 1.

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Cash Flows

Our U.S. qualified defined benefit plan is funded in excess of 80 percent, as measured under the requirements of the Pension Protection Act of 2006, and therefore we expect that the plan will not be subject to the “at risk” funding requirements of this legislation.

During 2015 and 2014, we contributed cash of $0.9 million and $1.0 million to our defined benefit retirement plans. We will not be required to contribute to our master defined benefit retirement plan in fiscal year 2016 due to the current funding level; however, minimal contributions will be required for our unfunded plans.

Estimated Future Benefit Payments

The benefit payments, which are expected to be funded through plan assets and company contributions and reflect expected future service, are expected to be paid as follows:

	Pension Benefits
2016	$	12.3
2017	$	12.8
2018	$	13.3
2019	$	14.0
2020	$	14.8
2021-2025	$	86.5

Defined Contribution Savings Plans

We have defined contribution savings plans that cover substantially all U.S. employees and certain non-U.S. employees. The general purpose of these plans is to provide additional financial security during retirement by providing employees with an incentive to make regular savings. Company contributions to the plans are based on eligibility and employee contributions. Expense under these plans was $17.4 million, $15.0 million and $15.8 million in fiscal years 2015, 2014 and 2013.

Postretirement Health Care Plans

In addition to defined benefit retirement plans, we also offer two domestic postretirement health care plans, one of which was assumed in the acquisition of Welch Allyn, that provide health care benefits to qualified retirees and their dependents. The plans are closed to new participants and include retiree cost sharing provisions and generally extends retiree coverage for medical and prescription benefits beyond the COBRA continuation period to the date of Medicare eligibility. We use a measurement date of September 30 for these plans.

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The postretirement health care plans, including the Welch Allyn plan on a post-acquisition basis, reflected a credit during fiscal 2015, 2014 and 2013 of ($0.2) million, ($0.2) million and ($0.1) million. The change in the accumulated postretirement benefit obligation was as follows:

	Years Ended September 30
	2015			2014
Change in benefit obligation:
Benefit obligation at beginning of year	$	11.2		$	9.8
Service cost		0.4			0.4
Interest cost		0.4			0.4
Acquired obligation		14.1			-
Actuarial gain		(0.9	)		(0.2	)
Benefits paid		(0.2	)		(0.2	)
Retiree contributions		0.1			0.2
Special termination benefits		-			0.8
Benefit obligation at end of year	$	25.1		$	11.2
Amounts recorded in the Consolidated Balance Sheets:
Accrued benefits obligation, current portion	$	1.8		$	1.1
Accrued benefits obligation, long-term		23.3			10.1
Net amount recognized	$	25.1		$	11.2

We contributed less than $0.2 million to the plans in fiscal 2015, including the post-acquisition period for the Welch Allyn plan, compared with $0.1 million contributed in fiscal 2014.

In addition to the amounts above, net actuarial gains of $2.4 million and prior service credits of $1.4 million, less an applicable aggregate tax effect of $1.5 million are included as components of accumulated other comprehensive loss at September 30, 2015. In addition to the amounts above, net actuarial gains of $1.7 million and prior service credits of $2.3 million, less an applicable aggregate tax effect of ($1.6) million are included as components of accumulated other comprehensive loss at September 30, 2014.

The estimated net actuarial gain and prior service benefit for our postretirement health care plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year are ($0.1) million and ($0.9) million.

The discount rate used to determine the net periodic benefit cost for the postretirement health care plans during the fiscal year ended September 30, 2015, 2014 and 2013 was 3.7, 4.1 and 3.3 percent. The discount rate used to determine the benefit obligation as of September 30, 2015, 2014 and 2013 was 3.5, 3.7 and 4.1 percent. As of September 30, the health care-cost trend rates for the plans were generally assumed to be in the ranges of 5.25 to 7.0 percent, trending down to a rate between 4 and 5 percent over the long-term.

A one-percentage-point increase/decrease in the assumed health care cost trend rates as of September 30, 2015 would cause an increase/decrease in service and interest costs of less than $0.1 million, along with an increase/decrease in the benefit obligation of $1.9 million and $1.7 million, respectively.

We fund the postretirement health care plans as benefits are paid, and current plan benefits are expected to require net company contributions of approximately $1.8 million in fiscal 2016 and $2 million per year thereafter.

NOTE 7. COMMON STOCK

Share Repurchases

We repurchased 1.2 million, 1.7 million and 2.8 million shares of our common stock during fiscal years 2015, 2014 and 2013 for $54.8 million, $70.5 million and $92.7 million, respectively, in the open market. The common stock was acquired under a $190 million share repurchase program approved by the Board of Directors in September 2013, which does not have an expiration date. There are no plans to terminate this program in the future, but repurchases will be suspended temporarily as we allocate free cash flow to debt service following the Welch Allyn acquisition. Repurchases may be made on the open market or via private transactions, and are used for general business purposes.

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Stock-Based Compensation

We have stock-based compensation plans under which employees and non-employee directors may be granted options to purchase shares of Company common stock at the fair market value at the time of grant. In addition to stock options, we grant performance share units (“PSUs”) and RSUs to certain management level employees and vested deferred stock to non-employee directors. We also offer eligible employees the opportunity to buy shares of our common stock at a discount via an Employee Stock Purchase Plan (“ESPP”).

Our primary stock-based compensation program is the Stock Incentive Plan, which has been approved by our shareholders. Under the Stock Incentive Plan, we have a total of 15.3 million authorized shares. At September 30, 2015, 4.3 million shares were available for future grants under our stock-based compensation plans. We generally settle our stock-based awards with treasury shares. As of September 30, 2015, we had 23.3 million treasury shares available for use to settle stock-based awards.

The following table sets forth a summary of the annual stock-based compensation cost that was charged against income for all types of awards:

	Years Ended September 30
	2015			2014			2013
Total stock-based compensation cost (pre-tax)	$	25.0		$	18.0		$	13.5
Total income tax benefit		(7.5	)		(6.5	)		(4.9	)
Total stock-based compensation cost, net of tax	$	17.5		$	11.5		$	8.6

Stock Options

Stock options granted by our Compensation Committee under the Stock Incentive Plan are non-qualified stock options. These awards are generally granted with exercise prices equal to the average of the high and low prices of our common stock on the date of grant. They vest in equal annual installments over a three or four year period and the maximum contractual term is ten years. We use a Binomial option-pricing model to estimate the fair value of stock options, and compensation cost is recognized on a straight-line basis over the requisite service period.

The following table sets forth the weighted average fair value per share of stock options and the related valuation assumptions used in the determination of those fair values:

	Years Ended September 30
	2015		2014		2013
Weighted average fair value per share	$	12.83	$	11.91	$	7.91
Valuation assumptions:
Risk-free interest rate		1.6%		1.3%		0.6%
Expected dividend yield		1.4%		1.4%		1.9%
Expected volatility		35.0%		36.1%		40.2%
Weighted average expected life		4.9 years		4.9 years		4.9 years

The risk-free interest rate is based upon observed U.S. Treasury interest rates appropriate for the term of our employee stock options. Expected dividend yield is based on the history and our expectation of dividend payouts. Expected volatility was based on our historical stock price volatility. Expected life represents the weighted average period the stock options are expected to remain outstanding and is a derived output of the Binomial model. The expected life of employee stock options is impacted by the above assumptions as well as the post-vesting forfeiture rate and the exercise factor used in the Binomial model. These two variables are based on the history of exercises and forfeitures for previous stock options granted by us.

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The following table summarizes transactions under our stock option plans for fiscal year 2015:

	Weighted					Weighted
	Average			Weighted		Average	Aggregate
	Number of			Average		Remaining	Intrinsic
	Shares			Exercise		Contractual	Value (1)
	(in thousands)			Price		Term	(in millions)
Balance Outstanding at October 1, 2014		1,992		$	31.99
Granted		381			45.01
Exercised		(371	)		31.83
Cancelled/Forfeited		(101	)		36.63
Balance Outstanding at September 30, 2015		1,901		$	34.38	6.6 years	$	33.5
Exercisable at September 30, 2015		1,060		$	30.98	5.3 years	$	22.3
Options Expected to Vest		773		$	38.34	8.0 years	$	10.6

(1) The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $51.99, as reported by the New York Stock Exchange on September 30, 2015. This amount, which changes continuously based on the fair value of our common stock, would have been received by the option holders had all option holders exercised their options as of the balance sheet date.

The total intrinsic value of options exercised during fiscal years 2015, 2014 and 2013 was $6.3 million, $4.6 million and $1.6 million.

As of September 30, 2015, there was $4.1 million of unrecognized compensation expense related to stock options granted under the Plan. This unrecognized compensation expense does not reflect a reduction for our estimate of potential forfeitures, and is expected to be recognized over a weighted average period of 2.4 years.

Restricted Stock Units

RSUs are granted to certain employees with fair values equal to the average of the high and low prices of our common stock on the date of grant, multiplied by the number of units granted. RSU grants are contingent upon continued employment and vest over periods ranging from one to four years. Dividends, payable in common stock equivalents, accrue on the grants and are subject to the same specified terms as the original grants, including the risk of forfeiture.

The following table summarizes transactions for our nonvested RSUs for fiscal year 2015:

				Weighted
	Number of			Average
	Share Units			Grant Date
	(in thousands)			Fair Value
Nonvested RSUs at October 1, 2014		431		$	34.92
Granted		351			47.85
Vested		(93	)		37.76
Forfeited		(55	)		35.90
Nonvested RSUs at September 30, 2015		634		$	41.35

As of September 30, 2015, there was $13.4 million of total unrecognized compensation expense related to nonvested RSUs granted under the Stock Incentive Plan. This unrecognized compensation expense does not reflect a reduction for our estimate of potential forfeitures, and is expected to be recognized over a weighted average period of 2 years. The total vest date fair value of shares that vested during fiscal years 2015, 2014 and 2013 was $4.3 million, $5.3 million and $5.4 million.

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Performance Share Units

Our Compensation Committee grants PSUs to certain employees and these awards are subject to any stock dividends, stock splits, and other similar rights inuring to common stock, but unlike our RSUs are not entitled to dividend reinvestment. Vesting of the grants is contingent upon achievement of performance targets and corresponding service requirements.

The fair value of the PSUs is equal to the average of the high and low prices of our common stock on the date of grant, multiplied by the number of units granted. For PSUs with a market condition such as total shareholder return, the Monte-Carlo simulation method is used to determine fair value. The Monte-Carlo simulation is a generally accepted statistical technique used to generate a defined number of stock price paths in order to develop a reasonable estimate of the range of our and the Peer Group’s future expected stock prices.

The following table sets forth the weighted average fair value per share for PSUs and the related valuation assumptions used in the determination of those fair values. PSUs granted in both fiscal 2015 and 2014 are based on company-specific performance targets, with a total shareholder return collar, while grants in fiscal 2013 are based entirely on shareholder return targets.

	Years Ended September 30
	2015	2014	2013
Weighted average fair value per share	$47.82	$47.91	$19.77
Valuation assumptions:
Risk-free interest rate	0.9%	0.5%	0.3%
Expected dividend yield	0.0%	0.0%	0.0%
Expected volatility	23.5%	30.1%	32.6%

The basis for the assumptions listed above is similar to the valuation assumptions used for stock options, as discussed previously.

The following table summarizes transactions for our nonvested PSUs for fiscal 2015:

				Weighted
	Number of			Average
	Share Units			Grant Date
	(in thousands)			Fair Value
Nonvested PSUs as of October 1, 2014		586		$	29.98
Granted		331			49.27
Vested		(414	)		30.11
Cancelled		(76	)		24.57
Forfeited		(73	)		41.15
Nonvested PSUs at September 30, 2015		354		$	42.16

As of September 30, 2015, there was $10.2 million of unrecognized compensation expense related to PSUs granted under the Stock Incentive Plan based on the expected achievement of certain performance targets or market conditions. This unrecognized compensation expense does not reflect a reduction for our estimate of potential forfeitures, and is expected to be recognized by the end of fiscal 2017. The total vest date fair value of shares that vested during fiscal 2015 was $20.5 million.

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NOTE 8. SPECIAL CHARGES

Over the past several years, we have placed a focus on improving our cost structure and business processes through various means including consolidation of certain manufacturing and select back office operations, customer rationalizations and various other organizational changes. As a result of these actions, we recognized special charges of $41.2 million, $37.1 million, and $5.7 million for the fiscal years ended September 30, 2015, 2014, and 2013, respectively. These charges are summarized below.

Welch Allyn Integration

In conjunction with the acquisition of Welch Allyn in September 2015, we eliminated approximately 80 positions, primarily in Welch Allyn’s corporate support and administrative functions, which became redundant as a result of merging into Hill-Rom. We recorded $14.4 million of special charges in conjunction with this action in fiscal 2015 for severance and employee benefits provided to affected employees. Many of the affected employees must continue service for a specified period of time after completion of the merger in order to receive the severance benefits offered. As a result, additional charges related to this action of approximately $3 million will be recorded in fiscal 2016 until those service obligations are fulfilled.

Pension Settlement Charge

As disclosed in Note 6, we offered lump sum settlements to all terminated vested participants in our domestic master defined benefit retirement plan, which resulted in a settlement charge of $9.6 million. This charge was recorded as a component of special charges in fiscal 2015.

Site Consolidation

In the third quarter of fiscal 2015, we initiated a plan to streamline our operations and simplify our supply chain by consolidating certain manufacturing and distribution operations. As part of this action, we announced the closure of sites in Redditch, England and Charleston, South Carolina. Upon closure, each site’s operations will either be relocated to other existing Company facilities or outsourced to third-party suppliers. For the year ended September 30, 2015, we recorded severance and benefit charges of $2.7 million for approximately 160 employees to be displaced by the closures, as well as $1.8 million of other related costs. We expect to incur approximately $3 million of additional charges in the first half of fiscal 2016 for personnel costs and site closure expenses related to this action until the closures are complete.

Global Restructuring Program

During the second quarter of fiscal 2014, we announced a global restructuring program focused on improving our cost structure. This action included early retirement and reduction in force programs that eliminated over 200 net positions, primarily in the U.S., where the action was substantially completed in fiscal 2014 with cash expenditures continuing during fiscal 2015. The program also included a reduction of our European manufacturing capacity and a streamlining of global operations by, among other things, executing a back office process transformation program in Europe. The restructuring in Europe is in process and has resulted in severance and benefit charges of $6.0 million for the year ended September 30, 2015, as well as other costs of $7.2 million related to legal and professional fees, temporary labor, project management, and other administrative functions. In the second quarter of fiscal 2015, we also reversed $0.5 million of previously recorded severance and benefit charges due to certain plan participants declining continuing healthcare coverage.

Since the inception of the global restructuring program through September 30, 2015, we have recognized aggregate special charges of $37.6 million, which are recorded in both fiscal 2014 and 2015. Charges of $24.9 million were recorded in the year ended September 30, 2014, net of reversals. We expect to incur $5 to $10 millionof additional European restructuring costs through the completion of the program.

Discontinuance of Third-Party Payer Rentals

Also during the second quarter of fiscal 2014, we initiated a plan to discontinue third-party payer rentals of therapy products occurring primarily in home care settings. Special charges recorded for this action included a $7.7 million non-cash tangible asset impairment charge, a $2.0 million charge for severance and other benefits for approximately 70 eliminated positions, and $1.6 million in other related costs, net of a reversal of $0.2 million which was recorded in the third quarter of fiscal 2014. This action is substantially complete.

Batesville Manufacturing Early Retirement Program

During the first quarter of fiscal 2014, we initiated a plan to improve our cost structure and streamline our organization by offering an early retirement program to certain manufacturing employees in our Batesville, Indiana plant, meeting specific eligibility requirements, and other minor reduction in force actions. These programs resulted in the elimination of approximately 35 positions and required recognition of a special charge of approximately $1 million for lump sum payments under the program and severance and other benefits provided to other affected employees. This action was substantially complete by the end of the second quarter of fiscal 2014.

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Fiscal 2013 Restructuring Program

During the second quarter of fiscal 2013, we announced a plan to improve our cost structure and streamline our organization by eliminating in excess of 100 positions across the Company, roughly half of which were contract and open positions. This resulted in a special charge of $1.7 million related to severance and other benefits to be provided to affected employees. We also incurred a contract termination charge of $0.6 million, a non-cash asset impairment charge of $0.2 million related to a product discontinuance action and $1.0 million in other related costs. We reversed $0.6 million of a fiscal 2012 severance and other benefits charge that was determined to be excessive during the second quarter of fiscal 2013. During the third and fourth quarters of fiscal 2013, we continued actions under the previously announced plan and incurred charges of $0.8 million and $2.0 million, respectively. These actions and the related cash expenditures are substantially complete.

For all accrued severance and other benefit charges described above, we record restructuring reserves within other current liabilities and other long-term liabilities. The reserve activity for severance and other benefits during fiscal 2015 was as follows:

Balance at September 30, 2014	$	11.7
Expenses		23.1
Cash Payments		(10.0	)
Reversals		(0.5	)
Balance at September 30, 2015	$	24.3

NOTE 9. INCOME TAXES

The significant components of income before income taxes and the consolidated income tax provision were as follows:

	Years Ended September 30
	2015			2014			2013
Income before income taxes:
Domestic	$	49.2		$	87.0		$	120.0
Foreign		15.9			28.2			24.0
Total	$	65.1		$	115.2		$	144.0
Income tax expense:
Current provision
Federal	$	35.3		$	40.2		$	45.0
State		3.6			3.1			1.8
Foreign		1.7			7.4			7.0
Total current provision		40.6			50.7			53.8
Deferred provision:
Federal		(18.1	)		(12.2	)		(9.9	)
State		(1.3	)		(1.0	)		1.1
Foreign		(2.9	)		17.1			(6.0	)
Total deferred provision		(22.3	)		3.9			(14.8	)
Income tax expense	$	18.3		$	54.6		$	39.0

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Differences between income tax expense reported for financial reporting purposes and that computed based upon the application of the statutory U.S. Federal tax rate to the reported income before income taxes were as follows:

	Years Ended September 30
	2015						2014						2013
				% of						% of						% of
				Pretax						Pretax						Pretax
	Amount			Income			Amount			Income			Amount			Income
Federal income tax (a)	$	22.8			35.0		$	40.3			35.0		$	50.4			35.0
State income tax (b)		1.6			2.4			2.0			1.7			2.5			1.7
Foreign income tax (c)		(10.2	)		(15.7	)		(7.7	)		(6.7	)		(5.7	)		(4.0	)
Application of federal tax credits		(2.2	)		(3.4	)		(0.6	)		(0.5	)		(3.5	)		(2.4	)
Adjustment of estimated income tax accruals		(1.6	)		(2.4	)		(0.6	)		(0.5	)		(1.5	)		(1.0	)
Valuation of tax attributes		4.0			6.2			21.3			18.5			0.6			0.4
Domestic manufacturer's deduction		(1.5	)		(2.3	)		(1.8	)		(1.5	)		(2.2	)		(1.5	)
Capitalized transaction costs		2.5			3.8			0.3			0.2			-			-
Other, net		2.9			4.5			1.4			1.2			(1.6	)		(1.1	)
Income tax expense	$	18.3			28.1		$	54.6			47.4		$	39.0			27.1

(a) At statutory rate.

(b) Net of Federal benefit.

(c) Federal tax rate differential.

The tax effect of temporary differences that gave rise to the deferred tax balance sheet accounts were as follows:

	Years Ended September 30
	2015			2014
Deferred tax assets:
Employee benefit accruals	$	106.4		$	49.3
Inventory		6.2			13.9
Reserve for bad debts		8.4			10.0
Net operating loss carryforwards		45.8			40.3
Tax credit carryforwards		11.7			2.5
Other, net		39.6			25.7
		218.1			141.7
Less:  Valuation allowance		(40.7	)		(28.3	)
Total deferred tax assets		177.4			113.4
Deferred tax liabilities:
Depreciation		(35.3	)		(13.9	)
Amortization		(409.1	)		(62.8	)
Other, net		(16.4	)		(4.9	)
Total deferred tax liabilities		(460.8	)		(81.6	)
Deferred tax asset (liability) - net	$	(283.4	)	$	31.8

At September 30, 2015, we had $43.2 million of deferred tax assets related to operating loss carryforwards in foreign jurisdictions that are subject to various carryforward periods with the majority eligible to be carried forward for an unlimited period. Additionally, we had $2.2 million of deferred tax assets related to federal net operating loss carryforwards which will expire between 2019 and 2033 and $0.4 million of deferred tax assets related to state net operating loss carryforwards, which expire between 2016 and 2033. We had $11.7 million of deferred tax assets related to state tax credits, some of which will be carried forward for an unlimited period and some of which will expire between 2016 and 2026.

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The gross deferred tax assets as of September 30, 2015 were reduced by valuation allowances of $40.7 million primarily related to certain foreign deferred tax attributes and state tax credit carryforwards as it is more likely than not that some portion or all of these tax attributes will not be realized. In evaluating whether it is more likely than not that we would recover our deferred tax assets, future taxable income, the reversal of existing temporary differences and tax planning strategies were considered. We believe that our estimates for the valuation allowances recorded against deferred tax assets are appropriate based on current facts and circumstances.

We operate under tax holidays in both Singapore and Puerto Rico. The Singapore tax holiday is effective through 2016 with potential to extend through 2018 while the Puerto Rico tax holiday is effective through 2025. Both incentives are conditional on meeting certain employment and/or investment thresholds. The impact of these tax holidays decreased foreign taxes by $4.3 million in fiscal 2015, $4.0 million for fiscal 2014 and $2.9 million for fiscal 2013. The benefit of the tax holidays on net income per share (diluted) was $0.07, $0.07 and $0.05 for fiscal 2015, 2014 and 2013, respectively.

With respect to the undistributed earnings of Welch Allyn’s foreign subsidiaries, given the timing of the acquisition, we are still evaluating the investment of such foreign earnings. As for the undistributed earnings of Hill-Rom’s foreign subsidiaries, including Welch Allyn for the post-acquisition period, foreign earnings are considered to be indefinitely reinvested for use in meeting working capital, business expansion and development, and other general needs. Accordingly, no provision has been made for deferred taxes related to the future repatriation of such earnings. If such earnings were repatriated, additional tax expense may result. It is not practicable to estimate the amount of tax that may be payable upon any such distribution.

We file a consolidated federal income tax return as well as multiple state, local and foreign jurisdiction tax returns. In the normal course of business, we are subject to examination by the taxing authorities in each of the jurisdictions where we file tax returns. During fiscal 2015, the Internal Revenue Service (“IRS”) concluded its audit for fiscal year 2013 and initiated its post-filing examination of the fiscal 2014 consolidated federal return. We continue to participate in the IRS Compliance Assurance Program (“CAP”) for fiscal year 2015 and have submitted the application to remain in the CAP for fiscal years 2016 and 2017. The CAP provides the opportunity for the IRS to review certain tax matters prior to us filing our tax return for the year, thereby reducing the time it takes to complete the post-filing examination. We are also subject to state and local or foreign income tax examinations by taxing authorities for years back to fiscal 2009.

Welch Allyn also filed a consolidated federal income tax return as well as multiple state, local and foreign jurisdiction tax returns. In the normal course of business, Welch Allyn is subject to examination by the taxing authorities in each of the jurisdictions where it files tax returns. During calendar year 2015, the Internal Revenue Service (“IRS”) concluded its post-filing audit for calendar year 2013 (subject to certain exceptions), and initiated its post-filing examination of the calendar year 2014 consolidated federal return. Welch Allyn continues to participate in the IRS Compliance Assurance Program (“CAP”) for 2015 to include the period up through the date of the acquisition by Hill-Rom on September 8, 2015. Thereafter, Welch Allyn will be integrated into Hill-Rom’s CAP going forward. Welch Allyn has received Partial Acceptance Letters from the IRS under CAP for calendar years 2011 through 2014 primarily for an issue that’s before Competent Authority.

We also have on-going audits in various stages of completion in several state and foreign jurisdictions, one or more of which may conclude within the next 12 months. Such settlements could involve some or all of the following: the payment of additional taxes, the adjustment of certain deferred taxes and/or the recognition of unrecognized tax benefits. The resolution of these matters, in combination with the expiration of certain statutes of limitations in various jurisdictions, make it reasonably possible that our unrecognized tax benefits may decrease as a result of either payment or recognition by approximately $0.5 to $1.5 million in the next twelve months, excluding interest.

The total amount of gross unrecognized tax benefits as of September 30, 2015, 2014 and 2013 was $5.8 million, $4.1 million and $4.6 million, which includes $3.3 million, $2.7 million and $3.9 million that, if recognized, would impact the effective tax rate in future periods. The remaining amount relates to items which, if recognized, would not impact our effective tax rate.

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A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	Years Ended September 30
	2015			2014			2013
Balance at October 1	$	4.1		$	4.6		$	9.8
Increases in tax position of prior years		0.4			2.1			-
Decreases in tax position of prior years		(1.3	)		(0.9	)		(0.5	)
Increases in tax positions related to the current year		-			-			0.1
Settlements with taxing authorities		(1.2	)		(0.1	)		(3.2	)
Lapse of applicable statute of limitations		(1.3	)		(1.5	)		(1.7	)
Increase in positions due to acquisitions		5.5			-			-
Foreign currency adjustments		(0.4	)		(0.1	)		0.1
Total change		1.7			(0.5	)		(5.2	)
Balance at September 30	$	5.8		$	4.1		$	4.6

We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. Accrued interest and penalties, which are not presented in the reconciliation table above, were $3.0 million, $0.4 million and $0.6 million at September 30, 2015, 2014 and 2013. Related to interest and penalties, we recognized an income tax benefit (expense) of $0.2 million in 2015, $0.2 million in 2014 and $0.1 million in 2013.

NOTE 10. EARNINGS PER COMMON SHARE

Basic earnings per share is calculated based upon the weighted average number of outstanding common shares for the period, plus the effect of deferred vested shares. Diluted earnings per share is calculated consistent with the basic earnings per share calculation plus the effect of dilutive unissued common shares related to stock-based employee compensation programs. For all years presented, anti-dilutive stock options were excluded from the calculation of dilutive earnings per share. Excluded shares were 0.2 million, 0.3 million and 1.4 million for fiscal years 2015, 2014 and 2013. Cumulative treasury stock acquired, less cumulative shares reissued, have been excluded in determining the average number of shares outstanding.

Earnings per share is calculated as follows:

	Years Ended September 30
	2015		2014		2013
Net income attributable to common shareholders	$	47.7	$	60.6	$	105.0
Average shares outstanding - Basic (thousands)		57,249		57,555		59,910
Add potential effect of exercise of stock options
and other unvested equity awards (thousands)		1,287		968		340
Average shares outstanding - Diluted (thousands)		58,536		58,523		60,250
Net income attributable to common shareholders per common share - Basic	$	0.83	$	1.05	$	1.75
Net income attributable to common shareholders per common share - Diluted	$	0.82	$	1.04	$	1.74

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NOTE 11. SEGMENT REPORTING

We disclose segment information that is consistent with the way in which management operates and views the business. Beginning in fiscal 2014, we changed our definition of divisional income within our internal reporting to management to exclude the impacts of acquisition-related intangible asset amortization. All segment information included below has been updated to reflect this change.

Our operating structure consists of the following three reporting segments:

· North America - sells and rents our patient support and near-patient technologies and services, as well as our health information technology solutions, in the U.S. and Canada.

· Surgical and Respiratory Care - sells and rents our surgical and respiratory care products globally.

· International - sells and rents similar products as our North America segment in regions outside of the U.S. and Canada.

Our performance under each reportable segment is measured on a divisional income basis before non-allocated operating and administrative costs, impairment of other intangibles, litigation, special charges, acquisition and integration costs, acquisition-related intangible asset amortization, and other unusual events. Divisional income generally represents the division’s gross profit less its direct operating costs along with an allocation of manufacturing and distribution costs, research and development and certain corporate functional expenses.

Non-allocated operating and administrative costs include functional expenses that support the entire organization such as administration, finance, legal and human resources, expenses associated with strategic developments, acquisition-related intangible asset amortization, and other events that are not indicative of operating trends. We exclude such amounts from divisional income to allow management to evaluate and understand divisional operating trends without the effects of such items.

In September 2015, we acquired Welch Allyn Holdings, Inc. (“Welch Allyn”). The results of Welch Allyn’s operations for the 22 days under our ownership are reported as a reconciling item in our segment disclosures for the year ended September 30, 2015.

	Years Ended September 30
	2015			2014			2013
Revenue:
North America	$	1,002.0		$	888.9		$	958.3
Surgical and Respiratory Care		506.6			301.6			245.8
International		429.4			495.6			512.1
Welch Allyn1		50.2			-			-
Total revenue	$	1,988.2		$	1,686.1		$	1,716.2
Divisional income:
North America	$	204.1		$	165.0		$	201.7
Surgical and Respiratory Care		80.5			68.6			56.8
International		12.8			24.9			33.5
Other:
Non-allocated operating costs, administrative costs, and other		173.1			98.8			131.4
Special charges		41.2			37.1			5.7
Operating profit		83.1			122.6			154.9
Interest expense		(18.4	)		(9.8	)		(9.5	)
Investment income and other, net		0.4			2.4			(1.4	)
Income before income taxes	$	65.1		$	115.2		$	144.0

1 Welch Allyn is not considered a separate reportable segment but is presented as a reconciling item to total consolidated revenue.

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Geographic Information

Geographic data for net revenue and long-lived assets (which consist mainly of property and equipment leased to others) were as follows:

	Years Ended September 30
	2015		2014		2013
Net revenue to unaffiliated customers: (a)
United States	$	1,273.0	$	1,070.8	$	1,116.4
Foreign		715.2		615.3		599.8
Total revenue	$	1,988.2	$	1,686.1	$	1,716.2
Long-lived assets: (b)
United States	$	263.9	$	151.7	$	158.0
Foreign		114.5		109.8		76.3
Total long-lived assets	$	378.4	$	261.5	$	234.3

(a)	Net revenue is attributed to geographic areas based on the location of the customer.
(b)	Includes property and equipment leased to others.

NOTE 12. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following table presents selected consolidated financial data by quarter for each of the last two fiscal years.

2015 Quarter Ended	December 31, 2014		March 31, 2015		June 30, 2015		September 30, 2015
Net revenue	$	465.0	$	474.8	$	474.5	$	573.9
Gross profit	$	199.9	$	214.2	$	209.5	$	256.7
Net income (loss) attributable to common shareholders	$	12.1	$	26.1	$	19.1	$	(9.6	)
Basic net income (loss) attributable to common      shareholders per common share	$	0.21	$	0.46	$	0.34	$	(0.16	)
Diluted net income (loss) attributable to common      shareholders per common share	$	0.21	$	0.45	$	0.33	$	(0.16	)

2014 Quarter Ended	December 31, 2013		March 31, 2014			June 30, 2014		September 30, 2014
Net revenue	$	393.4	$	415.3		$	397.6	$	479.8
Gross profit	$	176.8	$	202.7		$	187.1	$	213.3
Net income (loss) attributable to common shareholders	$	13.2	$	(3.3	)	$	26.1	$	24.6
Basic net income (loss) attributable to common      shareholders per common share	$	0.23	$	(0.06	)	$	0.46	$	0.43
Diluted net income (loss) attributable to common      shareholders per common share	$	0.22	$	(0.06	)	$	0.45	$	0.42

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NOTE 13. COMMITMENTS AND CONTINGENCIES

Lease Commitments

Rental expense for fiscal years 2015, 2014 and 2013 was $25.2 million, $24.7 million and $21.5 million. The table below indicates the minimum annual rental commitments (excluding renewable periods) aggregating $73.8 million, for manufacturing facilities, warehouse distribution centers, service centers and sales offices, under non-cancelable operating leases.

	Amount
2016	$	28.2
2017	$	18.4
2018	$	12.1
2019	$	6.3
2020	$	3.2
2021 and beyond	$	5.6

Self Insurance

We are involved with various possible claims, including product and general liability, workers’ compensation, auto liability and employment related matters. Such claims in the United States have deductibles and self-insured retentions ranging from $25 thousand to $1.0 million per occurrence or per claim, depending upon the type of coverage and policy period. International deductibles and self-insured retentions are lower. We are also generally self-insured up to certain stop-loss limits for certain employee health benefits, including medical, drug and dental. Our policy is to estimate reserves based upon a number of factors including known claims, estimated incurred but not reported claims and outside actuarial analysis, which are based on historical information along with certain assumptions about future events. Such estimated reserves are classified as Other Current Liabilities and Other Long-Term Liabilities within the Consolidated Balance Sheets.

Legal Proceedings

Universal Hospital Services, Inc. Litigation

On January 13, 2015, Universal Hospital Services, Inc. filed a complaint against us in the United States District Court for the Western District of Texas. The plaintiff alleges, among other things, that we engaged in certain customer contracting practices in violation of state and federal antitrust laws. The plaintiff also has asserted claims for tortious interference with business relationships. The plaintiff seeks injunctive relief and money damages in an unspecified amount. We believe that the allegations are without merit and intend to defend this matter vigorously.

Stryker Litigation

On April 4, 2011, we filed two separate actions against Stryker Corporation alleging infringement of certain Hill-Rom patents covering proprietary communications networks, status information systems and powered wheels used in our beds or stretchers. Both suits sought monetary damages and injunctions against Stryker for selling or distributing any beds, stretchers or ancillary products that infringe on Hill-Rom’s patents. On August 14, 2012, we entered into a confidential favorable settlement agreement with Stryker Corporation to resolve our claims about our powered wheel patents, and on March 26, 2015, we entered into a confidential favorable settlement agreement with Stryker Corporation to resolve our claims about our status information systems. No trial date for the remaining claims covering proprietary communications networks has been set, and accordingly we cannot, at this time, assess the likelihood of any potential outcome or damages or other relief.

General

We are subject to various other claims and contingencies arising out of the normal course of business, including those relating to governmental investigations and proceedings, 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 us, and that any such unfavorable decisions could have a material adverse effect on our financial condition, results of operations and cash flows.

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Item 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the supervision and participation of our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer (the “Certifying Officers”), has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2015. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and such information is accumulated and communicated to management, including our Certifying Officers and our Board of Directors, as appropriate to allow timely decisions regarding required disclosure.

Based upon that evaluation, the Certifying Officers concluded that our disclosure controls and procedures were effective as of September 30, 2015.

Management’s Report on Internal Control Over Financial Reporting

The report of management’s assessment of the effectiveness of our internal control over financial reporting as of September 30, 2015 and the related report of our independent registered public accounting firm, are included under Part II, Item 8 of this Form 10-K.

Changes in Internal Control Over Financial Reporting

We have excluded Welch Allyn from our assessment of internal control over financial reporting as of September 30, 2015, because Welch Allyn was acquired by us in a purchase business combination in the fourth quarter of 2015. Welch Allyn is a wholly-owned subsidiary whose total assets and total revenue represent 9 percent and 3 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended September 30, 2015. We are currently in the process of evaluating and integrating Welch Allyn’s historical internal control over financial reporting structure with ours. We expect to complete this integration in fiscal 2016.

Other than the changes noted above, there have been no other changes to our internal controls over financial reporting. Management’s report on our internal control over financial reporting is included under Item 8 above.

Item 9B. OTHER INFORMATION

None.

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PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item is incorporated herein by reference to our Proxy Statement to be filed with the SEC in January 2016 relating to our 2016 Annual Meeting of Shareholders (the “2016 Proxy Statement”), under the headings “Election of Directors”, “Section 16(a) Beneficial Ownership Reporting Compliance”, and “Corporate Governance.” Information relating to our executive officers is included in this report in Part I, Item 1 under the caption “Executive Officers of the Registrant.”

Item 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference to the 2016 Proxy Statement, under the heading “Executive Compensation.”

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item is incorporated herein by reference to the 2016 Proxy Statement, under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information.”

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporated herein by reference to the 2016 Proxy Statement, where such information is included under the heading “Corporate Governance.”

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item is incorporated herein by reference to the 2016 Proxy Statement, where such information is included under the heading “Proposals Requiring Your Vote - Ratification of Appointment of Independent Registered Public Accounting Firm.”

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PART IV

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents have been filed as a part of this Form 10-K or, where noted, incorporated by reference:

(1) Financial Statements

The financial statements of the Company and its consolidated subsidiaries are listed under Part II, Item 8 on the Index to Consolidated Financial Statements on page 41.

(2) Financial Statement Schedules

The financial statement schedule filed in response to Part II, Item 8 and Part IV, Item 15(c) of Form 10-K is listed under Part II, Item 8 on the Index to Consolidated Financial Statements on page 41.

(3) Exhibits (See changes to Exhibit Index below):

“The Exhibit Index, which follows the signature page to this Form 10-K and is hereby incorporated herein by reference, sets forth a list of those exhibits filed herewith, and includes and identifies management contracts or compensatory plans or arrangements required to be filed as exhibits to this Form 10-K by Item 601 (b)(10)(iii) of Regulation S-K.”

The agreements included as exhibits to this Form 10-K are intended to provide information regarding their terms and not to provide any other factual or disclosure information about us or the other parties to the agreements. The agreements may contain representations and warranties by the parties to the agreements, including us, solely for the benefit of the other parties to the applicable agreement. Such representation and warranties:

· should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

· may have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

· may apply standards of materiality in a way that is different from what may be viewed as material to certain investors; and

· were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.

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SCHEDULE II

HILL-ROM HOLDINGS, INC. AND SUBSIDIARIES

Valuation and Qualifying Accounts

For The Fiscal Years Ended September 30, 2015, 2014 and 2013

(Dollars in millions)

			ADDITIONS
	BALANCE AT		CHARGED TO		CHARGED TO				DEDUCTIONS				BALANCE
	BEGINNING		COSTS AND		OTHER				NET OF				AT END
DESCRIPTION	OF PERIOD		EXPENSES		ACCOUNTS				RECOVERIES				OF PERIOD
Reserves deducted from assets to which they apply:
Allowance for possible losses and sales returns -
accounts receivable:
Period Ended:
September 30, 2015	$	31.4	$	1.8	$	0.1		(a)	$	(7.3	)	(b)	$	26.0
September 30, 2014	$	30.1	$	1.5	$	8.6		(a)	$	(8.8	)	(b)	$	31.4
September 30, 2013	$	38.5	$	2.7	$	(0.1	)	(a)	$	(11.0	)	(b)	$	30.1
Allowance for inventory valuation:
Period Ended:
September 30, 2015	$	42.9	$	0.9	$	5.7		(c)	$	(4.0	)	(d)	$	45.5
September 30, 2014	$	22.0	$	4.0	$	19.8		(c)	$	(2.9	)	(d)	$	42.9
September 30, 2013	$	22.0	$	1.8	$	-			$	(1.8	)	(d)	$	22.0
Valuation allowance against deferred tax assets:
Period Ended:
September 30, 2015	$	28.3	$	4.0	$	11.1		(c)	$	(2.7	)	(e)	$	40.7
September 30, 2014	$	8.9	$	21.3	$	-			$	(1.9	)	(e)	$	28.3
September 30, 2013	$	8.6	$	0.6	$	-			$	(0.3	)	(e)	$	8.9

(a)	Reduction of gross revenue for uncollectible health care rental reimbursements, cash discounts and other adjustments in determining
	net revenue.  Also includes the effect of acquired businesses, if any.
(b)	Generally reflects the write-off  of specific receivables against recorded reserves.
(c)	Generally reflects the effect of acquired businesses, if any.
(d)	Generally reflects the write-off of specific inventory against recorded reserves.
(e)	Primarily reflects write-offs of deferred tax assets against the valuation allowance and other movement of the valuation allowance
	offset by an opposing change in deferred tax assets.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

HILL-ROM HOLDINGS, INC.
By:	/s/  John J. Greisch
	John J. Greisch
	President and Chief Executive Officer

Date: November 19, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

/s/      Rolf A. Classon	/s/       James R. Giertz
Rolf A. Classon Chairman of the Board	James R. Giertz Director
/s/       John J. Greisch	/s/       Charles E. Golden
John J. Greisch President and Chief Executive Officer and Director (Principal Executive Officer)	Charles E. Golden Director
/s/       Steven J. Strobel	/s/       William H. Kucheman
Steven J. Strobel            Senior Vice President and Chief Financial Officer            (Principal Financial Officer)	William H. Kucheman Director
/s/       Richard G. Keller	/s/       Ronald A. Malone
Richard G. Keller Vice President — Controller and Chief Accounting Officer            (Principal Accounting Officer)	Ronald A. Malone Director
/s/       William G. Dempsey.	/s/       Eduardo R. Menascé
William G. Dempsey Director	Eduardo R. Menascé Director
	Stacy Enxing Seng Director

Date: November 19, 2015

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HILL-ROM HOLDINGS, INC.

INDEX TO EXHIBITS

Management contracts and compensatory plans or arrangements are designated with “*”.

2.1 Agreement and Plan of Merger dated June 16, 2015 by and among Hill-Rom Holdings, Inc., Empire Merger Sub Corp., and Welch Allyn Holdings, Inc. (Incorporated herein by reference to Exhibit 2.1 filed with the Form 8-K dated June 17, 2015)

2.2 Share Purchase and Transfer Agreement dated as of June 13, 2014 by and among TRUMPF International Beteiligungs-GmbH, Hill-Rom Holdings Netherlands B.V., HR Europe B.V. and Hill-Rom Holdings, Inc. (Incorporated herein by reference to Exhibit 1.1 filed with Form 8-K dated June 16, 2014)

3.1 Restated and Amended Articles of Incorporation of Hill-Rom Holdings, Inc., as currently in effect (Incorporated herein by reference to Exhibit 3.1 filed with Form 8-K dated March 10, 2010)

3.2 Amended and Restated Code of By-Laws of Hill-Rom Holdings, Inc., as currently in effect (Incorporated herein by reference to Exhibit 3.2 filed with Form 8-K dated March 10, 2010)

4.1 Indenture dated as of December 1, 1991, between Hill-Rom Holdings, Inc. and Union Bank, N.A. (as successor to LaSalle Bank National Association and Harris Trust and Savings Bank) as Trustee (Incorporated herein by reference to Exhibit (4) (a) to Registration Statement on Form S-3, Registration No. 33-44086)

4.2 Indenture dated as of September 1, 2015, between Hill-Rom Holdings, Inc. and MUFG Union Bank, N.A., as Trustee (Incorporated herein by reference to Exhibit 10.1 to the Form 8-K dated September 8, 2015)

*10.1 Hill-Rom Holdings, Inc. Amended and Restated Short Term Incentive Compensation Program (Incorporated herein by reference to Exhibit 10.1 filed with Form 10-K dated November 24, 2009)

*10.2 Form of Director Indemnity Agreement (Incorporated herein by reference to Exhibit 10.6 filed with Form 10-K dated December 23, 2003)

*10.3 Form of Indemnity Agreement between Hill-Rom Holdings, Inc. and certain executive officers  (Incorporated herein by reference to Exhibit 10.6 filed with Form 10-K dated November 16, 2011)

*10.4 Hill-Rom Holdings, Inc. Board of Directors’ Deferred Compensation Plan (Incorporated herein by reference to Exhibit 10.10 filed with Form 10-Q dated July 13, 2001)

*10.5 Hill-Rom Holdings, Inc. Director Phantom Stock Plan and form of award (Incorporated herein by reference to Exhibit 10.11 filed with Form 10-Q dated July 13, 2001)

*10.6 Form of Non-Qualified Stock Option Agreement under Amended and Restated Hill-Rom Holdings, Inc. Stock Incentive Plan (Incorporated herein by reference to Exhibit 10.11 filed with Form 10-K dated November 16, 2011)

*10.7 Form of Non-Qualified Stock Option Agreement (CEO version) under Amended and Restated Hill-Rom Holdings, Inc. Stock Incentive Plan (Incorporated herein by reference to Exhibit 10.12 filed with Form 10-K dated November 16, 2011)

*10.8 Amended and Restated Hill-Rom Holdings, Inc. Stock Incentive Plan, as currently in effect (Incorporated herein by reference to Exhibit 10.30 filed with Form 10-K dated November 24, 2009)

*10.9 Employment Agreement dated as of March 31, 2008 between Hill-Rom Company, Inc. and Richard G. Keller (Incorporated herein by reference to Exhibit 10.12 filed with Form 10-Q dated May 14, 2008)

*10.10 Hill-Rom Holdings, Inc. Employee Stock Purchase Plan (Incorporated by reference to Appendix I to the Company’s definitive Proxy Statement on Schedule 14A dated January 7, 2009)

85

*10.11 Employment Agreement dated January 6, 2010 between Hill-Rom Holdings, Inc. and John J. Greisch (Incorporated herein by reference to Exhibit 10.1 filed with Form 8-K dated January 7, 2010)

*10.12 Employment Agreement between Hill-Rom Holdings, Inc. and Susan R. Lichtenstein dated May 10, 2010 (Incorporated herein by reference to Exhibit 10.7 filed with Form 10-Q dated May 6, 2010)

*10.13 Form of Change in Control Agreement between Hill-Rom Holdings, Inc. and certain of its officers, including Named Executive Officers (other than the CEO) (Incorporated by reference to Exhibit 10.58 filed with the Company’s Form 10-K dated November 17, 2010)

*10.14 Amended Change in Control Agreement between Hill-Rom Holdings, Inc. and John J. Greisch dated September 30, 2010 (Incorporated by reference to Exhibit 10.59 filed with the Company’s Form 10-K dated November 17, 2010)

*10.15 2014 Non-Employee Director Compensation Policy

*10.16 Form of Restricted Stock Unit Agreement under Amended and Restated Hill-Rom Holdings, Inc. Stock Incentive Plan (Incorporated by reference to Exhibit 10.63 filed with the Company’s Form 10-K dated November 17, 2010)

*10.17 Form of Restricted Stock Unit Agreement (CEO version) under Amended and Restated Hill-Rom Holdings, Inc. Stock Incentive Plan (Incorporated by reference to Exhibit 10.65 filed with the Company’s Form 10-K dated November 17, 2010)

*10.18 FY 2011 Form of Performance Based Stock Award under the Stock Incentive Plan (Incorporated by reference to Exhibit 10.61 filed with the Company’s Form 10-K dated November 16, 2011)

*10.19 FY 2011 Form of Performance Based Stock Award under the Stock Incentive Plan (CEO version) (Incorporated by reference to Exhibit 10.62 filed with the Company’s Form 10-K dated November 16, 2011)

*10.20 Hill-Rom Holdings, Inc. Short-Term Incentive Plan (Incorporated by reference to Appendix 1 to the Hill-Rom Holdings, Inc. Definitive Proxy Statement on Schedule 14A dated January 18, 2011)

*10.21 Hill-Rom Holdings, Inc. Amended and Restated Supplemental Executive Retirement Plan (Incorporated by reference to Exhibit 10.69 filed with the Company’s Form 10-K dated November 16, 2011)

*10.22 Employment Agreement between Hill-Rom Holdings, Inc. and Alton Shader, dated July 11, 2011 (Incorporated by reference to Exhibit 10.2 filed with the Company’s Form 10-Q dated July 28, 2011)

*10.23 Employment Agreement between Hill-Rom Holdings, Inc. and Andreas Frank, dated October 3, 2011 (Incorporated by reference to Exhibit 10.72 filed with the Company’s Form 10-K dated November 16, 2011)

*10.24 Employment Agreement between Hill-Rom Holdings, Inc. and Carlyn Solomon, dated October 3, 2014 (Incorporated by reference to Exhibit 10.1 filed with the Company’s Form 8-K dated October 9, 2014)

*10.25 Employment Agreement between Hill-Rom Holdings, Inc. and Steven Strobel, dated October 23, 2014 (Incorporated by reference to Exhibit 10.1 filed with the Company’s Form 8-K dated October 27, 2014)

10.26 Credit Agreement dated as of September 8, 2015 among Hill-Rom Holdings, Inc., the lenders named therein, and JPMorgan Chase Bank N.A. as Term Loan A agent for the lenders and Goldman Sachs Bank USA as Term Loan B agent for the lenders (Incorporated herein by reference to Exhibit 10.1 to the Form 8-K dated September 8, 2015)

*10.27 Form of Limited Recapture Agreement between Hill-Rom Holdings, Inc. and certain of its officers, including Named Executive Officers (Incorporated by reference to Exhibit 10.34 filed with the Company’s Form 10-K dated November 20, 2013)

*10.28 Employment Agreement between Hill-Rom Holdings, Inc. and Carlos Alonso-Marum dated March 19, 2015 (Incorporated herein by reference to Exhibit 10.2 to the Form 10-Q dated August 7, 2015)

86

*10.29  Employment Agreement between Hill-Rom Holdings, Inc. and Kenneth Meyers dated September 23, 2015

*10.30  Employment Agreement between Hill-Rom Holdings, Inc. and Taylor Smith dated November 11, 2013

10.31  FY 2016 Non-Employee Director Compensation Policy

21 Subsidiaries of the Registrant

23 Consent of Independent Registered Public Accounting Firm

31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS     XBRL Instance Document

101.SCH    XBRL Taxonomy Extension Schema Document

101.CAL    XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF    XBRL Taxonomy Extension Definition Linkbase Document

101.LAB    XBRL Extension Labels Linkbase Document

101.PRE    XBRL Taxonomy Extension Presentation Linkbase Document

87

EX-10.29

Exhibit 10.29

EMPLOYMENT AGREEMENT

P R E A M B L E

This Employment Agreement defines the essential terms and conditions of our employment relationship with you.  The subjects covered in the Agreement are vitally important to you and to the Company.  Thus, you should read the document carefully and ask any questions before signing the Agreement.

This EMPLOYMENT AGREEMENT between Ken Meyers (“Executive”) and Hill-Rom Holdings, Inc. (“Company”) is dated this 21st day of September, 2015.

W I T N E S S E T H:

WHEREAS, the Company and its affiliated entities are engaged in the healthcare industry throughout the United States and abroad including, but not limited to, the design, manufacture, sale, service and rental of hospital beds and stretchers, hospital furniture, medical-related architectural products, specialty sleep surfaces (including therapeutic surfaces), air clearing devices, biomedical and asset management services, as well as other medical-related accessories, devices, products and services;

WHEREAS, the Company is willing to employ Executive in an executive or managerial position and Executive desires to be employed by the Company in such capacity based upon the terms and conditions set forth in this Agreement;

WHEREAS, in the course of the employment contemplated under this Agreement, it will be necessary for Executive to acquire and maintain knowledge of certain trade secrets and other confidential and proprietary information regarding the Company as well as any of its parent, subsidiary and/or affiliated entities (hereinafter jointly referred to as the “Companies”); and

WHEREAS, the Company and Executive (collectively referred to as the “Parties”) acknowledge and agree that the execution of this Agreement is necessary to memorialize the terms and conditions of their employment relationship as well as safeguard against the unauthorized disclosure or use of the Company’s confidential information and to otherwise preserve the goodwill and ongoing business value of the Company;

NOW THEREFORE, in consideration of Executive’s employment, the Company’s willingness to disclose certain confidential and proprietary information to Executive and the mutual covenants contained herein as well as other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties agree as follows:

1. Employment.  As of Executive’s first date of employment with the Company (“Start Date”), as mutually agreed upon by the Company and Executive, the Executive agrees to serve as Senior Vice President, Administration and Chief Human Resources Officer of the Company, reporting to the Chief Executive Officer of the Company.  Executive agrees to perform all duties and responsibilities traditionally assigned to, or falling within the normal responsibilities of, an individual employed as Senior Vice President, Administration and Chief Human Resources Officer of the Company.  Executive also agrees to perform any and all additional duties or responsibilities consistent with such position as may be assigned by the Board of Directors or the Chief Executive of the Company in its or his sole discretion.

2. Efforts and Duty of Loyalty.  During the term of employment with the Company, Executive covenants and agrees to exercise reasonable efforts to perform all assigned duties in a diligent and professional manner and in the best interest of the Company.  Executive agrees to devote his full working time, attention, talents, skills and efforts to further the Company’s business interests.  Executive agrees not to engage in any outside business activity, whether or not pursued for gain, profit or other pecuniary advantage, without the express written consent of the Company.  Executive shall act at all times in accordance with the Company’s Code of Ethical Business Conduct, and all other applicable policies which may exist or be adopted by the Company from time to time.  The Executive may serve on other boards of directors as shall not interfere with the proper performance of his duties and obligations hereunder consistent with the Company’s Corporate Governance Standards for Board of Directors and applicable laws, with the prior consent of the Company.

3. At-Will Employment.  Subject to the terms and conditions set forth below, Executive specifically acknowledges and accepts such employment on an “at-will” basis and agrees that both Executive and the Company retain the right to terminate this relationship at any time, with or without cause, for any reason not prohibited by applicable law upon notice as required by this Agreement.  Executive acknowledges that nothing in this Agreement is intended to create, nor should be interpreted to create, an employment contract for any specified length of time between the Company and Executive.

4. Compensation.  For all services rendered by Executive on behalf of, or at the request of, the Company, in his capacity as Senior Vice President, Administration and Chief Human Resources Officer of the Company, Executive shall be compensated as follows from and after the Start Date, subject to withholding for payment of any and all applicable federal, state and local payroll and withholding taxes.

(a) Base Salary.  For the services performed by him under this Agreement, the Company shall pay Executive a base salary of Four Hundred Twenty Five Thousand Dollars ($425,000) per year, pro-rated for the period which Executive serves (“Base Salary”).  The Base Salary shall be paid in the same increments as the Company’s normal payroll, but no less frequently than monthly and prorated for any period less than a full month.  Executive’s Base Salary shall be reviewed at least annually, with the initial review taking place during the fourth quarter of 2016.

2

(b) STIC Bonus.  Incentive compensation, payable solely at the discretion of the Board of Directors of the Company, pursuant to the Company’s existing Incentive Compensation Program or any other program as the Company may establish from time to time in its sole discretion.  For each fiscal year, the annual performance bonus target will be not less than 60% of base salary earned during such fiscal year.  Bonus will be based upon the performance measure and objectives established by the Board from time to time, but ultimately subject to the Compensation and Management Development Committee’s (“CMDC”) discretion.  Minimum bonus will be 0% of target and maximum bonus will be 200% of target.

(c) Long-Term Incentive Plan.  The Executive will be eligible to participate in the long-term incentive plan in place at the time and as authorized by the CMDC, at the time of the normal equity grant, with the first year’s target value of 175% of base salary.  The Award is expected to be comprised of stock options, restricted stock units and performance shares, in combination or exclusively, realizing the proportional mix may change over time in consultation with the Executive and the Board.

(d) Sign On Equity Grant. Executive shall receive a one-time award in the amount of One Million Two Hundred Fifty Thousand Dollars ($1,250,000.00), comprised of Restricted Stock Units, vesting in equal amounts on an annual basis over three years from the date of award.  Following the Start Date, Executive will be provided with a Hill-Rom Holdings, Inc. award agreement providing the terms and additional details regarding Executive’s one time award.

(e) Intentionally Omitted

(f) Retirement Plans.  Commencing on the Start Date, Executive will be entitled to participate in Company retirement plans (e.g., 401(k) Savings Plan and Supplemental Executive Retirement Plan) consistent with plans, programs or policies available to other senior executive officers of the Company and subject to satisfaction of any applicable eligibility requirements.

(g) Other Benefits.  Commencing on the Start Date, Executive will be entitled to participate in and receive such additional benefits and perquisites, including health and welfare benefits (such as a Company-paid Executive physical examination) as are available to other senior executives of the Company and as the Board of Directors of Company may deem appropriate and as pre-approved by the Compensation and Management Development Committee of the Board.  Executive will be entitled to 26 days of paid time off.

5. Changes to Compensation.  Notwithstanding anything contained herein to the contrary, Executive acknowledges that the Company specifically reserves the right to make changes to Executive’s compensation in its sole discretion including, but not limited to, modifying or eliminating a compensation component.  The Parties agree that such changes shall be deemed effective immediately and a modification of this Agreement unless, within thirty (30) days after receiving notice of such change, Executive exercises his right to terminate this Agreement without cause or for “Good Reason,” in the event Executive is not treated in a manner that is commensurate with the treatment of other senior executives of the Company, if applicable, as provided below in Paragraphs Nos. 9 and 11.

3

6. Direct Deposit.  As a condition of employment, and within thirty (30) days of the Start Date of this Agreement, Executive agrees to make all necessary arrangements to have all sums paid pursuant to this Agreement direct deposited into one or more bank accounts as designated by Executive.

7. Predecessor Employers.  Except as otherwise disclosed in writing to the Compensation Committee of the Board prior to the date hereof Executive warrants that he is not a party to any contract, restrictive covenant, or other agreement purporting to limit or otherwise adversely affecting his ability to secure employment with any third party.  Alternatively, should any such agreement exist, Executive warrants that the contemplated services to be performed hereunder will not violate the terms and conditions of any such agreement.

8. Restricted Duties.  Executive agrees not to disclose, or use for the benefit of the Company, any confidential or proprietary information belonging to any predecessor employer(s) that otherwise has not been made public and further acknowledges that the Company has specifically instructed him not to disclose or use such confidential or proprietary information.  Based on his understanding of the anticipated duties and responsibilities hereunder, Executive acknowledges that such duties and responsibilities will not compel the disclosure or use of any such confidential and proprietary information.

9. Termination Without Cause.  The Parties agree that either party may terminate this employment relationship at any time, without cause, upon sixty (60) days’ advance written notice or, if terminated by the Company, pay in lieu of notice (hereinafter referred to as “notice pay”).  In such event, Executive shall only be entitled to such compensation, benefits and perquisites that have been paid or fully accrued as of the effective date of his separation and as otherwise explicitly set forth in this Agreement.  However, in no event shall Executive be entitled to notice pay if Executive is eligible for and accepts severance payments pursuant to the provisions of Paragraphs 16 and 17, below.  Notice pay shall be paid as if the Executive remained on payroll, subject to Paragraph 14 hereof.

10. Termination With Cause.  Executive’s employment may be terminated by the Company at any time “for cause” without notice or prior warning.  For purposes of this Agreement, “cause” shall mean the Company’s good faith determination that Executive has:

(a) Acted with gross neglect or willful misconduct in the discharge of his duties and responsibilities, or refused to follow or comply with the lawful direction of the Board of Directors of the Company, the Chief Executive Officer or the terms and conditions of this Agreement providing such refusal is not based primarily on Executive’s good faith compliance with applicable legal or ethical standards.

(b) Acquiesced or participated in any conduct that is dishonest, fraudulent, illegal, unethical, involves moral turpitude or is otherwise illegal and involves conduct that has the potential, in the Board of Directors’ reasonable opinion, to cause the Company, its officers or its directors significant embarrassment or ridicule;

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(c) Violated a material requirement of any Company policy or procedure, specifically including a violation of the Company’s Code of Ethics or Associate Policy Manual;

(d) Disclosed without proper authorization any trade secrets or other Confidential Information (as defined herein);

(e) Engaged in any act that, in the reasonable opinion of the Board of Directors of the Company would hold the Company, its officers or directors up to probable civil or criminal liability, provided that, if Executive acts in good faith for compliance with applicable legal or ethical standards, such actions shall not be grounds for termination for cause;

(f) Breached the warranties of Executive set forth in Paragraph 7 herein; or

(g) Engaged in such other conduct recognized at law as constituting cause.

Upon the occurrence or discovery of any event specified above, the Company shall have the right to terminate Executive’s employment, effective immediately, by providing notice thereof to Executive without further obligation to him other than accrued wages or other accrued wages, deferred compensation or other accrued benefits of employment (collectively referred to herein as “Accrued Obligations”), which shall be paid in accordance with the Company’s past practice and applicable law.  To the extent any violation of this Paragraph is capable of being promptly cured by Executive (or cured within a reasonable period to the Company’s satisfaction), the Company agrees to provide Executive with a reasonable opportunity to so cure such defect.  Absent written mutual agreement otherwise, the Parties agree in advance that it is not possible for Executive to cure any violations of sub-paragraphs (b), (d) or (f) and, therefore, no opportunity for cure need be provided in those circumstances.  Notwithstanding the foregoing, the Company may not terminate the Executive’s employment for cause unless (A) a determination that cause exists is made and approved by a majority of the Company’s Board, (B) if the circumstance giving rise to the issue are capable of being cured the Executive is given at least ten (10) days’ written notice of the Board meeting called to make such determination, and (C) the Executive is given the opportunity to address such meeting.

11. Termination by Executive for Good Reason.  Executive may terminate his employment and declare this Agreement to have been terminated “without cause” by the Company (and, therefore, for “Good Reason”) upon the occurrence, without Executive’s consent, of any of the following circumstances:

(a) The assignment to Executives of duties that are materially inconsistent with Executive’s position as Senior Vice President, Administration and Chief Human Resources Officer;

(b) The failure to elect or reelect Executive as Senior Vice President, Administration and Chief Human Resources Officer of the Company (unless such failure is related in any way to the Company’s decision to terminate Executive for cause);

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(c) A reduction by the Company in the amount of Executive’s base salary or the discontinuation or reduction by the Company of Executive’s participation at previously existing levels of eligibility in any incentive compensation, additional compensation or equity programs, benefits, policies or perquisites; provided, however, that the Company may make such changes and/or reductions without implicating the provisions of this subsection (c) so long as Executive is treated in a manner that is commensurate with the treatment of other senior executives of the Company;

(d) A failure by the Company to perform its obligations under this Employment Agreement, which, in each of subsections (a) through (d) above, is not remedied by the Company within thirty (30) days of receipt of written notice of such event or breach delivered by Executive to the Company within ninety (90) days of the occurrence of the event.  Any termination of employment by the Executive shall be within sixty (60) days of the end of the cure period.

12. Termination Due to Death or Disability.  In the event Executive dies or suffers a disability (as defined herein) during the term of employment, this Agreement shall automatically be terminated on the date of such death or disability without further obligation on the part of the Company other than the Accrued Obligations (as defined in Section 10) except that Executive will be immediately vested in the Supplemental Executive Retirement Plan, which shall be paid in accordance with the award agreements, benefits plans, past practice and applicable law.  For purposes of this Agreement, Executive shall be considered to have suffered a “disability”:  (i) upon a good faith determination by Company that, as a result of any mental or physical impairment, Executive is and will likely remain unable to perform the essential functions of his duties or responsibilities hereunder on a full-time basis for one hundred eighty (180) days, with or without reasonable accommodation, or (ii) Executive becomes eligible for or receives any benefits pursuant to the Company’s long-term disability policy.  Notwithstanding anything expressed or implied above to the contrary, the Company agrees to fully comply with its obligations under the Family and Medical Leave Act of 1993 and the Americans with Disabilities Act as well as any other applicable federal, state, or local law, regulation, or ordinance governing the provision of leave to individuals with serious health conditions or the protection of individuals with disabilities as well as the Company’s obligation to provide reasonable accommodation thereunder.

13. Reaffirmation.  Upon termination of Executive’s employment for any reason, Executive agrees, if requested to reaffirm in writing his post-employment obligation as set forth in this Agreement.

14. Code Section 409A Notification.  Executive acknowledges that he has been advised of the American Jobs Creation Act of 2004, which includes Internal Revenue Code Section 409A, and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”), and which also significantly changed the taxation of nonqualified deferred compensation plans and arrangements.

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(a) The intent of the parties is that payments and benefits under this Agreement comply with, or be exempt from, Code Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in accordance therewith.  If any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause the Executive to incur any additional tax or interest under Code Section 409A, the Company shall, after consulting with the Executive, reform such provision to try to comply with Code Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Code Section 409A.  To the extent that any provision hereof is modified in order to comply with Code Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to the Executive and the Company of the applicable provision without violating the provisions of Code Section 409A.

(b) A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment that are considered “nonqualified deferred compensation” under Code Section 409A unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”  If the Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment that is considered non-qualified deferred compensation under Code Section 409A payable on account of a “separation from service,” and with regard to which an exemption from such section does not apply, such payment or benefit shall be made or provided at the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such “separation from service” of the Executive, and (B) the date of the Executive’s death (the “Delay Period”).  Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 14 (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

(c) With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall not be violated without regard to expenses reimbursed under any arrangement covered by Internal Revenue Code Section 105(b) solely because such expenses are subject to a limit related to the period the arrangement is in effect and (iii) such payments shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense occurred.

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(d) For purposes of Code Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.  In no event may the Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement that is considered nonqualified deferred compensation.  In no event shall the timing of Executive’s execution of the Separation and Release Agreement, directly or indirectly, result in the Executive designating the calendar year of payment, and if a payment that is subject to execution of the Separation and Release Agreement could be made in more than one taxable year, payment shall be made in the later taxable year.

15. Code Section 409A Acknowledgement.  Executive acknowledges that, notwithstanding anything contained herein to the contrary, both Parties shall be independently responsible for assessing their own risks and liabilities under Code Section 409A that may be associated with any payment made under the terms of this Agreement or any other arrangement which may be deemed to trigger Code Section 409A.  Further, the Parties agree that each shall independently bear responsibility for any and all taxes, penalties or other tax obligations as may be imposed upon them in their individual capacity as a matter or law.

16. Severance Payments.  In the event Executive’s employment is terminated by the Company without cause (including by Executive for Good Reason), and subject to the normal terms and conditions imposed by the Company as set forth herein and in the attached Separation and Release Agreement (Exhibit A), Executive shall be eligible to receive severance pay based upon his base salary at the time of termination for a period of twelve (12) months.  Executive will be immediately vested in the Supplemental Executive Retirement Plan.  Additionally, the Company shall arrange for the Executive to continue to participate (through COBRA or otherwise), on substantially the same terms and conditions as in effect for the Executive (including any required active employee contribution) immediately prior to such termination, in the health and similar welfare benefits provided to the Executive until the earlier of (i) the end of the 12 month period beginning on the effective date of the termination of Executive’s employment hereunder, or (ii) such time as the Executive is eligible to be covered by comparable benefits of a subsequent employer.  The Executive agrees to notify the Company promptly if and when he begins employment with another employer and if and when he becomes eligible to participate in any health or welfare plans of another employer.  The foregoing severance rights and obligations shall not exist if Executive voluntarily leaves the Company’s employ without “Good Reason” (as defined above) or is terminated for “cause” (as defined above).

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17. Severance Payment Terms and Conditions.  No severance pay shall be paid if Executive voluntarily leaves the Company’s employ without Good Reason, as defined above, or is terminated for cause.  Any severance pay made payable under this Agreement shall be paid in lieu of, and not in addition to, any other contractual, notice or statutory pay or other accrued compensation obligation (excluding accrued wages and deferred compensation).  Additionally, such severance pay is contingent upon Executive materially complying with the restrictive covenants contained herein and executing a Separation and Release Agreement in a form not substantially different from that attached as Exhibit A. Further, the Company’s obligation to provide severance hereunder shall be deemed null and void should Executive fail or refuse to execute and deliver to the Company the Company’s then-standard Separation and Release Agreement (without modification, and which shall not include any restrictive covenants not contained herein and shall not change the Company’s indemnification/liability insurance obligations set forth herein or elsewhere) within any time period as may be prescribed by law or, in absence thereof, twenty-one (21) days after the Executive’s Effective Termination Date.  Except as required by Code Section 409A, the above severance pay shall be paid in accordance with the Company’s standard payroll practices (e.g. bi-weekly), except no payment shall be made until after the Separation and Release Agreement becomes effective and the first payment thereafter shall include any missed payment.  Notwithstanding the foregoing, if any execution and revocation period overlap two calendar years, payments will be paid in the second (2nd) calendar year.  Amounts that are nonqualified deferred compensation under Code Section 409A that would otherwise be payable during the six (6) month period immediately following termination shall be paid, with interest, settled, made, or provided, on the expiration of the Delay Period.  Notwithstanding, the foregoing Section is subject to the provisions of Code Section 409A.

18. Assignment of Rights.

(a) Copyrights.  Executive agrees that all works of authorship fixed in any tangible medium of expression by him during the term of this Agreement relating to the Company’s business (“Works”), either solely or jointly with others, shall be and remain exclusively the property of the Company.  Each such Work created by Executive is a “work made for hire” under the copyright law and the Company may file applications to register copyright in such Works as author and copyright owner thereof.  If, for any reason, a Work created by Executive is excluded from the definition of a “work made for hire” under the copyright law, then Executive does hereby assign, sell, and convey to the Company the entire rights, title, and interests in and to such Work, including the copyright therein, to the Company.  Executive will execute any documents that the Company deems necessary in connection with the assignment of such Work and copyright therein.  Executive will take whatever steps and do whatever acts the Company requests, including, but not limited to, placement of the Company’s proper copyright notice on Works created by Executive to secure or aid in securing copyright protection in such Works and will assist the Company or its nominees in filing applications to register claims of copyright in such Works.  The Company shall have free and unlimited access at all times to all Works and all copies thereof and shall have the right to claim and take possession on demand of such Works and copies.

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(b) Inventions.  Executive agrees that all discoveries, concepts, and ideas, whether patentable or not, including, but not limited to, apparatus, processes, methods, compositions of matter, techniques, and formulae, as well as improvements thereof or know-how related thereto, relating to any present or prospective product, process, or service of the Company (“Inventions”) that Executive conceives or makes during the term of this Agreement relating to the Company’s business, shall become and remain the exclusive property of the Company, whether patentable or not, and Executive will, without royalty or any other consideration:

(i) Inform the Company promptly and fully of such Inventions by written reports, setting forth in detail the procedures employed and the results achieved;

(ii) Assign to the Company all of his rights, title, and interests in and to such Inventions, any applications for United States and foreign Letters Patent, any United States and foreign Letters Patent, and any renewals thereof granted upon such Inventions;

(iii) Assist the Company or its nominees, at the expense of the Company, to obtain such United States and foreign Letters Patent for such Inventions as the Company may elect; and

(iv) Execute, acknowledge, and deliver to the Company at the Company’s expense such written documents and instruments, and do such other acts, such as giving testimony in support of his inventorship, as may be necessary in the opinion of the Company, to obtain and maintain United States and foreign Letters Patent upon such Inventions and to vest the entire rights and title thereto in the Company and to confirm the complete ownership by the Company of such Inventions, patent applications, and patents.

19. Company Property.  All records, files, drawings, documents, data in whatever form, business equipment (including computers, PDAs, cell phones, etc.), and the like relating to, or provided by, the Company shall be and remain the sole property of the Company.  Upon termination of employment, Executive shall immediately return to the Company all such items without retention of any copies and without additional request by the Company.  De minimis items such as pay stubs, 401(k) plan summaries, employee bulletins, and the like are excluded from this requirement.  Executive may retain his address books to the extent they only contain contact information.

20. Confidential Information.  Executive acknowledges that the Company and its affiliated entities (herein collectively referred to as “Companies”) possess certain trade secrets as well as other confidential and proprietary information which they have acquired or will acquire at great effort and expense.  Such information may include, without limitation, confidential information, whether in tangible or intangible form, regarding the Companies’ products and services, marketing strategies, business plans, operations, costs, current or prospective customer information (including customer identities, contacts, requirements, creditworthiness, preferences, and like matters), product concepts, designs, prototypes or specifications, research and development efforts, technical data and know-how, sales information, including pricing and other terms and conditions of sale, financial information, internal procedures, techniques, forecasts, methods, trade information, trade secrets, software programs, project requirements, inventions, trademarks, trade names, and similar information regarding the Companies’ business(es) (collectively referred to herein as “Confidential Information”).  Executive further acknowledges that, as a result of his employment with the Company, Executive will have access to, will become acquainted with, and/or may help develop, such Confidential Information.  Confidential Information shall not include information readily available in the public so long as such information was not made available through fault of Executive or wrong doing by any other individual.

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21. Restricted Use of Confidential Information.  Executive agrees that all Confidential Information is and shall remain the sole and exclusive property of the Company and/or its affiliated entities.  Except as may be expressly authorized by the Company in writing, or other than in the course of the Executive’s employment and for the benefit of the Company, Executive agrees not to disclose, or cause any other person or entity to disclose, any Confidential Information to any third party while employed by the Company and for as long thereafter as such information remains confidential (or as limited by applicable law).  Further, Executive agrees to use such Confidential Information only in the course of Executive’s duties in furtherance of the Company’s business and agrees not to make use of any such Confidential Information for Executive’s own purposes or for the benefit of any other entity or person.  The foregoing shall not apply to information that (a) was known to the public prior to its disclosure to the Executive; (b) becomes generally known to the public subsequent  to disclosure to the Executive through no wrongful act of the Executive or any representative of the Executive; or (c) the Executive is required to disclose by applicable law, regulation or legal process (provided that the Executive provides the Company with prior notice of the contemplated disclosure and cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information).

22. Acknowledged Need for Limited Restrictive Covenants.  Executive acknowledges that the Companies have spent and will continue to expend substantial amounts of time, money and effort to develop their business strategies, Confidential Information, customer identities and relationships, goodwill and Executive relationships, and that Executive will benefit from these efforts.  Further, Executive acknowledges the inevitable use of, or near-certain influence by his knowledge of, the Confidential Information disclosed to Executive during the course of employment if allowed to compete against the Company in an unrestricted manner and that such use would be unfair and extremely detrimental to the Company.  Accordingly, based on these legitimate business reasons, Executive acknowledges each of the Companies’ need to protect their legitimate business interests by reasonably restricting Executive’s ability to compete with the Company on a limited basis.

23. Non-Solicitation.  During Executive’s employment and for a period of twenty-four (24) months thereafter, Executive agrees not to directly or indirectly engage in the following prohibited conduct:

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(a) Solicit, offer products or services to, or accept orders for, any Competitive Products or otherwise transact any competitive business on behalf of any Competitor;

(b) Attempt on behalf of any Competitor to entice or otherwise cause any third party to withdraw, curtail or cease doing business with the Company (or any Affiliate thereof), specifically including customers, vendors, independent contractors and other third party entities;

(c) Except in the course of the Executive’s employment and for the benefit of the Company, disclose to any person or entity the identities, contacts or preferences of any customers of the Company (or any Affiliate thereof), or the identity of any other persons or entities having business dealings with the Company (or any Affiliate thereof);

(d) Induce any individual who has been employed by or had provided services to the Company (or any Affiliate thereof) within the six (6) month period immediately preceding the effective date of Executive’s separation to terminate such relationship with the Company (or any Affiliate thereof);

(e) Assist, coordinate or otherwise offer employment to, accept employment inquiries from, or employ any individual who is or had been employed by the Company (or any Affiliate thereof) at any time within the six (6) month period immediately preceding such offer, or inquiry;

(f) Communicate or indicate in any way to any customer of the Company (or any Affiliate thereof), prior to formal separation from the Company, any interest, desire, plan, or decision to separate from the Company; other than by way of long term retirement plans; or

(g) Otherwise attempt on behalf of any Competitor to directly or indirectly interfere with the Company’s business, the business of any of the Companies or their relationship with their employees, consultants, independent contractors or customers.

24. Limited Non-Compete.  For the above-stated reasons, and as a condition of employment to the fullest extent permitted by law, Executive agrees during the Relevant Non-Compete Period not to directly or indirectly engage in the following competitive activities:

(a) Executive shall not have any ownership interest in, work for, advise, consult, or have any business connection or business or employment relationship in any competitive capacity with any Competitor unless Executive provides written notice to the Company of such relationship prior to entering into such relationship and, further, provides sufficient written assurances to the Company’s satisfaction that such relationship will not, jeopardize the Company’s legitimate interests or otherwise violate the terms of this Agreement;

(b) Executive shall not engage in any research, development, production, sale or distribution of any Competitive Products on behalf of a Competitor;

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(c) Executive shall not market, sell, or otherwise offer or provide any Competitive Products within any Geographic Territory on behalf of a Competitor;

(d) Executive shall not distribute, market, sell or otherwise offer or provide any Competitive Products to any customer of the Company on behalf of a Competitor.

25. Non-Compete Definitions.  For purposes of this Agreement, the Parties agree that the following terms shall apply:

(a) “Affiliate” includes any parent, subsidiary, joint venture, sister company, or other entity controlled, owned, managed or otherwise associated with the Company;

(b) “Assigned Customer Base” shall include all accounts or customers formally assigned to Executive within a given territory or geographical area or contacted by him at any time during the eighteen (18) month period preceding Executive’s date of separation;

(c) “Competitive Products” shall include any product or service that directly or indirectly competes with, is substantially similar to, or serves as a reasonable substitute for, any product or service in research, development or design, or manufactured, produced, sold or distributed by the Company;

(d) “Competitor” shall mean the list of companies on Exhibit B, which can be changed at any time prior to 90 days before termination of employment by or of Executive by written notice to Executive, so long as the list does not exceed fifteen (15) companies and each of which is a material competitor of the Company.

(e) “Geographic Territory” shall include any territory in which the Company has provided any services or sold any products at any time during the twenty-four (24) month period preceding Executive’s date of separation;

(f) “Relevant Non-Compete Period” shall include the period of Executive’s employment with the Company as well as a period of twenty-four (24) months after such employment is terminated, regardless of the reason for such termination provided, however, that this period shall be reduced to the greater of (i) twelve (12) months or (ii) the total length of Executive’s employment with the Company, including employment with any parent, subsidiary or affiliated entity, if such employment is less than twenty-four (24) months;

(g) “Directly or indirectly” shall be construed such that the foregoing restrictions shall apply equally to Executive whether performed individually or as a partner, shareholder, officer, director, manager, Executive, salesperson, independent contractor, broker, agent, or consultant for any other individual, partnership, firm, corporation, company, or other entity engaged in such conduct.

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26. Consent to Reasonableness.  In light of the above-referenced concerns, including Executive’s knowledge of and access to the Companies’ Confidential Information, Executive acknowledges that the terms of the foregoing restrictive covenants are reasonable and necessary to protect the Company’s legitimate business interests and will not unreasonably interfere with Executive’s ability to obtain alternate employment.  As such, Executive hereby agrees that such restrictions are valid and enforceable, and affirmatively waives any argument or defense to the contrary.  Executive acknowledges that this limited noncompetition provision is not an attempt to prevent Executive from obtaining other employment in violation of IC § 22-5-3-1 or any other similar statute.  Executive further acknowledges that the Company may need to take action, including litigation, to enforce this limited non-competition provision, which efforts the Parties stipulate shall not be deemed an attempt to prevent Executive from obtaining other employment.

27. Survival of Restrictive Covenants.  Executive acknowledges that the above restrictive covenants shall survive the termination of this Agreement and the termination of Executive’s employment for any reason.  Executive further acknowledges that any alleged breach by the Company of any contractual, statutory or other obligation shall not excuse or terminate the obligations hereunder or otherwise preclude the Company from seeking injunctive or other relief.  Rather, Executive acknowledges that such obligations are independent and separate covenants undertaken by Executive for the benefit of the Company.

28. [Intentionally Omitted]

29. Post-Termination Notification.  For the duration of his Relevant Non-compete Period or other restrictive covenant period, which ever is longer, Executive agrees to promptly notify the Company no later than five (5) business days of his acceptance of any employment or consulting engagement.  Such notice shall include sufficient information to ensure Executive compliance with his non-compete obligations and must include at a minimum the following information:  (i) the name of the employer or entity for which he is providing any consulting services; (ii) a description of his intended duties as well as (iii) the anticipated start date.  Such information is required to ensure Executive’s compliance with his non-compete obligations as well as all other applicable restrictive covenants.  Such notice shall be provided in writing to the Office of Vice President and General Counsel of the Company at 1069 State Road 46 E, Batesville, Indiana 47006.  Failure to timely provide such notice shall be deemed a material breach of this Agreement and entitle the Company to return of any severance paid to Executive plus attorneys’ fees.  Executive further consents to the Company’s notification to any new employer of Executive’s rights and obligations under this Agreement.

30. Scope of Restrictions.  If the scope of any restriction contained in any preceding paragraphs of this Agreement is deemed too broad to permit enforcement of such restriction to its fullest extent, then such restriction shall be enforced to the maximum extent permitted by law, and Executive hereby consents and agrees that such scope may be judicially modified accordingly in any proceeding brought to enforce such restriction.

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31. Specific Enforcement/Injunctive Relief.  Executive agrees that it would be difficult to measure any damages to the Company from a breach of the above-referenced restrictive covenants, but acknowledges that the potential for such damages would be great, incalculable and irremediable, and that monetary damages alone would be an inadequate remedy.  Accordingly, Executive agrees that the Company shall be entitled to immediate injunctive relief against such breach, or threatened breach, in any court having jurisdiction.  In addition, if Executive violates any such restrictive covenant, Executive agrees that the period of such violation shall be added to the term of the restriction.  In determining the period of any violation, the Parties stipulate that in any calendar month in which Executive engages in any activity in violation of such provisions, Executive shall be deemed to have violated such provision for the entire month, and that month shall be added to the duration of the non-competition provision.  Executive acknowledges that the remedies described above shall not be the exclusive remedies, and the Company may seek any other remedy available to it either in law or in equity, including, by way of example only, statutory remedies for misappropriation of trade secrets, and including the recovery of compensatory or punitive damages.  Executive further agrees that the Company shall be entitled to an award of all costs and attorneys’ fees incurred by it in any attempt to enforce the terms of this Agreement if the Company prevails.

32. Publicly Traded Stock.  The Parties agree that nothing contained in this Agreement shall be construed to prohibit Executive from investing his personal assets in any stock or corporate security traded or quoted on a national securities exchange or national market system provided, however, such investments do not require any services on the part of Executive in the operation or the affairs of the business or otherwise violate the Company’s Code of Ethics.

33. Notice of Claim and Contractual Limitations Period.  Executive acknowledges the Company’s need for prompt notice, investigation, and resolution of any claims that may be filed against it due to the number of relationships it has with employees and others (and due to the turnover among such individuals with knowledge relevant to any underlying claim).  Accordingly, Executive agrees prior to initiating any litigation of any type (including, but not limited to, employment discrimination litigation, wage litigation, defamation, or any other claim) to notify the Company, within One Hundred and Eighty (180) days after the claim accrued, by sending a certified letter addressed to the Company’s General Counsel setting forth:  (i) claimant’s name, address, and phone; (ii) the name of any attorney representing Executive; (iii) the nature of the claim; (iv) the date the claim arose; and (v) the relief requested.  This provision is in addition to any other notice and exhaustion requirements that might apply.  For any dispute or claim of any type against the Company (including but not limited to employment discrimination litigation, wage litigation, defamation, or any other claim), Executive must commence legal action within the shorter of one (1) year of accrual of the cause of action or such shorter period that may be specified by law.

34. Non-Jury Trials.  Notwithstanding any right to a jury trial for any claims, Executive waives any such right to a jury trial, and agrees that any claim of any type (including but not limited to employment discrimination litigation, wage litigation, defamation, or any other claim) lodged in any court will be tried, if at all, without a jury.

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35. Choice of Forum.  Executive acknowledges that the Company is primarily based in Indiana, and Executive understands and acknowledges the Company’s desire and need to defend any litigation against it in Illinois.  Accordingly, the Parties agree that any claim of any type brought by Executive against the Company or any of its employees or agents must be maintained only in a court sitting in Cook County, Illinois, or, if a federal court, the Northern District of Illinois.  Executive further understands and acknowledges that in the event the Company initiates litigation against Executive, the Company may need to prosecute such litigation in such state where the Executive is subject to personal jurisdiction.  Accordingly, for purposes of enforcement of this Agreement, Executive specifically consents to personal jurisdiction in the State of Illinois.

36. Choice of Law.  This Agreement shall be deemed to have been made within the County of Cook, State of Illinois and shall be interpreted and construed in accordance with the laws of the State of Illinois.  Any and all matters of dispute of any nature whatsoever arising out of, or in any way connected with the interpretation of this Agreement, any disputes arising out of the Agreement or the employment relationship between the Parties hereto, shall be governed by, construed by and enforced in accordance with the laws of the State of Indiana without regard to any applicable state’s choice of law provisions.

37. Titles.  Titles are used for the purpose of convenience in this Agreement and shall be ignored in any construction of it.

38. Severability.  The Parties agree that each and every paragraph, sentence, clause, term and provision of this Agreement is severable and that, in the event any portion of this Agreement is adjudged to be invalid or unenforceable, the remaining portions thereof shall remain in effect and be enforced to the fullest extent permitted by law.  Further, should any particular clause, covenant, or provision of this Agreement be held unreasonable or contrary to public policy for any reason, the Parties acknowledge and agree that such covenant, provision or clause shall automatically be deemed modified such that the contested covenant, provision or clause will have the closest effect permitted by applicable law to the original form and shall be given effect and enforced as so modified to whatever extent would be reasonable and enforceable under applicable law.

39. Assignment-Notices.  The rights and obligations of the Company under this Agreement shall inure to its benefit, as well as the benefit of its parent, subsidiary, successor and affiliated entities, and shall be binding upon the successors and assigns of the Company.  This Agreement, being personal to Executive, cannot be assigned by Executive, but his personal representative shall be bound by all its terms and conditions.  Any notice required hereunder shall be sufficient if in writing and mailed to the last known residence of Executive or to the Company at its principal office with a copy mailed to the Office of the General Counsel.

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40. Amendments and Modifications.  Except as specifically provided herein, no modification, amendment, extension or waiver of this Agreement or any provision hereof shall be binding upon the Company or Executive unless in writing and signed by both Parties.  The waiver by the Company or Executive of a breach of any provision of this Agreement shall not be construed as a waiver of any subsequent breach.  Nothing in this Agreement shall be construed as a limitation upon the Company’s right to modify or amend any of its manuals or policies in its sole discretion and any such modification or amendment which pertains to matters addressed herein shall be deemed to be incorporated herein and made a part of this Agreement.

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

42. Other Remedies.  The Executive agrees to execute and be bound by the terms and conditions of the Company’s Limited Recapture Agreement, and any applicable laws, rules and regulations.

43. Voluntary and Knowing Execution.  Executive acknowledges that he has been offered a reasonable amount of time within which to consider and review this Agreement; that he has carefully read and fully understands all of the provisions of this Agreement; and that he has entered into this Agreement knowingly and voluntarily, with the assistance of counsel.

44. Liability Insurance.  The Company shall cover the Executive under directors and officers liability insurance both during and, while potential liability exists, after the term of this Agreement in the same amount and to the same extent as the Company covers its other officers and non independent director.

45. Entire Agreement.  This Agreement constitutes the entire employment agreement between the Parties hereto concerning the subject matter hereof and shall supersede all prior and contemporaneous agreements between the Parties in connection with the subject matter of this Agreement.  Any pre-existing Employment Agreements shall be deemed null and void.  Nothing in this Agreement, however, shall affect any separately-executed written agreement addressing any other issues.

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IN WITNESS WHEREOF, the Parties have signed this Agreement effective as of the day and year first above written.

EXECUTIVE	HILL-ROM HOLDINGS, INC.
Signed: /s/ Kenneth F. Meyers	By: /s/ John Greisch
Printed: Kenneth F. Meyers	Title: Chief Executive Officer
Dated: September 21, 2015	Dated: September 21, 2015

CAUTION:  READ BEFORE SIGNING

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Exhibit A

SAMPLE SEPARATION AND RELEASE AGREEMENT

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

1. Executive’s active employment by the Company shall terminate effective [date of termination](Executive’s “Effective Termination Date”).  Except as specifically provided by this Agreement, or in any other non-employment agreement that may exist between the Company and Executive, Executive agrees that the Company shall have no other obligations or liabilities to him/her following his/her Effective Termination Date and that his/her receipt of the Severance Benefits provided herein shall constitute a complete settlement, satisfaction and waiver of any and all claims he/she may have against the Company.

2. Executive further submits, and the Company hereby accepts, his resignation as an Executive, officer and director, as of his Effective Termination Date for any position he may hold.  The Parties agree that this resignation shall apply to all such positions Executive may hold with the Company or any parent, subsidiary or affiliated entity thereof.  Executive agrees to execute any documents needed to effectuate such resignation.  Executive further agrees to take whatever steps are necessary to facilitate and ensure the smooth transition of his duties and responsibilities to others.

3. The Company agrees to provide Executive severance pay on the termination of his employment, as provided for in his Employment Agreement.

4. The Company further agrees to provide Executive with limited out-placement counseling with a company of its choice provided that Executive participates in such counseling immediately following termination of employment.  Notwithstanding anything in this Section 4 to the contrary, the out-placement counseling shall not be provided after the last day of the second calendar year following the calendar year in which termination of employment occurs.

5. As of his/her Effective Termination Date, Executive will become ineligible to participate in the Company’s health insurance program and continuation of coverage requirements under COBRA (if any) will be triggered at that time.  The medical insurance provided herein does not include any disability coverage.

6. Intentionally omitted

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

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

9. Executive further agrees and covenants not to sue the Company or any entity or individual subject to the foregoing General Release with respect to any claims, demands, liabilities or obligations release by this Agreement provided, however, that nothing contained in this Agreement shall:

(a) prevent Executive from filing an administrative charge with the Equal Employment Opportunity Commission or any other federal state or local agency; or

(b) prevent employee from challenging, under the Older Worker’s Benefit Protection Act (29 U.S.C. § 626), the knowing and voluntary nature of his/her release of any age claims in this Agreement in court or before the Equal Employment Opportunity Commission.

10. Notwithstanding his/her right to file an administrative charge with the EEOC or any other federal, state, or local agency, Executive agrees that with his/her release of claims in this Agreement, he/she has waived any right he/she may have to recover monetary or other personal relief in any proceeding based in whole or in part on claims released by him/her in this Agreement.  For example, Executive waives any right to monetary damages or reinstatement if an administrative charge is brought against the Company whether by Executive, the EEOC, or any other person or entity, including but not limited to any federal, state, or local agency.  Further, with his/her release of claims in this Agreement, Executive specifically assigns to the Company his/her right to any recovery arising from any such proceeding.

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

(a) He/she has carefully read and fully understands all of the provisions of this Agreement and that He/she has entered into this Agreement knowingly and voluntarily;

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

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

(d) He/she has been offered at least [twenty-one (21)/forty-five (45)] days within which to review and consider this Agreement.

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

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

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

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15. [Option A] Executive acknowledges that his/her termination and the Severance Benefits offered hereunder were based on an individual determination and were not offered in conjunction with any group termination or group severance program and waives any claim to the contrary.

[Option B] Executive represents and agrees that he/she has been provided relevant cohort information based on the information available to the Company as of the date this Agreement was tendered to Executive.  This information is attached hereto as Exhibit A.  The Parties acknowledge that simply providing such information does not mean and should not be interpreted to mean that the Company was obligated to comply with 29 C.F.R. § 1625.22(f).

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

17. Executive acknowledges that the Company as well as its parent, subsidiary and affiliated companies (“Companies” herein) possess, and he/she has been granted access to, certain trade secrets as well as other confidential and proprietary information that they have acquired at great effort and expense.  Such information includes, without limitation, confidential information regarding products and services, marketing strategies, business plans, operations, costs, current or, prospective customer information (including customer contacts, requirements, creditworthiness and like matters), product concepts, designs, prototypes or specifications, regulatory compliance issues, research and development efforts, technical data and know-how, sales information, including pricing and other terms and conditions of sale, financial information, internal procedures, techniques, forecasts, methods, trade information, trade secrets, software programs, project requirements, inventions, trademarks, trade names, and similar information regarding the Companies’ business (collectively referred to herein as “Confidential Information”).

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18. Executive agrees that all such Confidential Information is and shall remain the sole and exclusive property of the Company.  Except as may be expressly authorized by the Company in writing, or as may be required by law after providing due notice thereof to the Company, Executive agrees not to disclose, or cause any other person or entity to disclose, any Confidential Information to any third party for as long thereafter as such information remains confidential (or as limited by applicable law) and agrees not to make use of any such Confidential Information for Executive’s own purposes or for the benefit of any other entity or person.  The Parties acknowledge that Confidential Information shall not include any information that is otherwise made public through no fault of Executive or other wrong doing.  The foregoing shall not apply to information that the Executive is required to disclose by applicable law, regulation or legal process (provided that the Executive provides the Company with prior notice of the contemplated disclosure and cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information).

19. On or before Executive’s Effective Termination Date or per the Company’s request, Executive agrees to return the original and all copies of all things in his/her possession or control relating to the Company or its business, including but not limited to any and all contracts, reports, memoranda, correspondence, manuals, forms, records, designs, budgets, contact information or lists (including customer, vendor or supplier lists), ledger sheets or other financial information, drawings, plans (including, but not limited to, business, marketing and strategic plans), personnel or other business files, computer hardware, software, or access codes, door and file keys, identification, credit cards, pager, phone, and any and all other physical, intellectual, or personal property of any nature that he/she received, prepared, helped prepare, or directed preparation of in connection with his/her employment with the Company.  Nothing contained herein shall be construed to require the return of any non-confidential and de minimis items regarding Executive’s pay, benefits or other rights of employment such as pay stubs, W-2 forms, 401(k) plan summaries, benefit statements, etc.  Additionally, Executive may retain his address books to the extent they only contain contact information.

20. Executive hereby consents and authorizes the Company to deduct as an offset from the above-referenced severance payments, so long as the deduction is not taken from nonqualified deferred compensation under the definition of Code Section 409A, the value of any Company property not returned or returned in a damaged condition as well as any monies paid by the Company on Executive’s behalf (e.g., payment of any outstanding American Express bill).

21. Executive agrees to cooperate with the Company in connection with any pending or future litigation, proceeding or other matter which has been or may be brought against or by the Company before any agency, court, or other tribunal and concerning or relating in any way to any matter falling within Executive’s knowledge or former area of responsibility.  Executive agrees to immediately notify the Company, through the Office of the General Counsel, in the event he/she is contacted by any outside attorney (including paralegals or other affiliated parties) with regard to matters related to his employment with the Company unless (i) the Company is represented by the attorney, (ii) Executive is represented by the attorney for the purpose of protecting his/her personal interests or (iii) the Company has been advised of and has approved such contact.  Executive agrees to provide reasonable assistance and completely truthful testimony in such matters including, without limitation, facilitating and assisting in the preparation of any underlying defense, responding to discovery requests, preparing for and attending deposition(s) as well as appearing in court to provide truthful testimony.  The Company agrees to reimburse Executive for all reasonable out of pocket expenses incurred at the request of the Company associated with such assistance and testimony.

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22. Executive agrees not to make any written or oral statement that may defame, disparage or cast in a negative light so as to do harm to the personal or professional reputation of (a) the Company, (b) its Executives, officers, directors or trustees or (c) the services and/or products provided by the Company and its subsidiaries or affiliate entities.  Similarly, in response to any written inquiry from any prospective employer or in connection with a written inquiry in connection with any future business relationship involving Executive, the Company agrees not to provide any information, and the senior officers shall not make any written or oral statement, that may defame, disparage or cast in a negative light so as to do harm to the personal or professional reputation of Executive.  The Parties acknowledge, however, that nothing contained herein shall be construed to prevent or prohibit the Company or the Executive from providing truthful information in response to any court order, discovery request, subpoena or other lawful request, rebutting statements by others or making normal competitive-type statements.

23. EXECUTIVE SPECIFICALLY AGREES AND UNDERSTANDS THAT THE EXISTENCE AND TERMS OF THIS AGREEMENT ARE STRICTLY CONFIDENTIAL AND THAT SUCH CONFIDENTIALITY IS A MATERIAL TERM OF THIS AGREEMENT.  Accordingly, except as required by law or unless authorized to do so by the Company in writing, Executive agrees that he/she shall not communicate, display or otherwise reveal any of the contents of this Agreement to anyone other than his/her spouse, legal counsel or financial advisor provided, however, that they are first advised of the confidential nature of this Agreement and Executive obtains their agreement to be bound by the same.  The Company agrees that Executive may respond to legitimate inquiries regarding the termination of his/her employment by stating that the Parties have terminated their relationship on an amicable basis and that the Parties have entered into a Confidential Separation and Release Agreement that prohibits him/her from further discussing the specifics of his/her separation.  Nothing contained herein shall be construed to prevent Executive from discussing or otherwise advising subsequent employers of the existence of any obligations as set forth in his/her Employment Agreement.  Further, nothing contained herein shall be construed to limit or otherwise restrict the Company’s ability to disclose the terms and conditions of this Agreement as may be required by business necessity.

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

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25. Similarly, in the event that the Company breaches or threatens to breach any provision of this Agreement, Executive shall be entitled to seek any and all equitable or other available relief provided by law, specifically including immediate and permanent injunctive relief.  In the event Executive is wholly unsuccessful, the Company shall be entitled to an award of its costs and attorneys’ fees.

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

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

28. The Parties agree that each and every paragraph, sentence, clause, term and provision of this Agreement is severable and that, if any portion of this Agreement should be deemed not enforceable for any reason, such portion shall be stricken and the remaining portion or portions thereof should continue to be enforced to the fullest extent permitted by applicable law.

29. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Illinois without regard to any applicable state’s choice of law provisions.

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

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

PLEASE READ CAREFULLY.  THIS SEPARATION AND RELEASE

AGREEMENT INCLUDES A COMPLETE RELEASE OF ALL

KNOWN AND UNKNOWN CLAIMS.

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

[EXECUTIVE]	COMPANY NAME
Signed:	By:
Printed:	Title:
Dated:	Dated:

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Exhibit B

List of Competitors

Stryker Corporation, Integra LifeSciences, Steris Corporation, CONMED Corporation, Gettinge AB, CareFusion Corp., Hospira, Inc., ResMed, Phillips Healthcare, Smith & Nephew plc, Arthrex Inc., including, for the avoidance of doubt and in each case, parents, subsidiaries and affiliates

EX-10.30

Exhibit 10.30

EMPLOYMENT AGREEMENT

PREAMBLE

This Employment Agreement defines the essential terms and conditions of our employment

relationship with you. The subjects covered in this Agreement are vitally important to you and to

the Company. Thus, you should read the document carefully and ask any questions before

signing the Agreement. Given the importance of these matters to you and the Company, you are

required to sign the Agreement as a condition of employment.

This EMPLOYMENT AGREEMENT, dated and effective this 30th day of October, 2013 is entered into by and between Hill-Rom Holdings, Inc. ("Company") and Taylor Smith ("Employee").

WITNESSETH:

WHEREAS, the Company and its affiliated entities are engaged in the healthcare industry throughout the United States and abroad including, but not limited to, the design, manufacture, sale, service and rental of hospital beds and stretchers, hospital furniture, medical-related architectural products, specialty sleep surfaces (including therapeutic surfaces), air clearing devices, biomedical and asset management services, as well as other medical-related accessories, devices, products and services;

WHEREAS, the Company is willing to employ Employee in an executive or managerial position and Employee desires to be employed by the Company in such capacity based upon the terms and conditions set forth in this Agreement;

WHEREAS, in the course of the employment contemplated under this Agreement and as a continuation of Employee's past employment with the Company, if applicable, it will be necessary for Employee to acquire and maintain knowledge of certain trade secrets and other confidential and proprietary information regarding the Company as well as any of its parent, subsidiary and/or affiliated entities (hereinafter jointly referred to as the "Companies"); and

WHEREAS, the Company and Employee (collectively referred to as the "Parties") acknowledge and agree that the execution of this Agreement is necessary to memorialize the terms and conditions of their employment relationship as well as safeguard against the unauthorized disclosure or use of the Company's confidential information and to otherwise preserve the goodwill and ongoing business value of the Company;

NOW THEREFORE, in consideration of Employee's employment, the Company's willingness to disclose certain confidential and proprietary information to Employee and the mutual covenants contained herein as well as other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties agree as follows:

1. Employment. As of the effective date of this Agreement, the Company agrees to employ Employee and Employee agrees to serve as Senior Vice President, Surgical/Respiratory Care. Employee agrees to perform all duties and responsibilities traditionally assigned to, or falling within the normal responsibilities of, an individual employed in the above-referenced position. Employee also agrees to perform any and all additional duties or responsibilities as may be assigned by the Company in its sole discretion. The Parties acknowledge that both this title and the underlying duties may change.

2. Best Efforts and Duty of Loyalty. During the term of employment with the Company, Employee covenants and agrees to exercise reasonable efforts to perform all assigned duties in a diligent and professional manner and in the best interest of the Company. Employee agrees to devote Employee's full working time, attention, talents, skills and best efforts to further the Company's business and agrees not to take any action, or make any omission, that deprives the Company of any business opportunities or otherwise act in a manner that conflicts with the best interest of the Company or is otherwise detrimental to its business. Employee agrees not to engage in any outside business activity, whether or not pursued for gain, profit or other pecuniary advantage, without the express written consent of the Company. Employee shall act at all times in accordance with the Company's Code of Ethical Business Conducts, and all other applicable policies which may exist or be adopted by the Company from time to time.

3. At-Will Employment. Subject to the terms and conditions set forth below, Employee specifically acknowledges and accepts such employment on an "at-will" basis and agrees that both Employee and the Company retain the right to terminate this relationship at any time, with or without cause, for any reason not prohibited by applicable law upon notice as required by this Agreement. Employee acknowledges that nothing in this Agreement is intended to create, nor should be interpreted to create, an employment contract for any specified length of time between the Company and Employee.

4. Compensation. For all services rendered by Employee on behalf of, or at the request of, the Company, Employee shall be paid as follows:

(a) A base salary at the bi-weekly rate of Thirteen Thousand Four Hundred and Sixty One Dollars and Fifty-Four Cents ($13,462.54), less usual and ordinary deductions;

(b) Incentive compensation, payable solely at the discretion of the Company, pursuant to the Company's existing Incentive Compensation Program or any other program as the Company may establish in its sole discretion; and

(c) Such additional compensation, benefits and perquisites as the Company may deem appropriate

5. Changes to Compensation. Notwithstanding anything contained herein to the contrary, Employee acknowledges that the Company specifically reserves the right to make changes to Employee's compensation in its sole discretion including, but not limited to, modifying or eliminating a compensation component. The Parties agree that such changes shall be deemed effective immediately and a modification of this Agreement unless, within seven (7) days after receiving notice of such change, Employee exercises Employee's right to terminate this Agreement without cause or for "Good Reason" as provided below in Paragraph No. 11. The

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Parties anticipate that Employee's compensation structure will be reviewed on an annual basis but acknowledge that the Company shall have no obligation to do so.

6. Direct Deposit. As a condition of employment, and within thirty (30) days of the effective date of this Agreement, Employee agrees to make all necessary arrangements to have all sums paid pursuant to this Agreement direct deposited into one or more bank accounts as designated by Employee.

7. Warranties and Indemnification. Employee warrants that Employee is not a party to any contract, restrictive covenant, or other agreement purporting to limit or otherwise adversely affecting Employee's ability to secure employment with any third party. Alternatively, should any such agreement exist, Employee warrants that the contemplated services to be performed hereunder will not violate the terms and conditions of any such agreement. In either event, Employee agrees to fully indemnify and hold the Company harmless from any and all claims arising from, or involving the enforcement of, any such restrictive covenants or other agreements.

8. Restricted Duties. Employee agrees not to disclose, or use for the benefit of the Company, any confidential or proprietary information belonging to any predecessor employer(s) that otherwise has not been made public and further acknowledges that the Company has specifically instructed Employee not to disclose or use such confidential or proprietary information. Based on Employee's understanding of the anticipated duties and responsibilities hereunder, Employee acknowledges that such duties and responsibilities will not compel the disclosure or use of any such confidential and proprietary information.

9. Termination Without Cause. The Parties agree that either party may terminate this employment relationship at any time, without cause, upon sixty (60) days' advance written notice or, if terminated by the Company, pay in lieu of notice (hereinafter referred to as "notice pay"). In such event, Employee shall only be entitled to such compensation, benefits and perquisites that have been paid or fully accrued as of the effective date of Employee's separation and as otherwise explicitly set forth in this Agreement. However, in no event shall Employee be entitled to notice pay if Employee is eligible for and accepts severance payments pursuant to the provisions of Paragraphs 16 and 17, below.

10. Termination With Cause. Employee's employment may be terminated by the Company at any time "for cause" without notice or prior warning. For purposes of this Agreement, "cause" shall mean the Company's good faith determination that Employee has:

(a) Acted with gross neglect or willful misconduct in the discharge of his/her duties and responsibilities or refused to follow or comply with the lawful direction of the Board of Directors of the Company or the terms and conditions of this Agreement providing such refusal is not based primarily on Employee's good faith compliance with applicable legal or ethical standards;

(b) Acquiesced or participated in any conduct that is dishonest, fraudulent, illegal (at the felony level), unethical, involves moral turpitude or is otherwise illegal and involves conduct that has the potential, in the Company's reasonable opinion, to cause the Company, its officers or its directors embarrassment or ridicule;

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(c) Violated a material requirement of any Company policy or procedure, specifically including a violation of the Company's Code of Ethics or Associate Policy Manual;

(d) Disclosed without proper authorization any trade secrets or other Confidential Information (as defined herein);

(e) Engaged in any act that, in the reasonable opinion of the Company, is contrary to its best interests or would hold the Company, its officers or directors up to probable civil or criminal liability, provided that, if Executive acts in good faith in compliance with applicable legal or ethical standards, such actions shall not be grounds for termination for cause; or

(f) Engaged in such other conduct recognized at law as constituting cause.

Upon the occurrence or discovery of any event specified above, the Company shall have the right to terminate Employee's employment, effective immediately, by providing notice thereof to Employee without further obligation to Employee, other than accrued wages or other accrued wages, deferred compensation or other accrued benefits of employment (collectively referred to herein as "Accrued Obligations"), which shall be paid in accordance with the Company's past practice and applicable law. To the extent any violation of this Paragraph is capable of being promptly cured by Employee (or cured within a reasonable period to the Company's satisfaction), the Company agrees to provide Employee with a reasonable opportunity to so cure such defect. Absent written mutual agreement otherwise, the Parties agree in advance that it is not possible for Employee to cure any violations of sub­paragraph (b) or (d) and, therefore, no opportunity for cure need be provided in those circumstances.

11. Termination by Employee for Good Reason. Employee may terminate this Agreement and declare this Agreement to have been terminated "without cause" by the Company (and, therefore, for "Good Reason") upon the occurrence, without Employee's consent, of any of the following acts by the Company, or failures by the Company to act (each a "Good Reason Condition"), provided (i) the Employee provides written notice to the Company of the occurrence of the Good Reason Condition within ten (10) business days after the Employee has knowledge of the Good Reason Condition; (ii) the Company fails to notify the Employee of the Company's intended method of correction within thirty (30) business days after the Company receives Employee's notice, or the Company fails to correct the Good Reason Condition within thirty (30) business days after such Employee notice; and (iii) the Employee resigns within ten (10) business days after the end of the 30-business-day period specified in (ii):

(a) A material diminution in Employee's duties;

(b) The failure to elect or reelect Employee as Vice President or other officer of the Company (unless such failure is related in any way to the Company's decision to terminate Employee for cause);

(c) The failure of the Company to continue to provide Employee with office space, related facilities and support personnel (including, but not limited to, administrative and secretarial assistance) within the Company's principal executive offices commensurate with his responsibilities to, and position within, the Company;

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(d) A material reduction by the Company in the amount of Employee's base salary or the discontinuation or material reduction by the Company of Employee's participation at the same level of eligibility as compared to other peer employees in any incentive compensation, additional compensation, benefits, policies or perquisites subject to Employee understanding that such reduction(s) shall be permissible if the change applies in a similar way to other peer level employees;

(e) The relocation of the Company's principal executive offices or Employee's place of work to a location requiring a change of more than fifty (50) miles in Employee's daily commute; or

(f) Any other action or inaction by the Company that constitutes a material breach of this Employment Agreement.

12. Termination Due to Death or Disability. In the event Employee dies or suffers a disability (as defined herein) during the term of employment, this Agreement shall automatically be terminated on the date of such death or disability without further obligation on the part of the Company other than the payment of Accrued Obligations. For purposes of this Agreement, Employee shall be considered to have suffered a "disability" upon a determination that Employee cannot perform the essential functions of Employee's position as a result of such a disability and the occurrence of one or more of the following events:

(a) Employee becomes eligible for or receives any benefits pursuant to any disability insurance policy as a result of a determination under such policy that Employee is permanently disabled;

(b) Employee becomes eligible for or receives any disability benefits under the Social Security Act; or

(c) A good faith determination by the Company that Employee is and will likely remain unable to perform the essential functions of Employee's duties or responsibilities hereunder on a full-time basis, with or without reasonable accommodation, as a result of any mental or physical impairment.

Notwithstanding anything expressed or implied above to the contrary, the Company agrees to fully comply with its obligations under the Family and Medical Leave Act of 1993 and the Americans with Disabilities Act as well as any other applicable federal, state, or local law, regulation, or ordinance governing the provision of leave to individuals with serious health conditions or the protection of individuals with disabilities, as well as the Company's obligation to provide reasonable accommodation thereunder.

13. Exit Interview. Upon termination of Employee's employment for any reason, Employee agrees, if requested, to participate in an exit interview with the Company and reaffirm in writing Employee's post-employment obligations as set forth in this Agreement.

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14. Section 409A Notification. Employee acknowledges that Employee has been advised of the American Jobs Creation Act of 2004, which added Section 409A to the Internal Revenue Code ("Section 409A"), and significantly changed the taxation of nonqualified deferred compensation plans and arrangements. Under proposed and final regulations as of the date of this Agreement, Employee has been advised that Employee's severance pay and other termination benefits may be treated by the Internal Revenue Service as providing "nonqualified deferred compensation," and therefore subject to Section 409A. In that event, several provisions in Section 409A may affect Employee's receipt of severance compensation, including the timing thereof. These include, but are not limited to, a provision which requires that distributions to "specified employees" of public companies on account of separation from service may not be made earlier than six (6) months after the effective date of such separation. If applicable, failure to comply with Section 409A can lead to immediate taxation of such deferrals, with interest calculated at a penalty rate and a 20% penalty. As a result of the requirements imposed by the American Jobs Creation Act of 2004, Employee agrees if Employee is a "specified employee" at the time of Employee's termination of employment and if payments in connection with such termination of employment are subject to Section 409A and not otherwise exempt, such payments (and other benefits to the extent applicable) due Employee at the time of termination of employment shall not be paid until a date at least six (6) months after the effective date of Employee's termination of employment ("Employee's Effective Termination Date"). Notwithstanding any provision of this Agreement to the contrary, to the extent that any payment under the terms of this Agreement would constitute an impermissible acceleration of payments under Section 409A or any regulations or Treasury guidance promulgated thereunder, such payments shall be made no earlier than at such times allowed under Section 409A. If any provision of this Agreement (or of any award of compensation) would cause Employee to incur any additional tax or interest under Section 409A or any regulations or Treasury guidance promulgated thereunder, the Company or its successor may reform such provision; provided that it will (i) maintain, to the maximum extent practicable, the original intent of the applicable provision without violating the provisions of Section 409A and (ii) notify and consult with Employee regarding such amendments or modifications prior to the effective date of any such change. Each amount to be paid or benefit to be provided to Employee pursuant to this Agreement, which constitutes deferred compensation subject to Section 409A, shall be construed as a separate identified payment for purposes of Section 409A. To the extent required to avoid an accelerated or additional tax under Section 409A, amounts reimbursed to Employee under this Agreement shall be paid to Employee on or before the last day of the year following the year in which the expense was incurred, the amount of expenses eligible for reimbursement (and in-kind benefits provided to Employee) during any one year may not affect amounts reimbursed or provided in any subsequent tax year, and the right to reimbursement (and in-kind benefits provided to Employee) under this Agreement shall not be subject to liquidation or exchange for another benefit.

15. Section 409A Acknowledgement. Employee acknowledges that, notwithstanding anything contained herein to the contrary, both Parties shall be independently responsible for accessing their own risks and liabilities under Section 409A that may be associated with any payment made under the terms of this Agreement or any other arrangement which may be deemed to trigger Section 409A. Further, the Parties agree that each shall independently bear responsibility for any and all taxes, penalties or other tax obligations as may be imposed upon them in their individual capacity as a matter of law. To the extent applicable, Employee understands and agrees that Employee shall have the responsibility for, and Employee agrees to pay, any and all appropriate income tax or other tax obligations for which Employee is individually responsible and/or related to receipt of any benefits provided in this Agreement. Employee agrees to fully indemnify and hold the Company harmless for any taxes, penalties, interest, cost or attorneys' fee assessed against or incurred by the

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Company on account of such benefits having been provided to Employee or based on any alleged failure to withhold taxes or satisfy any claimed obligation. Employee understands and acknowledges that neither the Company, nor any of its employees, attorneys, or other representatives has provided or will provide Employee with any legal or financial advice concerning taxes or any other matter, and that Employee has not relied on any such advice in deciding whether to enter into this Agreement.

16. Severance Payments. In the event Employee's employment is terminated by the Company without cause (including by Employee for Good Reason), and subject to the normal terms and conditions imposed by the Company as set forth herein and in the attached Separation and Release Agreement, Employee shall be eligible to receive severance pay based upon Employee's base salary at the time of termination for a period of twelve (12) months.

17. Severance Payment Terms and Conditions. No severance pay shall be paid if Employee voluntarily leaves the Company's employ without Good Reason, as defined above, or is terminated for cause. Any severance pay made payable under this Agreement shall be paid in lieu of, and not in addition to, any other contractual, notice or statutory pay or other accrued compensation obligation (excluding accrued wages and deferred compensation). Additionally, such severance pay is contingent upon Employee fully complying with the restrictive covenants contained herein and executing a Separation and Release Agreement. Further, the Company's obligation to provide severance hereunder shall be deemed null and void should Employee fail or refuse to execute and deliver to the Company the Company's then-standard Separation and Release Agreement (without modification) within any time period as may be prescribed by law or, in absence thereof, twenty-one (21) days after the Employee's Effective Termination Date. Conditioned upon the execution and delivery of the Separation and Release Agreement as set forth in the prior sentence, Severance pay benefits shall be paid as follows: (i) in one lump sum equivalent to six (6) months' salary on the day following the date which is six (6) months following Employee's Effective Termination Date with any remainder to be paid in bi-weekly installments equivalent to the Employee's salary commencing upon the next regularly scheduled payroll date, if both the severance pay benefit is subject to Section 409A and if Employee is a "specified employee" under Section 409A or (ii) for any severance pay benefits not subject to clause (i), begin upon the next regularly scheduled payroll following the earlier to occur of fifteen (15) days from the Company's receipt of an executed Separation and Release Agreement or the expiration of sixty (60) days after Employee's Effective Termination Date and shall be paid on the Company's regularly scheduled pay dates; provided, however, that if the before-stated sixty (60) day period ends in a calendar year following the calendar year in which the sixty (60) day period commenced, then any benefits not subject to clause (i) shall only begin on the next regularly scheduled payroll following the expiration of sixty (60) days after the Employee's Effective Termination Date. Excluding any lump sum payment due as a result of the application of Section 409A (which shall be paid regardless of reemployment), all other severance payments provided hereunder shall terminate upon reemployment.

18. Assignment of Rights.

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(a) Copyrights. Employee agrees that all works of authorship fixed in any tangible medium of expression by Employee during the term of this Agreement relating to the Company's business ("Works"), either solely or jointly with others, shall be and remain exclusively the property of the Company. Each such Work created by Employee is a "work made for hire" under the copyright law and the Company may file applications to register copyright in such Works as author and copyright owner thereof. If, for any reason, a Work created by Employee is excluded from the definition of a "work made for hire" under the copyright law, then Employee does hereby assign, sell, and convey to the Company the entire rights, title, and interests in and to such Work, including the copyright therein, to the Company. Employee will execute any documents that the Company deems necessary in connection with the assignment of such Work and copyright therein. Employee will take whatever steps and do whatever acts the Company requests, including, but not limited to, placement of the Company's proper copyright notice on Works created by Employee to secure or aid in securing copyright protection in such Works and will assist the Company or its nominees in filing applications to register claims of copyright in such Works. The Company shall have free and unlimited access at all times to all Works and all copies thereof and shall have the right to claim and take possession on demand of such Works and copies.

(b) Inventions. Employee agrees that all discoveries, concepts, and ideas, whether patentable or not, including, but not limited to, apparatus, processes, methods, compositions of matter, techniques, and formulae, as well as improvements thereof or know-how related thereto, relating to any present or prospective product, process, or service of the Company ("Inventions") that Employee conceives or makes during the term of this Agreement relating to the Company's business, shall become and remain the exclusive property of the Company, whether patentable or not, and Employee will, without royalty or any other consideration:

(i) Inform the Company promptly and fully of such Inventions by written reports, setting forth in detail the procedures employed and the results achieved;

(ii) Assign to the Company all of Employee's rights, title, and interests in and to such Inventions, any applications for United States and foreign Letters Patent, any United States and foreign Letters Patent, and any renewals thereof granted upon such Inventions;

(iii) Assist the Company or its nominees, at the expense of the Company, to obtain such United States and foreign Letters Patent for such Inventions as the Company may elect; and

(iv) Execute, acknowledge, and deliver to the Company at the Company's expense such written documents and instruments, and do such other acts, such as giving testimony in support of Employee's inventorship, as may be necessary in the opinion of the Company, to obtain and maintain United States and foreign Letters Patent upon such Inventions and to vest the entire rights and title thereto in the Company and to confirm the complete ownership by the Company of such Inventions, patent applications, and patents.

19. Company Property. All records, files, drawings, documents, data in whatever form, business equipment (including computers, PDAs, cell phones, etc.), and the like relating to, or provided by, the Company shall be and remain the sole property of the Company. Upon termination of employment, Employee shall immediately return to the Company all such items without retention of any copies and without additional request by the Company.

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De minimis items such as pay stubs, 401(k) plan summaries, employee bulletins, and the like are excluded from this requirement.

20. Confidential Information. Employee acknowledges that the Company and its affiliated entities (herein collectively referred to as "Companies") possess certain trade secrets as well as other confidential and proprietary information which they have acquired or will acquire at great effort and expense. Such information may include, without limitation, confidential information, whether in tangible or intangible form, regarding the Companies' products and services, marketing strategies, business plans, operations, costs, current or prospective customer information (including customer identities, contacts, requirements, creditworthiness, preferences, and like matters), product concepts, designs, prototypes or specifications, research and development efforts, technical data and know-how, sales information, including pricing and other terms and conditions of sale, financial information, internal procedures, techniques, forecasts, methods, trade information, trade secrets, software programs, project requirements, inventions, trademarks, trade names, and similar information regarding the Companies' business(es) (collectively referred to herein as "Confidential Information"). Employee further acknowledges that, as a result of Employee's employment with the Company, Employee will have access to, will become acquainted with, and/or may help develop, such Confidential Information. Confidential Information shall not include information readily available in the public so long as such information was not made available through fault of Employee or wrong doing by any other individual.

21. Restricted Use of Confidential Information. Employee agrees that all Confidential Information is and shall remain the sole and exclusive property of the Company and/or its affiliated entities. Except as may be expressly authorized by the Company in writing, Employee agrees not to disclose, or cause any other person or entity to disclose, any Confidential Information to any third party while employed by the Company and for as long thereafter as such information remains confidential (or as limited by applicable law). Further, Employee agrees to use such Confidential Information only in the course of Employee's duties in furtherance of the Company's business and agrees not to make use of any such Confidential Information for Employee's own purposes or for the benefit of any other entity or person.

22. Acknowledged Need for Limited Restrictive Covenants. Employee acknowledges that the Companies have spent and will continue to expend substantial amounts of time, money and effort to develop their business strategies, Confidential Information, customer identities and relationships, goodwill and employee relationships, and that Employee will benefit from these efforts. Further, Employee acknowledges the inevitable use of, or near-certain influence by Employee's knowledge of, the Confidential Information disclosed to Employee during the course of employment if allowed to compete against the Company in an unrestricted manner and that such use would be unfair and extremely detrimental to the Company. Accordingly, based on these legitimate business reasons, Employee acknowledges each of the Companies' need to protect their legitimate business interests by reasonably restricting Employee's ability to compete with the Company on a limited basis.

23. Non-Solicitation. During Employee's employment and for a period of eighteen (18) months thereafter, Employee agrees not to directly or indirectly engage in the following prohibited conduct:

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(a) Solicit, offer products or services to, or accept orders for, any Competitive Products or otherwise transact any competitive business with, any customer or entity with whom Employee had contact or transacted any business on behalf of the Company (or any Affiliate thereof) during the eighteen (18) month period preceding Employee's date of separation or about whom Employee possessed, or had access to, confidential and proprietary information;

(b) Attempt to entice or otherwise cause any third party to withdraw, curtail or cease doing business with the Company (or any Affiliate thereof), specifically including customers, vendors, independent contractors and other third party entities;

(c) Disclose to any person or entity the identities, contacts or preferences of any customers of the Company (or any Affiliate thereof), or the identity of any other persons or entities having business dealings with the Company (or any Affiliate thereof);

(d) Induce any individual who has been employed by or had provided services to the Company (or any Affiliate thereof) within the six (6) month period immediately preceding the effective date of Employee's separation to terminate such relationship with the Company (or any Affiliate thereof);

(e) Assist, coordinate or otherwise offer employment to, accept employment inquiries from, or employ any individual who is or had been employed by the Company (or any Affiliate thereof) at any time within the six (6) month period immediately preceding such offer, or inquiry;

(f) Communicate or indicate in any way to any customer of the Company (or any Affiliate thereof), prior to formal separation from the Company, any interest, desire, plan, or decision to separate from the Company; or

(g) Otherwise attempt to directly or indirectly interfere with the Company's business, the business of any of the Companies or their relationship with their employees, consultants, independent contractors or customers.

24. Limited Non-Compete. For the above-stated reasons, and as a condition of employment to the fullest extent permitted by law, Employee agrees during the Relevant Non-Compete Period not to directly or indirectly engage in the following competitive activities:

(a) Employee shall not have any ownership interest in, work for, advise, consult, or have any business connection or business or employment relationship in any competitive capacity with any Competitor unless Employee provides written notice to the Company of such relationship prior to entering into such relationship and, further, provides sufficient written assurances to the Company's satisfaction that such relationship will not, jeopardize the Company's legitimate interests or otherwise violate the terms of this Agreement;

(b) Employee shall not engage in any research, development, production, sale or distribution of any Competitive Products, specifically including any products or services relating to those for which Employee had responsibility for the eighteen (18) month period preceding Employee's date of separation;

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(c) Employee shall not market, sell, or otherwise offer or provide any Competitive Products within Employee's Geographic Territory (if applicable) or Assigned Customer Base, specifically including any products or services relating to those for which Employee had responsibility for the eighteen (18) month period preceding Employee's date of separation; and

(d) Employee shall not distribute, market, sell or otherwise offer or provide any Competitive Products to any customer of the Company with whom Employee had contact or for which Employee had responsibility at any time during the eighteen (18) month period preceding Employee's date of separation.

25. Non-Compete Definitions. For purposes of this Agreement, the Parties agree that the following terms shall apply:

(a) "Affiliate" includes any parent, subsidiary, joint venture, or other entity controlled, owned, managed or otherwise associated with the Company;

(b) "Assigned Customer Base" shall include all accounts or customers formally assigned to Employee within a given territory or geographical area or contacted by Employee at any time during the eighteen (18) month period preceding Employee's date of separation;

(c) "Competitive Products" shall include any product or service that directly or indirectly competes with, is substantially similar to, or serves as a reasonable substitute for, any product or service in research, development or design, or manufactured, produced, sold or distributed by the Company;

(d) "Competitor" shall include any person or entity that offers or is actively planning to offer any Competitive Products;

(e) "Geographic Territory" shall include any territory formally assigned to Employee as well as all territories in which Employee has provided any services, sold any products or otherwise had responsibility at any time during the eighteen (18) month period preceding Employee's date of separation;

(f) "Relevant Non-Compete Period" shall include the period of Employee's employment with the Company as well as a period of eighteen (18) months after such employment is terminated, regardless of the reason for such termination provided, however, that this period shall be reduced to the greater of (i) nine (9) months or (ii) the total length of Employee's employment with the Company, including employment with any parent, subsidiary or affiliated entity, if such employment is less than eighteen (18) months;

(g) "Directly or indirectly" shall be construed such that the foregoing restrictions shall apply equally to Employee whether performed individually or as a partner, shareholder, officer, director, manager, employee, salesman, independent contractor, broker, agent, or consultant for any other individual, partnership, firm, corporation, company, or other entity engaged in such conduct.

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26. Consent to Reasonableness. In light of the above-referenced concerns, including Employee's knowledge of and access to the Companies' Confidential Information, Employee acknowledges that the terms of the foregoing restrictive covenants are reasonable and necessary to protect the Company's legitimate business interests and will not unreasonably interfere with Employee's ability to obtain alternate employment. As such, Employee hereby agrees that such restrictions are valid and enforceable, and affirmatively waives any argument or defense to the contrary. Employee acknowledges that this limited non-competition provision is not an attempt to prevent Employee from obtaining other employment in violation of IC §22-5-3-1 or any other similar statute. Employee further acknowledges that the Company may need to take action, including litigation, to enforce this limited non-competition provision, which efforts the Parties stipulate shall not be deemed an attempt to prevent Employee from obtaining other employment.

27. Survival of Restrictive Covenants. Employee acknowledges that the above restrictive covenants shall survive the termination of this Agreement and the termination of Employee's employment for any reason. Employee further acknowledges that any alleged breach by the Company of any contractual, statutory or other obligation shall not excuse or terminate the obligations hereunder or otherwise preclude the Company from seeking injunctive or other relief. Rather, Employee acknowledges that such obligations are independent and separate covenants undertaken by Employee for the benefit of the Company.

28. Effect of Transfer. Subject to the provisions of Paragraph 11 above, Employee agrees that this Agreement shall continue in full force and effect notwithstanding any change in job duties, job titles or reporting responsibilities. Employee further acknowledges that the above restrictive covenants shall survive, and be extended to cover, the transfer of Employee from the Company to its parent, subsidiary, or any other affiliated entity (hereinafter collectively referred to as an "Affiliate") or any subsequent transfer(s) among them. Specifically, in the event of Employee's temporary or permanent transfer to an Affiliate, Employee agrees that the foregoing restrictive covenants shall remain in force so as to continue to protect such company for the duration of the non-compete period, measured from Employee's effective date of transfer to an Affiliate. Additionally, Employee acknowledges that this Agreement shall be deemed to have been automatically assigned to the Affiliate as of Employee's effective date of transfer such that the above-referenced restrictive covenants (as well as all other terms and conditions contained herein) shall be construed thereafter to protect the legitimate business interests and goodwill of the Affiliate as if Employee and the Affiliate had independently entered into this Agreement. Employee's acceptance of Employee's transfer to, and subsequent employment by, the Affiliate shall serve as consideration for (as well as be deemed as evidence of Employee's consent to) the assignment of this Agreement to the Affiliate as well as the extension of such restrictive covenants to the Affiliate. Employee agrees that this provision shall apply with equal force to any subsequent transfers of Employee from one Affiliate to another Affiliate.

29. Post-Termination Notification. For the duration of Employee's Relevant Non-compete Period or other restrictive covenant period, whichever is longer, Employee agrees to promptly notify the Company no later than five (5) business days of Employee's acceptance of any employment or consulting engagement. Such notice shall include sufficient information to ensure Employee compliance with Employee's non-compete obligations and must include at a minimum the following information: (i) the name of the employer or entity for which Employee is providing any consulting services; (ii) a description of Employee's intended duties as well as (iii) the anticipated start date. Such information is required to ensure Employee's compliance with Employee's non-compete obligations as well as all other applicable restrictive covenants. Such notice shall be provided in writing to the Office of Vice President and General Counsel of the Company at 1069 State Road 46 E, Batesville, Indiana 47006. Failure to timely provide such notice shall be deemed a material breach of this Agreement and entitle the Company to return of any severance paid to Employee plus attorneys' fees. Employee further consents to the Company's notification to any new employer of Employee's rights and obligations under this Agreement.

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30. Scope of Restrictions. If the scope of any restriction contained in any preceding paragraphs of this Agreement is deemed too broad to permit enforcement of such restriction to its fullest extent, then such restriction shall be enforced to the maximum extent permitted by law, and Employee hereby consents and agrees that such scope may be judicially modified accordingly in any proceeding brought to enforce such restriction.

31. Specific Enforcement/Injunctive Relief. Employee agrees that it would be difficult to measure any damages to the Company from a breach of the above-referenced restrictive covenants, but acknowledges that the potential for such damages would be great, incalculable and irremediable, and that monetary damages alone would be an inadequate remedy. Accordingly, Employee agrees that the Company shall be entitled to immediate injunctive relief against such breach, or threatened breach, in any court having jurisdiction. In addition, if Employee violates any such restrictive covenant, Employee agrees that the period of such violation shall be added to the term of the restriction. In determining the period of any violation, the Parties stipulate that in any calendar month in which Employee engages in any activity in violation of such provisions, Employee shall be deemed to have violated such provision for the entire month, and that month shall be added to the duration of the non-competition provision. Employee acknowledges that the remedies described above shall not be the exclusive remedies, and the Company may seek any other remedy available to it either in law or in equity, including, by way of example only, statutory remedies for misappropriation of trade secrets, and including the recovery of compensatory or punitive damages. Employee further agrees that the Company shall be entitled to an award of all costs and attorneys' fees incurred by it in any attempt to enforce the terms of this Agreement.

32. Publicly Traded Stock. The Parties agree that nothing contained in this Agreement shall be construed to prohibit Employee from investing Employee's personal assets in any stock or corporate security traded or quoted on a national securities exchange or national market system provided, however, such investments do not require any services on the part of Employee in the operation or the affairs of the business or otherwise violate the Company's Code of Ethics.

33. Notice of Claim and Contractual Limitations Period. Employee acknowledges the Company's need for prompt notice, investigation, and resolution of any claims that may be filed against it due to the number of relationships it has with employees and others (and due to the turnover among such individuals with knowledge relevant to any underlying claim). Accordingly, Employee agrees prior to initiating any litigation of any type (including, but not limited to, employment discrimination litigation, wage litigation, defamation, or any other claim) to notify the Company, within One Hundred and Eighty (180) days after the claim accrued, by sending a certified letter addressed to the Company's General Counsel setting forth: (i) claimant's name, address, and phone; (ii) the name of any attorney (if any) representing Employee; (iii) the nature of the claim; (iv) the date the claim arose; and (v) therelief requested. This provision is in addition to any other notice and exhaustion requirements that might apply. For any dispute or claim of any type against the Company (including but not limited to employment discrimination litigation, wage litigation, defamation, or any other claim), Employee must commence legal action within the shorter of one (1) year of accrual of the cause of action or such shorter period that may be specified by law.

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34. Non-Jury Trials. Notwithstanding any right to a jury trial for any claims, Employee waives any such right to a jury trial, and agrees that any claim of any type (including but not limited to employment discrimination litigation, wage litigation, defamation, or any other claim) lodged in any court will be tried, if at all, without a jury.

35. Choice of Forum. Employee acknowledges that the Company is primarily based in Indiana, and Employee understands and acknowledges the Company's desire and need to defend any litigation against it in Indiana. Accordingly, the Parties agree that any claim of any type brought by Employee against the Company or any of its employees or agents must be maintained only in a court sitting in Marion County, Indiana, or Ripley County, Indiana, or, if a federal court, the Southern District of Indiana, Indianapolis Division. Employee further understands and acknowledges that in the event the Company initiates litigation against Employee, the Company may need to prosecute such litigation in such state where the Employee is subject to personal jurisdiction. Accordingly, for purposes of enforcement of this Agreement, Employee specifically consents to personal jurisdiction in the State of Indiana as well as any state in which resides a customer assigned to the Employee. Furthermore, Employee consents to appear, upon Company's request and at Employee's own cost, for deposition, hearing, trial, or other court proceeding in Indiana or in any state in which resides a customer assigned to the Employee.

36. Choice of Law. This Agreement shall be deemed to have been made within the County of Ripley, State of Indiana and shall be interpreted and construed in accordance with the laws of the State of Indiana. Any and all matters of dispute of any nature whatsoever arising out of, or in any way connected with the interpretation of this Agreement, any disputes arising out of the Agreement or the employment relationship between the Parties hereto, shall be governed by, construed by and enforced in accordance with the laws of the State of Indiana without regard to any applicable state's choice of law provisions.

37. Titles. Titles are used for the purpose of convenience in this Agreement and shall be ignored in any construction of it.

38. Severability. The Parties agree that each and every paragraph, sentence, clause, term and provision of this Agreement is severable and that, in the event any portion of this Agreement is adjudged to be invalid or unenforceable, the remaining portions thereof shall remain in effect and be enforced to the fullest extent permitted by law. Further, should any particular clause, covenant, or provision of this Agreement be held unreasonable or contrary to public policy for any reason, the Parties acknowledge and agree that such covenant, provision or clause shall automatically be deemed modified such that the contested covenant, provision or clause will have the closest effect permitted by applicable law to the original form and shall be given effect and enforced as so modified to whatever extent would be reasonable and enforceable under applicable law.

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39. Assignment-Notices. The rights and obligations of the Company under this Agreement shall inure to its benefit, as well as the benefit of its parent, subsidiary, successor and affiliated entities, and shall be binding upon the successors and assigns of the Company. This Agreement, being personal to Employee, cannot be assigned by Employee, but Employee's personal representative shall be bound by all its terms and conditions. Any notice required hereunder shall be sufficient if in writing and mailed to the last known residence of Employee or to the Company at its principal office with a copy mailed to the Office of the General Counsel.

40. Amendments and Modifications. Except as specifically provided herein, no modification, amendment, extension or waiver of this Agreement or any provision hereof shall be binding upon the Company or Employee unless in writing and signed by both Parties. The waiver by the Company or Employee of a breach of any provision of this Agreement shall not be construed as a waiver of any subsequent breach. Nothing in this Agreement shall be construed as a limitation upon the Company's right to modify or amend any of its manuals or policies in its sole discretion and any such modification or amendment which pertains to matters addressed herein shall be deemed to be incorporated herein and made a part of this Agreement.

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

42. Voluntary and Knowing Execution. Employee acknowledges that Employee has been offered a reasonable amount of time within which to consider and review this Agreement; that Employee has carefully read and fully understands all of the provisions of this Agreement; and that Employee has entered into this Agreement knowingly and voluntarily.

43. Entire Agreement. This Agreement constitutes the entire employment agreement between the Parties hereto concerning the subject matter hereof and shall supersede all prior and contemporaneous agreements between the Parties in connection with the subject matter of this Agreement. Any pre-existing Employment Agreements shall be deemed null and void. Nothing in this Agreement, however, shall affect any separately-executed written agreement addressing any other issues (e. g., the Inventions, Improvements, Copyrights and Trade Secrets Agreement, etc.).

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IN WITNESS WHEREOF, the Parties have signed this Agreement effective as of the day and year first above written.

TAYLOR SMITH	HILL-ROM HOLDINGS, INC.
Signed:  /s/  Taylor Smith	BY:  /s/  Michael Oliver
Printed:  Taylor Smith	Title:  SVP and Chief HR Officer
Dated:  October 26, 2013	Dated:  October 30, 2013

CAUTION: READ BEFORE SIGNING

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EX-10.31

Exhibit 10.31

Hill-Rom Holdings, Inc. FY 2016 Non-Employee Director Compensation Policy

· Non-employee directors, other than the Chairman of the Board, shall each receive an annual cash retainer of $65,000 for their service as directors and shall not receive meeting fees for attendance at Board meetings; the Chairman of the Board shall receive an annual cash retainer of $135,000 for service as Chairman of the Board.

· Each non-employee director, other than the Chairpersons of each committee, who is a member of the Audit, Compensation and Management Development Committee or Nominating/Corporate Governance, shall receive a $12,500, $7,500 and $5,000 annual retainer, respectively. Notwithstanding the foregoing, for any meeting of an ad hoc Committee of the Board that requires attendance in person or by telephone, the non-employee directors who attend, shall each receive a meeting fee of $1,500.

· The Chairpersons of each of the Audit, Compensation and Management Development and Nominating/Corporate Governance Committees shall receive a $25,000, $20,000 and $15,000 annual retainer, respectively.

· Non-employee directors who attend meetings of Committees of which they are not members shall receive no fees for their attendance.

· Board and Committee retainers shall be paid in quarterly installments (with such quarterly installments to be paid on the first day of each quarter).

· Each non-employee director shall be reimbursed for expenses incurred as a result of attendance at Board or Committee meetings.

· Each non-employee director shall be awarded, on the first trading day following the close of each annual meeting of the Company’s shareholders, restricted stock units (otherwise known as deferred stock awards) valued at $160,000 on the date of grant under the Corporation’s Stock Incentive Plan; provided that the Chairman of the Board’s annual grant of deferred stock awards shall be valued at $200,000. Each deferred stock award granted to any non-employee director shall be for a number of shares of Common Stock determined by dividing (i) the indicated dollar amount by (ii) the average high and low prices of the Common Stock on the date of grant. Vesting for all such restricted stock units will occur on the later to occur of one year and one day from the date of the grant or the six month anniversary of the date that the applicable director ceases to be a member of the Board.

EX-21

EXHIBIT 21

HILL-ROM HOLDINGS, INC.

SUBSIDIARIES OF THE REGISTRANT

All subsidiaries of the Company as of November 19, 2015 are wholly-owned Indiana corporations, unless otherwise noted.

Subsidiaries of Hill-Rom Holdings, Inc.

Hill-Rom, Inc.

Eagle Acquisition Sub B.V, a Netherlands corporation

Huntersville Insurance Company, Inc., a Utah corporation

Welch Allyn Holdings, Inc., a New York corporation

Subsidiaries of Hill-Rom, Inc.

Advanced Respiratory, Inc., a Minnesota corporation

Allen Medical Systems, Inc.

Hill-Rom Services, Inc.

Aspen Surgical Products Holding, Inc., a Delaware corporation

Trumpf Medical Systems, Inc.

Subsidiary of Allen Medical Systems, Inc.

AMATECH Corporation

Subsidiary of Aspen Surgical Products Holding, Inc.

Aspen Surgical Products, Inc., a Michigan corporation

Subsidiary of Aspen Surgical Products, Inc.

Aspen Surgical Puerto Rico Corp., a Puerto Rico corporation

Jointly owned subsidiary of Hill-Rom, Inc. and Advanced Respiratory, Inc.

Hill-Rom Company, Inc.

Subsidiaries of Hill-Rom Company, Inc.

Hill-Rom International, Inc.

MEDIQ/PRN Life Support Systems, LLC

Hill-Rom Logistics, LLC

Hill-Rom Company Real Estate Holdings, LLC, a Delaware Limited Liability Company

Subsidiary of Hill-Rom Services, Inc.

Hill-Rom Manufacturing, Inc.

Subsidiary of Hill-Rom Manufacturing, Inc.

Hill-Rom Finance Limited Partner, Inc.

Hill-Rom Manufacturing Real Estate Holdings, LLC, a Delaware Limited Liability Company

Subsidiaries of Hill-Rom International, Inc.

Hill-Rom Pty, Ltd, an Australia corporation

Hill-Rom Asia Limited, a Hong Kong corporation

Hill-Rom Japan KK, a Japan corporation

Jointly owned subsidiary of Hill-Rom Pty, Ltd and Trumpf Medizin Systeme GmbH & Co KG

Trumpf Med (Aust) Pty Limited, an Australia corporation

Subsidiaries of Hill-Rom Asia Limited

Hill-Rom Business Services Co., Ltd, a China corporation

Hill-Rom Shanghai Ltd., a China corporation

Jointly owned subsidiary of Hill-Rom Finance Limited Partner, Inc., Hill-Rom, Inc. and Aspen Surgical Products, Inc.

Hill-Rom EU C.V., a Netherlands partnership

Subsidiary of Hill-Rom EU C.V

Hill-Rom (Gibraltar) General Partner Limited, a Gibraltar Corporation

Subsidiary of Hill-Rom (Gibraltar) General Partner Limited

Hill-Rom Holding (Gibraltar) Limited, a Gibraltar Corporation

Jointly owned subsidiary of Hill-Rom Holding (Gibraltar) Limited and Hill-Rom (Gibraltar) General Partner Limited

HR Finance C.V., a Netherlands partnership

Subsidiary of Hill-Rom Holding (Gibraltar) Limited

Hill-Rom International S.á r.l./B.V., a Luxembourg corporation

Subsidiaries of HR Finance C.V.

HR Europe B.V. a Netherlands corporation

Hill-Rom Global Holdings, B.V., a Netherlands corporation

Hill-Rom Receivables, LLC, a Delaware limited liability company

Subsidiaries of Hill-Rom Global Holdings, B.V.

Hill-Rom Holdings Netherlands, B.V., a Netherlands corporation

Hill-Rom Singapore Holdings S.á r.l., a Luxembourg corporation

Jointly owned subsidiary of Hill-Rom Global Holdings B.V. and Hill-Rom International S.á r.l./B.V.

Hill-Rom SPRL, a Belgium corporation

Jointly owned subsidiary of Hill-Rom Holding Netherlands, B.V. and Hill-Rom Holding (Gibraltar) Limited

Hill-Rom HB, a Sweden partnership

Subsidiary of Hill-Rom Singapore Holdings S.á r.l.

Hill-Rom Services Pte, Ltd., a Singapore corporation

Subsidiary of Hill-Rom Services Pte, Ltd., a Singapore corporation

Hill-Rom Canada Respiratory, Ltd., a Canada corporation

Subsidiaries of Hill-Rom Holdings Netherlands, B.V.,

Hill-Rom UK (Holdings) Ltd., a United Kingdom corporation

Trumpf Medizin Systeme Beteiligungs GmbH, a Germany corporation

Subsidiary of Hill-Rom Holdings Netherlands BV and HR Europe BV

Trumpf Medizin Systeme GmbH & Co KG, a Germany partnership

Subsidiaries of Trumpf Medizin Systeme GmbH & Co KG

Trumpf Medical Systems Ltd. (UK), a United Kingdom corporation

Trumpf Medical Systems (Taicang) Co., Limited, a China corporation

Subsidiaries of Hill-Rom UK (Holdings) Ltd.

Aspen Medical Europe Limited (UK), a United Kingdom corporation

Hill-Rom Ltd., a United Kingdom corporation

Subsidiary of Hill-Rom Ltd.

Hill-Rom (UK), Ltd., a United Kingdom corporation

Subsidiaries of Hill-Rom International S.á r.l./B.V.

Hill-Rom B.V., a Netherlands corporation

Hill-Rom S.A., a Switzerland corporation

Hill-Rom Austria GmbH, an Austria corporation

Hill-Rom Sociedade Unipessoal, LDA a Portugal corporation

Hill-Rom Poland sp. z o.o., a Poland corporation

Hill-Rom Canada, Ltd., a Canada Corporation

Hill-Rom SARL, a France corporation

Jointly owned subsidiaries of Hill-Rom International S.á r.l./B.V. and Hill-Rom Services, Inc.

Hill-Rom India Private Ltd., an India corporation

Hill-Rom Rus, LLC, a Russia Limited Liability Company

Hill-Rom de Mexico S de RL de CV, a Mexico corporation

Hill-Rom Servicios S de RL de CV, a Mexico corporation

Hill-Rom Comercializador a de Mexico S de RL de CV, a Mexico corporation

Hill-Rom Importacao e Comercio de Equipamentos Medicos Ltda, a Brazil corporation

Hill-Rom Turkey Medikal Urunler Dagitim ve Ticaret Limited Sirketi, a Turkey corporation

Subsidiary of Hill-Rom Austria GmbH

Trumpf Medizinsystems Osterreich GmbH, an Austria corporation

Subsidiaries of Hill-Rom SARL

Hill-Rom Industries SA, a France corporation

Hill-Rom, S.p.A, an Italy corporation

Hill-Rom SAS, a France corporation

Hill-Rom Iberia S.L., a Spain corporation

Hill-Rom AB, a Sweden corporation

Trumpf Systemes Medicaux SAS, a France corporation

Jointly owned subsidiary of Hill-Rom SARL and Hill-Rom SAS

Hill-Rom sro, a Czech Republic corporation

Subsidiaries of Hill-Rom AB

Liko R&D AB, a Sweden corporation

Liko AB, a Sweden corporation

Hill-Rom Norway, a Norway corporation

Subsidiary of Liko AB

Völker Verwaltung GmbH, a Germany corporation

Jointly owned subsidiary of Liko AB and Eagle Acquisition Sub B.V.

Völker Holdings GmbH & Co KG, a Germany partnership

Subsidiaries of Völker Holdings GmbH & Co KG

Völker GmbH, a Germany corporation

Hill-Rom GmbH, a Germany corporation

Subsidiary of Völker GmbH

Völker BVBA, a Belgium corporation

Subsidiaries of Welch Allyn Holdings, Inc.

Welch Allyn, Inc. a New York corporation

Welch Allyn ATR, LLC, a Delaware Limited Liability Company

Subsidiaries of Welch Allyn, Inc.

Welch Allyn International Ventures, Inc. a Delaware corporation

Welch Allyn Protocol, Inc., an Oregon corporation

Hubble Telemedical, Inc., a Delaware corporation

Welch Allyn International Holdings, Inc., a Delaware corporation

Welch Allyn Real Estate Holdings, LLC, a Delaware Limited Liability Company

Subsidiaries of Welch Allyn International Holdings, Inc.

Welch Allyn South Africa Pty, Ltd., a South Africa corporation

Welch Allyn UK Ltd., a United Kingdom corporation

Welch Allyn B.V., a Netherlands corporation

Welch Allyn France, Sarl, a France corporation

Welch Allyn Malaysia SDN, Bhd, a Malaysia corporation

Welch Allyn Italia S.R.L., an Italy corporation

Welch Allyn Singapore Pte, Ltd., a Singapore corporation

Welch Allyn Japan K.K., a Japan corporation

Welch Allyn GmbH, a German corporation

Welch Allyn CV Holdings, LLC, a Delaware Limited Liability Company

Subsidiaries of Welch Allyn International Ventures, Inc. and Welch Allyn International Holdings, Inc.

Welch Allyn Columbia Ltda, a Columbia corporation

Welch Allyn do Brasil Comercia de Equipmentos Medicos, Ltda, a Brazil corporation

Subsidiary of Welch Allyn CV Holdings, LLC and Welch Allyn International Holdings, Inc.

WA Holdings, C.V. a Netherlands partnership

Subsidiary of WA Holdings, C.V.

Welch Allyn Coop Holdings, LLC, a Delaware Limited Liability Company

Subsidiary of WA Holdings, C.V. and Welch Allyn Coop Holdings, LLC

Welch Allyn International Holdings Cooperatief, U.A. a Netherlands cooperative

Subsidiaries of Welch Allyn International Holdings Cooperatief, U.A.

Welch Allyn Canada Limited, a Canada corporation

Welch Allyn EME B.V. a Netherlands corporation

Welch Allyn Limited, an Ireland corporation

Welch Allyn Australia Pty Limited, an Australia corporation

Welch Allyn Maquila Holdings, LLC, a Delaware Limited Liability Company

Subsidiary of Welch Allyn Maquila Holdings, LLC and WA Holdings, C.V.

Welch Allyn de Mexico s. de R.L. de C.V., a Mexico corporation

Subsidiary of Welch Allyn Si Subsidiary of Welch Allyn International Holdings Cooperatief, U.A.

and Welch Allyn Coop Holdings, Limited Liability Company

Welch Allyn Productos Medicos s. de R.L. de C.V., a Mexico corporation

Subsidiary of Welch Allyn Singapore Pte, Ltd.

Welch Allyn Medical Equipment (Suzhou) Co. Ltd., a China corporation

Subsidiary of Welch Allyn B.V.

Welch Allyn Sverige, AB, a Sweden corporation

EX-23

EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (Nos. 333-157341, 333-157338, 333-88354, 333-49669, and 333-88328) of Hill-Rom Holdings, Inc. of our report dated November 19, 2015, relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/  PricewaterhouseCoopers LLP                                                      

PricewaterhouseCoopers LLP

Indianapolis, Indiana

November 19, 2015

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John J. Greisch, certify that:

1. I have reviewed this Annual Report on Form 10-K of Hill-Rom Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 19, 2015

/s/ John J. Greisch

John J. Greisch

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Steven J. Strobel, certify that:

1. I have reviewed this Annual Report on Form 10-K of Hill-Rom Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 19, 2015

/s/ Steven J. Strobel

Steven J. Strobel

Senior Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10-K of Hill-Rom Holdings, Inc. (the “Company”) for the year ended September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John J. Greisch, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John J. Greisch

John J. Greisch

President and Chief Executive Officer

November 19, 2015

A signed original of this written statement required by Section 906 has been provided to Hill-Rom Holdings, Inc. and will be retained by Hill-Rom Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10-K of Hill-Rom Holdings, Inc. (the “Company”) for the year ended September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven J. Strobel, Senior Vice President and Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Steven J. Strobel

Steven J. Strobel

Senior Vice President and Chief Financial Officer

November 19, 2015

A signed original of this written statement required by Section 906 has been provided to Hill-Rom Holdings, Inc. and will be retained by Hill-Rom Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Property, Plant and Equipment) (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Property, Plant and Equipment
Depreciation expense	$ 73.6	$ 65.4	$ 71.2
Major components of property and the related accumulated depreciation:
Cost	976.4	849.6
Accumulated Depreciation	$ 598.0	588.1
Land Improvements [Member] | Minimum [Member]
Property, Plant and Equipment
Estimated useful life	6 years
Land Improvements [Member] | Maximum [Member]
Property, Plant and Equipment
Estimated useful life	15 years
Land and Land Improvements [Member]
Major components of property and the related accumulated depreciation:
Cost	$ 23.3	19.4
Accumulated Depreciation	2.8	2.3
Buildings and Building Equipment [Member]
Major components of property and the related accumulated depreciation:
Cost	196.2	158.3
Accumulated Depreciation	$ 90.3	88.6
Buildings and Building Equipment [Member] | Minimum [Member]
Property, Plant and Equipment
Estimated useful life	10 years
Buildings and Building Equipment [Member] | Maximum [Member]
Property, Plant and Equipment
Estimated useful life	40 years
Machinery and Equipment [Member]
Major components of property and the related accumulated depreciation:
Cost	$ 369.5	321.3
Accumulated Depreciation	$ 226.5	213.7
Machinery and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment
Estimated useful life	3 years
Machinery and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment
Estimated useful life	10 years
Equipment Leased to Others [Member]
Major components of property and the related accumulated depreciation:
Cost	$ 387.4	350.6
Accumulated Depreciation	$ 278.4	$ 283.5
Equipment Leased to Others [Member] | Minimum [Member]
Property, Plant and Equipment
Estimated useful life	2 years
Equipment Leased to Others [Member] | Maximum [Member]
Property, Plant and Equipment
Estimated useful life	10 years

XML

OTHER COMPREHENSIVE INCOME (Schedule of Changes in AOCL by Component) (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Other comprehensive income (loss)
Tax effect	$ 5.1	$ 4.9	$ (18.1)
Total Other Comprehensive Income (Loss), Net of Tax	(66.7)	(38.4)	42.3
Accumulated other comprehensive loss
Beginning balance	806.5
Net activity	(66.7)	(38.4)	42.3
Ending balance	1,146.9	806.5
Available-for-Sale Securities and Currency Hedges [Member]
Other comprehensive income (loss)
Prior to reclassification	(0.6)	0.3
Reclassification from	$ 0.6	0.1
Pre-tax		0.4
Tax effect		(0.1)
Total Other Comprehensive Income (Loss), Net of Tax		0.3
Accumulated other comprehensive loss
Beginning balance		(0.3)
Net activity		$ 0.3
Ending balance			(0.3)
Foreign Currency Translation Adjustment [Member]
Other comprehensive income (loss)
Prior to reclassification	$ (58.6)	$ (29.6)
Reclassification from
Pre-tax	$ (58.6)	$ (29.6)
Tax effect
Total Other Comprehensive Income (Loss), Net of Tax	$ (58.6)	$ (29.6)
Accumulated other comprehensive loss
Beginning balance	(34.2)	(4.6)
Net activity	(58.6)	(29.6)
Ending balance	(92.8)	(34.2)	(4.6)
Pension and Postretirement Defined Benefit Plan Items [Member]
Other comprehensive income (loss)
Prior to reclassification	(28.7)	(16.8)
Reclassification from	15.5	2.7
Pre-tax	(13.2)	(14.1)
Tax effect	5.1	5.0
Total Other Comprehensive Income (Loss), Net of Tax	(8.1)	(9.1)
Accumulated other comprehensive loss
Beginning balance	(39.9)	(30.8)
Net activity	(8.1)	(9.1)
Ending balance	(48.0)	(39.9)	(30.8)
Accumulated Other Comprehensive Income (Loss) [Member]
Other comprehensive income (loss)
Prior to reclassification	(87.9)	(46.1)
Reclassification from	16.1	2.8
Pre-tax	(71.8)	(43.3)
Tax effect	5.1	4.9
Total Other Comprehensive Income (Loss), Net of Tax	(66.7)	(38.4)
Accumulated other comprehensive loss
Beginning balance	(74.1)	(35.7)
Net activity	(66.7)	(38.4)
Ending balance	$ (140.8)	$ (74.1)	$ (35.7)

XML

GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS (Narrative) (Details) $ in Millions	12 Months Ended
	Sep. 30, 2015 USD ($) units	Sep. 30, 2014 USD ($)	Mar. 31, 2014 USD ($)	Sep. 30, 2013 USD ($)
Goodwill [Line Items]
Goodwill	$ 1,610.5	$ 399.8		$ 342.8
Number of reportable business segments | units	3
Number of reporting units | units	10
Minimum threshold at which impairment charge may be recognized	10.00%
Goodwill related to acquisitions	$ 1,225.6	62.1
Indefinite-lived Intangible Assets [Line Items]
Indefinite-lived intangible assets	466.9	$ 32.9
Consolidation of VIE [Member]
Goodwill [Line Items]
Goodwill related to acquisitions	$ 12.1
Virtus, Inc. [Member]
Goodwill [Line Items]
Goodwill			$ 9.4

XML

OTHER COMPREHENSIVE INCOME (Schedule of Items Reclassified out of AOCL) (Details) - USD ($) $ in Millions		3 Months Ended								12 Months Ended
		Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Amount reclassified										$ (65.1)	$ (115.2)	$ (144.0)
Tax effect										18.3	54.6	39.0
Net of tax		$ 9.6	$ (19.1)	$ (26.1)	$ (12.1)	$ (24.6)	$ (26.1)	$ 3.3	$ (13.2)	(47.7)	(60.6)	$ (105.0)
Pension and Postretirement Defined Benefit Plan Items [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Amount reclassified	[1]									15.5	2.7
Tax effect	[1]									(5.6)	(1.0)
Net of tax	[1]									9.9	1.7
Available-for-Sale Securities and Currency Hedges [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Amount reclassified	[2]									0.6	$ 0.1
Tax effect	[2]									(0.2)
Net of tax	[2]									$ 0.4	$ 0.1

[1] Reclassified from accumulated other comprehensive loss into cost of goods sold and selling and administrative expenses. These components are included in the computation of net periodic pension and postretirement benefit expense.

[2] Reclassified from accumulated other comprehensive loss into other income (expense), net.

XML

INCOME TAXES (Reconciliation of Unrecognized Tax Benefits) (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Balance at October 1	$ 4.1	$ 4.6	$ 9.8
Increases in tax position of prior years	0.4	2.1
Decreases in tax position of prior years	$ (1.3)	$ (0.9)	$ (0.5)
Increases in tax positions related to the current year			0.1
Settlements with taxing authorities	$ (1.2)	$ (0.1)	(3.2)
Lapse of applicable statute of limitations	(1.3)	$ (1.5)	$ (1.7)
Increase in positions due to acquisitions	5.5
Foreign currency adjustments			$ 0.1
Foreign currency adjustments	(0.4)	$ (0.1)
Total change	1.7	(0.5)	(5.2)
Balance at September 30	$ 5.8	$ 4.1	$ 4.6

XML

ACQUISITIONS (Acquisition of Virtus) (Details) - USD ($) $ in Millions		12 Months Ended
	Mar. 31, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Business Acquisition [Line Items]
Purchase price of entity, net of cash acquired		$ 1,638.7	$ 239.5
Fair value of the assets acquired and liabilities assumed:
Goodwill		$ 1,610.5	$ 399.8	$ 342.8
Virtus, Inc. [Member]
Business Acquisition [Line Items]
Purchase price of entity	$ 17.6
Purchase price of entity, net of cash acquired	13.0
Fair value of the assets acquired and liabilities assumed:
Inventory	2.6
Other current assets	5.4
Property, plant, and equipment	1.9
Goodwill	9.4
Current liabilities	(1.6)
Deferred tax liability	(0.1)
Total purchase price	$ 17.6

XML

EARNINGS PER COMMON SHARE (Tables)

12 Months Ended

Sep. 30, 2015

EARNINGS PER COMMON SHARE [Abstract]

Calculated Earnings per Share

	Years Ended September 30
	2015		2014		2013
Net income attributable to common shareholders	$	47.7	$	60.6	$	105.0
Average shares outstanding - Basic (thousands)		57,249		57,555		59,910
Add potential effect of exercise of stock options
and other unvested equity awards (thousands)		1,287		968		340
Average shares outstanding - Diluted (thousands)		58,536		58,523		60,250
Net income attributable to common shareholders per common share - Basic	$	0.83	$	1.05	$	1.75
Net income attributable to common shareholders per common share - Diluted	$	0.82	$	1.04	$	1.74

XML

EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended								12 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
EARNINGS PER COMMON SHARE [Abstract]
Net income attributable to common shareholders									$ 47.7	$ 60.6	$ 105.0
Average shares outstanding - Basic									57,249	57,555	59,910
Add potential effect of exercise of stock options and other unvested equity awards									1,287	968	340
Average shares outstanding - Diluted									58,536	58,523	60,250
Basic net income (loss) attributable to common shareholders per common share	$ (0.16)	$ 0.34	$ 0.46	$ 0.21	$ 0.43	$ 0.46	$ (0.06)	$ 0.23	$ 0.83	$ 1.05	$ 1.75
Diluted net income (loss) attributable to common shareholders per common share	$ (0.16)	$ 0.33	$ 0.45	$ 0.21	$ 0.42	$ 0.45	$ (0.06)	$ 0.22	$ 0.82	$ 1.04	$ 1.74
Shares with anti-dilutive effect excluded from the computation of Diluted EPS									200	300	1,400

XML

SPECIAL CHARGES (Schedule of Restructuring Activity) (Details) $ in Millions	12 Months Ended
	Sep. 30, 2015 USD ($)
Restructuring Reserve [Roll Forward]
Beginning Balance	$ 11.7
Expenses	23.1
Cash Payments	(10.0)
Reversals	(0.5)
Ending Balance	$ 24.3

XML

RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Schedule of Obligations and Funded Status) (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Amounts recorded in the Consolidated Balance Sheets:
Accrued pension benefits, long-term	$ (118.8)	$ (76.9)
Master Defined Benefit Retirement Plan [Member]
Change in benefit obligation:
Benefit obligation at beginning of year	343.8	297.9
Service cost	5.4	5.0	$ 6.1
Interest cost	14.6	14.4	13.2
Actuarial loss	12.5	31.4
Benefits paid	$ (54.0)	(10.2)
Acquisitions		4.3
Special termination benefits		$ 2.4
Plan settlement	$ (4.4)
Exchange rate gain	(2.4)	$ (1.4)
Benefit obligation at end of year	315.5	343.8	297.9
Change in plan assets:
Fair value of plan assets at beginning of year	276.1	254.4
Actual return on plan assets	(3.9)	30.9
Employer contributions	0.9	1.0
Benefits paid	(54.0)	(10.2)
Fair value of plan assets at end of year	219.1	276.1	$ 254.4
Funded status and net amounts recognized	(96.4)	(67.7)
Amounts recorded in the Consolidated Balance Sheets:
Accrued pension benefits, current portion	(1.0)	(1.0)
Accrued pension benefits, long-term	(95.4)	(66.7)
Net amount recognized	$ (96.4)	$ (67.7)

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INCOME TAXES (Schedule of Deferred Taxes) (Details) - USD ($) $ in Millions	Sep. 30, 2015	Sep. 30, 2014
Deferred tax assets:
Employee benefit accruals	$ 106.4	$ 49.3
Inventory	6.2	13.9
Reserve for bad debts	8.4	10.0
Net operating loss carryforwards	45.8	40.3
Tax credit carryforwards	11.7	2.5
Other, net	39.6	25.7
Deferred Tax Assets, Gross, Total	218.1	141.7
Less: Valuation allowance	(40.7)	(28.3)
Total deferred tax assets	177.4	113.4
Deferred tax liabilities:
Depreciation	(35.3)	(13.9)
Amortization	(409.1)	(62.8)
Other, net	(16.4)	(4.9)
Total deferred tax liabilities	(460.8)	(81.6)
Deferred tax asset - net		$ 31.8
Deferred tax (liability) - net	$ (283.4)

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SEGMENT REPORTING (Schedule of Geographic Information) (Details) - USD ($) $ in Millions		12 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Geographic Information
Revenue	[1]	$ 1,988.2	$ 1,686.1	$ 1,716.2
Long-lived assets	[2]	378.4	261.5	234.3
United States [Member]
Geographic Information
Revenue	[1]	1,273.0	1,070.8	1,116.4
Long-lived assets	[2]	263.9	151.7	158.0
Foreign [Member]
Geographic Information
Revenue	[1]	715.2	615.3	599.8
Long-lived assets	[2]	$ 114.5	$ 109.8	$ 76.3

[1] Net revenue is attributed to geographic areas based on the location of the customer.

[2] Includes property and equipment leased to others.

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INCOME TAXES (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Income taxes:
Deferred tax assets related to operating loss carryforwards in foreign jurisdictions	$ 43.2
Deferred tax assets related to domestic federal net operating loss carryforwards	2.2
Deferred tax assets related to state net operating loss carryforwards	0.4
Deferred tax assets related to state credits	11.7
Valuation allowance on deferred tax assets	40.7	$ 28.3
Total gross unrecognized tax benefits	5.8	4.1	$ 4.6	$ 9.8
Unrecognized tax benefits that would impact effective tax rate, if recognized	3.3	2.7	3.9
Accrued interest and penalties related to unrecognized tax benefits	3.0	0.4	0.6
Income tax expense for interest and penalties	0.2	0.2	0.1
Income Tax Holiday [Line Items]
Impact of tax holidays	$ 4.3	$ 4.0	$ 2.9
Benefit of tax holidays on net income per share (diluted)	$ 0.07	$ 0.07	$ 0.05
Minimum [Member]
Income taxes:
Amount of reasonably possible decrease	$ 0.5
Maximum [Member]
Income taxes:
Amount of reasonably possible decrease	$ 1.5
Earliest Tax Year [Member] | Domestic Tax Authority [Member]
Income taxes:
Operating loss carryforwards, year of expiration	Jan. 01, 2019
Earliest Tax Year [Member] | State and Local Jurisdiction [Member]
Income taxes:
Operating loss carryforwards, year of expiration	Jan. 01, 2016
Tax credit carryforwards, year of expiration	Jan. 01, 2016
Latest Tax Year [Member] | Domestic Tax Authority [Member]
Income taxes:
Operating loss carryforwards, year of expiration	Dec. 31, 2033
Latest Tax Year [Member] | State and Local Jurisdiction [Member]
Income taxes:
Operating loss carryforwards, year of expiration	Dec. 31, 2033
Tax credit carryforwards, year of expiration	Dec. 31, 2026
Inland Revenue, Singapore (IRAS) [Member]
Income Tax Holiday [Line Items]
Income tax holiday, year of expiration	2016
Puerto Rico Tax Authority [Member]
Income Tax Holiday [Line Items]
Income tax holiday, year of expiration	2025

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COMMON STOCK (Schedule of Transactions for Nonvested PSUs) (Details) - Performance Shares [Member] shares in Thousands	12 Months Ended
	Sep. 30, 2015 $ / shares shares
Number of Share Units
Nonvested at October 1, 2014 | shares	586
Granted | shares	331
Vested | shares	(414)
Cancelled | shares	(76)
Forfeited | shares	(73)
Nonvested at September 30, 2015 | shares	354
Weighted Average Grant Date Fair Value
Nonvested at October 1, 2014	$ 29.98
Granted	49.27
Vested	30.11
Cancelled	24.57
Forfeited	41.15
Nonvested at September 30, 2015	$ 42.16

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ACQUISITIONS (Tables)

12 Months Ended

Sep. 30, 2015

Welch Allyn Holdings, Inc. [Member]

Business Acquisition [Line Items]

Schedule of Fair Value of the Assets Acquired and Liabilities Assumed

	Amount
Trade receivables	$	63.2
Inventory		110.5
Other current assets		52.7
Current deferred income taxes		27.3
Property, plant, and equipment		93.2
Goodwill		1,203.5
Trade name (indefinite life)		434.0
Customer relationships (12-year useful life)		516.8
Developed technology (7-year weighted average useful life)		54.0
Other intangibles		19.9
Other noncurrent assets		30.6
Current liabilities		(161.5	)
Noncurrent deferred income taxes		(368.7	)
Other noncurrent liabilities		(25.6	)
Total purchase price, net of cash acquired	$	2,049.9
Fair value of common stock issued	$	416.3
Cash payment, net of cash acquired		1,633.6
Total consideration	$	2,049.9

Trumpf Medical [Member]

Business Acquisition [Line Items]

Schedule of Fair Value of the Assets Acquired and Liabilities Assumed

		Amount
Trade receivables	$	67.6
Inventory		63.6
Other current assets		23.4
Property, plant, and equipment		42.1
Goodwill		66.0
Trade name (5-year useful life)		6.7
Customer relationships (10-year weighted average useful life)		15.8
Developed technology (8-year weighted average useful life)		17.8
Other intangibles		4.8
Other noncurrent assets		0.7
Deferred tax asset		12.9
Current liabilities		(74.4	)
Long term debt		(6.0	)
Noncurrent liabilities		(8.1	)
Total purchase price	$	232.9

Virtus, Inc. [Member]

Business Acquisition [Line Items]

Schedule of Fair Value of the Assets Acquired and Liabilities Assumed

	Amount
Inventory	$	2.6
Other current assets		5.4
Property, plant, and equipment		1.9
Goodwill		9.4
Current liabilities		(1.6	)
Deferred tax liability		(0.1	)
Total purchase price	$	17.6

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FINANCING AGREEMENTS (Schedule of Maturities of Long-Term Debt) (Details) $ in Millions	Sep. 30, 2015 USD ($)
Debt Instrument [Line Items]
2016	$ 58.0
2017	83.0
2018	108.0
2019	108.0
2020	683.0
Senior Secured Term Loan A [Member]
Debt Instrument [Line Items]
2016	50.0
2017	75.0
2018	100.0
2019	100.0
2020	675.0
Senior Secured Term Loan B [Member]
Debt Instrument [Line Items]
2016	8.0
2017	8.0
2018	8.0
2019	8.0
2020	$ 8.0

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Employee Benefits Change and Self Insurance) (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2014	Mar. 31, 2014	Sep. 30, 2015
Paid Time Off Policy [Member]
Change in Accounting Estimate [Line Items]
Employee benefits expense reversed	$ (1,200)	$ (12,200)
Uninsured Risk [Member]
Loss Contingencies [Line Items]
Deductibles and self-insured retentions, minimum			$ 25
Deductibles and self-insured retentions, maximum			$ 1,000

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INCOME TAXES (Schedule of Differences between Income Tax Expense) (Details) - USD ($) $ in Millions		12 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Amount
Federal income tax	[1]	$ 22.8	$ 40.3	$ 50.4
State income tax	[2]	1.6	2.0	2.5
Foreign income tax	[3]	(10.2)	(7.7)	(5.7)
Application of federal tax credits		(2.2)	(0.6)	(3.5)
Adjustment of estimated income tax accruals		(1.6)	(0.6)	(1.5)
Valuation of tax attributes		4.0	21.3	0.6
Domestic manufacturer's deduction		(1.5)	(1.8)	$ (2.2)
Capitalized transaction costs		2.5	0.3
Other, net		2.9	1.4	$ (1.6)
Income tax expense		$ 18.3	$ 54.6	$ 39.0
% of Pretax Income
Federal income tax	[1]	35.00%	35.00%	35.00%
State income tax	[2]	2.40%	1.70%	1.70%
Foreign income tax	[3]	(15.70%)	(6.70%)	(4.00%)
Application of federal tax credits		(3.40%)	(0.50%)	(2.40%)
Adjustment of estimated income tax accruals		(2.40%)	(0.50%)	(1.00%)
Valuation of tax attributes		6.20%	18.50%	0.40%
Domestic manufacturer's deduction		(2.30%)	(1.50%)	(1.50%)
Capitalized transaction costs		3.80%	0.20%
Other, net		4.50%	1.20%	(1.10%)
Income tax expense		28.10%	47.40%	27.10%

[1] At statutory rate.

[2] Net of Federal benefit.

[3] Federal tax rate differential.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Nature of Operations) (Details)	Sep. 30, 2015 employees countries
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Number of employees | employees	10,000
Number of countries	100

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FINANCING AGREEMENTS (Schedule of Covenants) (Details) - Scenario, Forecast [Member]	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Maximum [Member]
Debt Instrument [Line Items]
Secured Net Leverage Ratio	3.00	3.50	4.00	4.50	4.75
Minimum [Member]
Debt Instrument [Line Items]
Interest Coverage Ratio	4.00	3.75	3.50	3.25	3.25

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COMMON STOCK (Schedule of Weighted Average Fair Value per Share of Stock Options and Related Valuation Assumptions) (Details) - Stock Options [Member] - $ / shares	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Stock Options
Weighted average fair value per share	$ 12.83	$ 11.91	$ 7.91
Valuation assumptions:
Risk-free interest rate	1.60%	1.30%	0.60%
Expected dividend yield	1.40%	1.40%	1.90%
Expected volatility	35.00%	36.10%	40.20%
Weighted average expected life	4 years 10 months 24 days	4 years 10 months 24 days	4 years 10 months 24 days

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RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Schedule of Allocation of Plan Assets) (Details) - Master Defined Benefit Retirement Plan [Member]	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Defined Benefit Plan Disclosure [Line Items]
Actual allocation	100.00%	100.00%
Equity Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Target allocation, minimum	39.00%	40.00%
Target allocation, maximum	49.00%	60.00%
Actual allocation	42.00%	52.00%
Fixed Income Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Target allocation, minimum	51.00%	40.00%
Target allocation, maximum	61.00%	60.00%
Actual allocation	58.00%	48.00%

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GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS (Schedule of Goodwill Activity) (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Goodwill [Line Items]
Goodwill	$ 2,083.3	$ 872.6	$ 815.6
Accumulated impairment losses	(472.8)	(472.8)	(472.8)
Goodwill, net	1,610.5	399.8	342.8
Goodwill related to acquisitions	1,225.6	62.1
Currency translation effect	(14.9)	(5.1)
North America Segment [Member]
Goodwill [Line Items]
Goodwill	390.6	390.6	383.0
Accumulated impairment losses	(358.1)	(358.1)	(358.1)
Goodwill, net	$ 32.5	32.5	24.9
Goodwill related to acquisitions		$ 7.6
Currency translation effect
Surgical and Respiratory Care Segment [Member]
Goodwill [Line Items]
Goodwill	$ 343.8	$ 333.5	$ 279.0
Accumulated impairment losses
Goodwill, net	$ 343.8	$ 333.5	$ 279.0
Goodwill related to acquisitions	22.1	57.3
Currency translation effect	(11.8)	(2.8)
International [Member]
Goodwill [Line Items]
Goodwill	145.4	148.5	153.6
Accumulated impairment losses	(114.7)	(114.7)	(114.7)
Goodwill, net	$ 30.7	33.8	$ 38.9
Goodwill related to acquisitions		(2.8)
Currency translation effect	$ (3.1)	$ (2.3)
Welch Allyn Holdings, Inc. [Member]
Goodwill [Line Items]
Goodwill	$ 1,203.5
Accumulated impairment losses
Goodwill, net	$ 1,203.5
Goodwill related to acquisitions	$ 1,203.5
Currency translation effect

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Sep. 30, 2015

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Hill-Rom Holdings, Inc. (the “Company,” “Hill-Rom,” “we,” “us,” or “our”) was incorporated on August 7, 1969 in the State of Indiana and is headquartered in Chicago, Illinois. We are a leading global medical technology company with more than 10,000 employees worldwide.  We partner with health care providers in more than 100 countries by focusing on patient care solutions that improve clinical and economic outcomes in five core areas: Advancing Mobility, Wound Care and Prevention, Clinical Workflow, Surgical Safety and Efficiency, and Respiratory Health. Around the world, Hill-Rom's people, products, and programs work towards one mission: Enhancing outcomes for patients and their caregivers.

Basis of Presentation and Principles of Consolidation

The Consolidated Financial Statements include the accounts of Hill-Rom and its wholly-owned subsidiaries. In addition, we also consolidate variable interest entities (VIEs) where Hill-Rom is deemed to have a controlling financial interest. Intercompany accounts and transactions have been eliminated in consolidation, including the intercompany transactions with consolidated VIEs. Where our ownership interest is less than 100 percent, the noncontrolling interests are reported in our Consolidated Financial Statements. Certain prior year amounts have been reclassified to conform to current year presentation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. Examples of such estimates include our accounts receivable reserves (Note 1), accrued warranties (Note 1), the impairment of intangibles and goodwill (Note 3), income taxes (Notes 1 and 9) and commitments and contingencies (Note 13), among others.

Cash and Cash Equivalents

We consider investments in marketable securities and other highly liquid instruments with a maturity of three months or less at date of purchase to be cash equivalents. Investments which have no stated maturity are also considered cash equivalents. All of our marketable securities may be freely traded.

Trade Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and do not bear interest, unless the transaction is an installment sale with payment terms exceeding one year. Reserves for uncollectible accounts represent our best estimate of the amount of probable credit losses and collection risk in our existing accounts receivable. We determine such reserves based on historical write-off experience by industry and reimbursement platform. Receivables are generally reviewed on a pooled basis based on historical collection experience for each reimbursement and receivable type. Receivables for sales transactions are also reviewed individually for collectability. Account balances are charged against the allowance when we believe it is probable the receivable will not be recovered. We do not have any off-balance sheet credit exposure related to our customers. If circumstances change, such as higher than expected claims denials, payment defaults, changes in our business composition or processes, adverse changes in general economic conditions, unfavorable impacts of austerity measures initiated by some governmental authorities, instability or disruption of credit markets, or an unexpected material adverse change in a major customer's or payer's ability to meet its obligations, our estimates of the realizability of trade receivables could be reduced by a material amount.

Within rental revenue, the domestic third-party payers' reimbursement process requires extensive documentation, which has had the effect of slowing both the billing and cash collection cycles relative to the rest of the business, and therefore, increasing total accounts receivable. Because of the extensive documentation required and the requirement to settle a claim with the primary payer prior to billing the secondary and/or patient portion of the claim, the collection period for a claim in a portion of our business may, in some cases, be extended.

We generally hold our trade accounts receivable until they are paid. Certain long-term receivables are occasionally sold to third parties; however, any recognized gain or loss on such sales has historically not been material.

Inventories

Inventories are valued at the lower of cost or market. Inventory costs are determined by the last-in, first-out (“LIFO”) method for approximately 21 and 29 percent of our inventories at September 30, 2015 and 2014. Costs for other inventories have been determined principally by the first-in, first-out (“FIFO”) method. Inventories consist of the following:

	September 30
	2015		2014
Finished products	$	133.2	$	93.5
Work in process		46.1		17.3
Raw materials		88.1		65.4
Total	$	267.4	$	176.2

If the FIFO method of inventory accounting, which approximates current cost, had been used for all inventories, they would have been approximately $3.2 million and $4.0 million higher than reported at September 30, 2015 and 2014.

Property, Plant and Equipment

Property, plant and equipment is recorded at cost and depreciated over the estimated useful life of the assets using principally the straight-line method. Ranges of estimated useful lives are as follows:

	Useful Life
Land improvements	6 - 15 years
Buildings and building equipment	10 - 40 years
Machinery and equipment	3 - 10 years
Equipment leased to others	2 -10 years

When property, plant and equipment is retired from service or otherwise disposed of, the cost and related amount of depreciation or amortization are eliminated from the asset and accumulated depreciation accounts. The difference, if any, between the net asset value and the proceeds on sale are charged or credited to income. Total depreciation expense for fiscal years 2015, 2014 and 2013 was $73.6 million, $65.4 million and $71.2 million. The major components of property and the related accumulated depreciation were as follows:

	September 30
	2015				2014
			Accumulated				Accumulated
	Cost		Depreciation		Cost		Depreciation
Land and land improvements	$	23.3	$	2.8	$	19.4	$	2.3
Buildings and building equipment		196.2		90.3		158.3		88.6
Machinery and equipment		369.5		226.5		321.3		213.7
Equipment leased to others		387.4		278.4		350.6		283.5
Total	$	976.4	$	598.0	$	849.6	$	588.1

Intangible Assets

Intangible assets are stated at cost and consist predominantly of goodwill, software, patents, acquired technology, trademarks, and acquired customer relationship assets. With the exception of goodwill and certain trademarks, our intangible assets are amortized on a straight-line basis over periods generally ranging from 3 to 20 years.

We assess the carrying value of goodwill and non-amortizable intangibles annually, during the third quarter of each fiscal year, or more often if events or changes in circumstances indicate there may be impairment. Goodwill is allocated among the reporting units based on the relative fair value of those units.

The majority of our goodwill and many of our intangible assets are not deductible for income tax purposes. A summary of intangible assets and the related accumulated amortization and impairment losses follows:

	September 30
	2015				2014
			Amortization				Amortization
	Cost		and Impairment		Cost		and Impairment
Goodwill	$	2,083.3	$	472.8	$	872.6	$	472.8
Software		181.7		139.2		170.5		146.6
Patents and Trademarks		497.6		16.9		67.1		16.0
Other		872.8		148.3		306.8		120.7
Total	$	3,635.4	$	777.2	$	1,417.0	$	756.1

Amortization expense for fiscal years 2015, 2014 and 2013 was $44.6 million, $41.0 million and $45.6 million. As further discussed in Note 3, we have various indefinite-lived intangible assets representing trade names with a carrying value of $466.9 million at September 30, 2015 and $32.9 million at September 30, 2014. Amortization expense for all other intangibles is expected to approximate the following for each of the next five fiscal years and thereafter:

	Amount
2016	$	92.9
2017	$	85.8
2018	$	81.6
2019	$	78.0
2020	$	74.4
2021 and beyond	$	368.1

Software consists mainly of capitalized costs associated with internal use software, including applicable costs associated with the implementation/upgrade of our Enterprise Resource Planning systems. In addition, software includes capitalized development costs for software products to be sold. The net book value of computer software costs, included within intangible assets, was $42.5 million and $23.9 million at September 30, 2015 and 2014. Capitalized software costs are amortized on a straight-line basis over periods ranging from three to ten years. Software amortization expense approximated $9.8 million, $11.5 million and $17.8 million for fiscal years 2015, 2014 and 2013, and is included in the total intangibles amortization presented earlier.

Fair Value Measurements

Fair value measurements are classified and disclosed in one of the following three categories:

 Level 1:  Financial instruments with unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities.

 Level 2:  Financial instruments with observable inputs other than those included in Level 1 such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 Level 3:  Financial instruments with unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.  Unobservable inputs reflect our own assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).  Unobservable inputs shall be developed based on the best information available in the circumstances, which might include our own data.

We record cash and cash equivalents, as disclosed on our Consolidated Balance Sheets, as Level 1 instruments and certain other investments and insignificant derivatives as either Level 2 or 3 instruments. Refer to Note 4 for disclosure of our debt instrument fair values.

Guarantees

We routinely grant limited warranties on our products with respect to defects in material and workmanship. The terms of these warranties are generally one year, however, certain components and products have substantially longer warranty periods. We recognize a reserve with respect to these obligations at the time of product sale, with subsequent warranty claims recorded directly against the reserve. The amount of the warranty reserve is determined based on historical trend experience for the covered products. For more significant warranty-related matters which might require a broad-based correction, separate reserves are established when such events are identified and the cost of correction can be reasonably estimated.

A reconciliation of changes in our warranty reserve is as follows:

	2015			2014			2013
Balance at October 1	$	28.4		$	38.1		$	42.2
Provision for warranties during the period		14.7			9.8			29.2
Warranty reserves acquired		7.1			3.0			(2.6	)
Warranty claims incurred during the period		(18.1	)		(22.5	)		(30.7	)
Balance at September 30	$	32.1		$	28.4		$	38.1

In the normal course of business we enter into various other guarantees and indemnities in our relationships with suppliers, service providers, customers, business partners and others. Examples of these arrangements would include guarantees of product performance, indemnifications to service providers and indemnifications of our actions to business partners. These guarantees and indemnifications have not historically nor do we expect them to have a material impact on our financial condition or results of operations, although indemnifications associated with our actions generally have no dollar limitations.

In conjunction with our acquisition and divestiture activities, we have entered into select guarantees and indemnifications of performance with respect to the fulfillment of our commitments under applicable purchase and sale agreements. The arrangements generally indemnify the buyer or seller for damages associated with breach of contract, inaccuracies in representations and warranties surviving the closing date and satisfaction of liabilities and commitments retained under the applicable contract. With respect to sale transactions, we also routinely enter into non-competition agreements for varying periods of time. Guarantees and indemnifications with respect to acquisition and divestiture activities, if triggered, could have a materially adverse impact on our financial condition and results of operations.

Accrued Rebates

We provide rebates and sales incentives to certain customer groups and distributors. Provisions for rebates are recorded as a reduction in net revenue when revenue is recognized. In some cases, rebates may be payable directly to the customer or distributor. We also have arrangements where we provide rebates to certain distributors that sell to end-user customers at prices determined under a contract between us and the end-user customer.

Employee Benefits Change

During the second quarter of fiscal 2014, we implemented a new paid time off policy as part of our employee benefits programs, replacing certain previously existing vacation and sick time policies.  In conjunction with these changes in policies, the vesting provisions with respect to the accumulation of paid time off were delayed resulting in the recognition and utilization of paid time off in the same benefits year.  As a result of this change, significant portions of our existing accrued vacation balance were no longer necessary and we reversed $12.2 million in the second quarter of fiscal 2014 and an additional $1.2 million in the third quarter of fiscal 2014 to reflect the change in vesting provisions.  All accounting with respect to this change in policy is complete.

Retirement Plans

We sponsor retirement and postretirement plans covering select employees. Expense recognized in relation to these defined benefit retirement plans and postretirement health care plans in the U.S. is based upon actuarial valuations and inherent in those valuations are key assumptions including discount rates, and where applicable, expected returns on assets, projected future salary rates and projected health care cost trends. The discount rates used in the valuation of our defined benefit pension and postretirement plans are evaluated annually based on current market conditions. In setting these rates we utilize long-term bond indices and yield curves as a preliminary indication of interest rate movements, and then make adjustments to the respective indices to reflect differences in the terms of the bonds covered under the indices in comparison to the projected outflow of our obligations. Our overall expected long-term rate of return on pension assets is based on historical and expected future returns, which are inflation adjusted and weighted for the expected return for each component of the investment portfolio. Our rate of assumed compensation increase is also based on our specific historical trends of wage adjustments.

We account for our defined benefit pension and other postretirement plans by recognizing the funded status of a benefit plan in the statement of financial position. We also recognize in accumulated other comprehensive income (loss) certain gains and losses that arose during the period. See Note 6 for key assumptions and further discussion related to our pension and postretirement plans.

Environmental Liabilities

Expenditures that relate to an existing condition caused by past operations, and which do not contribute to future revenue generation, are expensed. A reserve is established when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These reserves are determined without consideration of possible loss recoveries from third parties.

Specific costs included in environmental expense and reserves include site assessment, development of a remediation plan, clean-up costs, post-remediation expenditures, monitoring, fines, penalties and legal fees. Reserve amounts represent the expected undiscounted future cash outflows associated with such plans and actions.

Self Insurance

We are also involved in other possible claims, including product and general liability, workers' compensation, auto liability and employment related matters. Such claims in the United States have deductibles and self-insured retentions ranging from $25 thousand to $1.0 million per occurrence or per claim, depending upon the type of coverage and policy period. International deductibles and self-insured retentions are lower. We are also generally self-insured up to certain stop-loss limits for certain employee health benefits, including medical, drug and dental. Our policy is to estimate reserves based upon a number of factors including known claims, estimated incurred but not reported claims and outside actuarial analysis, which are based on historical information along with certain assumptions about future events. Such estimated reserves are classified as Other Current Liabilities and Other Long-Term Liabilities within the Consolidated Balance Sheets.

Treasury Stock

Treasury stock consists of our common shares that have been issued, but subsequently reacquired. We account for treasury stock purchases under the cost method. When these shares are reissued, we use an average-cost method to determine cost. Proceeds in excess of cost are credited to additional paid-in capital.

Revenue Recognition — Sales and Rentals

Net revenue reflects gross revenue less sales discounts and allowances and customer returns for product sales and rental revenue reserves. Revenue is evaluated under the following criteria and recognized when each is met:

•Evidence of an arrangement: An agreement with the customer reflecting the terms and conditions to deliver products or services serves as evidence of an arrangement.

•Delivery: For products, delivery is considered to occur upon transfer of title and risk of loss per the respective sales terms. For rental services, delivery is considered to occur when the services are rendered.

•Fixed or determinable price: The sales price is considered fixed or determinable if it is not subject to refund or measurable adjustment.

•Collection is deemed probable: At or prior to the time of a transaction, credit reviews of each customer are performed to determine the creditworthiness of the customer. Collection is deemed probable if the customer is expected to be able to pay amounts under the arrangement as those amounts become due. If collection is not probable, revenue is recognized when collection becomes probable, generally upon cash collection.

As a general interpretation of the above guidelines, revenue for health care and surgical products is generally recognized upon the assumption of risk of loss and other risks and rewards of ownership by the customer. Local business customs and non-standard sales terms can sometimes result in deviations to this normal practice in certain instances; however, in no case is revenue recognized prior to the transfer of risk of loss and rewards of ownership.

For non-invasive therapy products and medical equipment management services, the majority of product offerings are rental products for which revenue is recognized consistent with the rendering of the service and use of products. For The Vest® product, revenue is generally recognized at the time of receipt of authorization for billing from the applicable paying entity as this serves as evidence of the arrangement and sets a fixed or determinable price.

For health care products and services in the information technology space, various revenue recognition techniques are used, depending on the offering. Arrangements to provide services, routinely under separately sold service and maintenance contracts, result in the deferral of revenue until specified services are performed. Service contract revenue is generally recognized ratably over the contract period, if applicable, or as services are rendered. Product-related goods are generally recognized upon delivery to the customer.

Revenue is presented in the Statements of Consolidated Income net of certain discounts, GPO fees, and sales adjustments. For product sales, we record reserves resulting in a reduction of revenue for contractual discounts, as well as price concessions and product returns. Likewise, rental revenue reserves, reflecting contractual and other routine billing adjustments, are recorded as a reduction of revenue. Reserves for revenue are estimated based upon historical rates for revenue adjustments. 

Taxes Collected from Customers and Remitted to Governmental Units

Taxes assessed by a governmental authority that are directly imposed on a revenue producing transaction between us and our customers, including but not limited to sales taxes, use taxes, and value added taxes, are accounted for on a net (excluded from revenue and cost) basis.

Cost of Revenue

Cost of goods sold for product sales consists primarily of purchased material costs, fixed manufacturing expense, variable direct labor, overhead costs and costs associated with the distribution and delivery of products to our customers. Rental expenses consist of costs associated directly with rental revenue, including depreciation, maintenance, logistics and service center facility and personnel costs.

Research and Development Costs

Research and development costs are expensed as incurred. Costs were $91.8 million, $71.9 million and $70.2 million for fiscal years 2015, 2014 and 2013.

In addition, certain costs for software development technology held for sale are capitalized as intangibles and are amortized over a period of three to five years once the software is ready for its intended use. The amount capitalized during fiscal years 2015, 2014 and 2013 was approximately $2.6 million, $2.6 million and $2.4 million.

Advertising Costs

Advertising costs are expensed as incurred. Costs were $6.8 million, $7.3 million and $7.4 million for fiscal years 2015, 2014 and 2013.

Comprehensive Income 

We include the net-of-tax effect of unrealized gains or losses on our available-for-sale securities, foreign currency translation adjustments and pension or other defined benefit postretirement plans' actuarial gains or losses and prior service costs or credits in comprehensive income. See Note 5 for further details.

Foreign Currency Translation

The functional currency of foreign operations is generally the local currency in the country of domicile. Assets and liabilities of foreign operations are primarily translated into U.S. dollars at year-end rates of exchange and the income statements are translated at the average rates of exchange prevailing during the year. Adjustments resulting from translation of the financial statements of foreign operations into U.S. dollars are excluded from the determination of net income, but included as a component of accumulated other comprehensive income (loss). Foreign currency gains and losses resulting from foreign currency transactions are included in our results of operations and are not material. 

Stock-Based Compensation

We account for stock-based compensation under fair value provisions. Stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period. In order to determine the fair value of stock options and other performance-based stock awards on the date of grant, we utilize a Binomial model. Inherent in this model are assumptions related to a volatility factor, expected life, risk-free interest rate, dividend yield and expected forfeitures. The risk-free interest rate is based on factual data derived from public sources. The volatility factor, expected life, dividend yield and expected forfeiture assumptions require judgment utilizing historical information, peer data and future expectations. Deferred stock (also known as restricted stock units (“RSUs”)) is measured based on the fair market price of our common stock on the date of grant, as reported by the New York Stock Exchange, multiplied by the number of units granted. See Note 7 for further details.

Income Taxes 

The Company and our eligible domestic subsidiaries file a consolidated U.S. income tax return. Foreign operations file income tax returns in a number of jurisdictions. Deferred income taxes are computed using an asset and liability approach to reflect the net tax effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and the corresponding income tax amounts. We have a variety of deferred tax assets in numerous tax jurisdictions. These deferred tax assets are subject to periodic assessment as to recoverability. If it is determined that it is more likely than not that the benefits will not be realized, valuation allowances are recognized. In evaluating whether it is more likely than not that we would recover these deferred tax assets, future taxable income, the reversal of existing temporary differences and tax planning strategies are considered.

We account for uncertain income tax positions using a threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The difference between the tax benefit recognized in the financial statements for an uncertain income tax position and the tax benefit claimed in the tax return is referred to as an unrecognized tax benefit. See Note 9 for further details.

Derivative Instruments and Hedging Activity

We use derivative financial instruments to manage the economic impact of fluctuations in currency exchange and interest rates. Derivative financial instruments related to currency exchange rates include forward purchase and sale agreements which generally have terms no greater than 15 months. Additionally, interest rate swaps are sometimes used to convert some or all of our long-term debt to either a fixed or variable rate.

Derivative financial instruments are recognized on the Consolidated Balance Sheets as either assets or liabilities and are measured at fair value. Changes in the fair value of derivatives are recorded each period in the Statement of Consolidated Income or the Statement of Consolidated Comprehensive Income, depending on whether a derivative is designated and considered effective as part of a hedge transaction, and if it is, the type of hedge transaction.  Gains and losses on derivative instruments reported in accumulated other comprehensive income (loss) are subsequently included in the Statement of Consolidated Income in the periods in which earnings are affected by the hedged item. These activities have not had a material effect on our financial position or results of operations for the periods presented herein.

Recently Issued Accounting Guidance 

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers”, which provides guidance for revenue recognition. The standard's core principle, as further amended, is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 which delayed the effective date of the new revenue guidance by one year. As a result, the provisions of ASU 2014-09 will be effective for us in the first quarter of fiscal 2019, ending December 31, 2018. Early adoption is permitted as of the original effective date, but not earlier. We are currently in the process of evaluating the impact of adoption of this ASU on our Consolidated Financial Statements.

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issuedASU No. 2015-15, “Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.” This standard permits an entity to defer and present debt issuance costs related to line-of-credit arrangements as an asset and to subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement.These new standards do not affect the recognition and measurement of debt issuance costs. As permitted, the Company has elected to early-adopt these standards in the fourth quarter of fiscal 2015. This guidance is effective on a retrospective basis, as a change in accounting principle. The impact of the early adoption on our Consolidated Balance Sheet as of September 30, 2014 was a decrease to other assets and a decrease to long-term debt of $0.8 million.

In September 2015, the Company adopted ASU 2015-16, "Simplifying the Accounting for Measurement Period Adjustments." This update eliminates the need to retrospectively adjust prior period information in the financial statements for acquisition adjustments to goodwill during the measurement period. The impact of ASU 2015-16 will be dependent on any future measurement period adjustments for acquisitions.

In February 2013, an accounting standards update was issued that amends the reporting of amounts reclassified out of accumulated other comprehensive income (loss). This standard does not change the current requirements for reporting net income or other comprehensive income (loss) in the financial statements. However, the guidance requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income (loss) by component, either on the face of the financial statement where net income is presented or in the notes to the financial statements. The company adopted this standard in fiscal 2014, and the disclosures of reclassifications out of accumulated other comprehensive loss are included in Note 5.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's consolidated financial statements upon adoption.

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RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Schedule of Fair Value Measurements of Plan Assets) (Details) - Master Defined Benefit Retirement Plan [Member] - USD ($) $ in Millions	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Fair Value Measurements of Plan Assets
Plan assets at fair value	$ 219.1	$ 276.1	$ 254.4
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value	3.5	209.7
Significant Other Observable Inputs (Level 2) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value	$ 215.6	$ 66.4
Significant Unobservable Inputs (Level 3) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value
Cash [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value	$ 3.5	$ 2.1
Cash [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value	$ 3.5	$ 2.1
Cash [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value
Cash [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value
US Companies [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value	$ 47.1	$ 101.7
US Companies [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value		$ 101.7
US Companies [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value	$ 47.1
US Companies [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value
International Companies [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value	$ 44.8	$ 38.7
International Companies [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value		$ 38.7
International Companies [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value	$ 44.8
International Companies [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value
Fixed Income Securities [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value	$ 123.7	$ 133.2
Fixed Income Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value		66.8
Fixed Income Securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value	$ 123.7	$ 66.4
Fixed Income Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value
Other [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value		$ 0.4
Other [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value		$ 0.4
Other [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value
Other [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value Measurements of Plan Assets
Plan assets at fair value

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Research and Development and Advertising Costs) (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Research and Development Costs
Research and development expenses	$ 91.8	$ 71.9	$ 70.2
Software development technology costs capitalized during the period	2.6	2.6	2.4
Advertising Costs
Advertising costs	$ 6.8	$ 7.3	$ 7.4

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RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Tables)

12 Months Ended

Sep. 30, 2015

Master Defined Benefit Retirement Plan [Member]

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule of Components of Net Pension Expense

	Years Ended September 30
	2015			2014			2013
Service cost	$	5.4		$	5.0		$	6.1
Interest cost		14.6			14.4			13.2
Expected return on plan assets		(16.7	)		(16.7	)		(15.9	)
Amortization of unrecognized prior service cost, net		0.6			0.6			0.6
Amortization of net loss		5.2			3.2			7.8
Net periodic benefit cost		9.1			6.5			11.8
Settlement charge		9.6			-			-
Special termination benefits		-			2.4			-
Net pension expense	$	18.7		$	8.9		$	11.8

Schedule of Changes in Obligations, Assets and Funded Status

	Years Ended September 30
	2015			2014
Change in benefit obligation:
Benefit obligation at beginning of year	$	343.8		$	297.9
Service cost		5.4			5.0
Interest cost		14.6			14.4
Actuarial loss		12.5			31.4
Benefits paid		(54.0	)		(10.2	)
Acquisitions		-			4.3
Special termination benefits		-			2.4
Plan settlement		(4.4	)		-
Exchange rate gain		(2.4	)		(1.4	)
Benefit obligation at end of year		315.5			343.8
Change in plan assets:
Fair value of plan assets at beginning of year		276.1			254.4
Actual return on plan assets		(3.9	)		30.9
Employer contributions		0.9			1.0
Benefits paid		(54.0	)		(10.2	)
Fair value of plan assets at end of year		219.1			276.1
Funded status and net amounts recognized	$	(96.4	)	$	(67.7	)
Amounts recorded in the Consolidated Balance Sheets:
Accrued pension benefits, current portion	$	(1.0	)	$	(1.0	)
Accrued pension benefits, long-term		(95.4	)		(66.7	)
Net amount recognized	$	(96.4	)	$	(67.7	)

Schedule of Accumulated Benefit Obligation

	September 30
	2015						2014
	PBO		ABO		Plan Assets		PBO		ABO		Plan Assets
Master plan	$	292.5	$	275.3	$	218.9	$	319.1	$	303.2	$	275.8
International plans		17.9		16.3		0.2		20.3		18.5		0.3
Supplemental executive plan		5.1		5.1		-		4.4		4.2		-
	$	315.5	$	296.7	$	219.1	$	343.8	$	325.9	$	276.1

Schedule of Actuarial Assumptions

	2015			2014			2013
Weighted average assumptions to determine benefit
obligations at the measurement date:
Discount rate for obligation		4.4	%		4.5	%		5.0	%
Rate of compensation increase		3.0	%		3.0	%		3.3	%
Weighted average assumptions to determine benefit
cost for the year:
Discount rate for expense		4.5	%		5.0	%		4.1	%
Expected rate of return on plan assets		6.8	%		7.0	%		7.0	%
Rate of compensation increase		3.0	%		3.3	%		3.3	%

Schedule of Allocation of Plan Assets

	2015		2014		2015			2014
	Target		Target		Actual			Actual
	Allocation		Allocation		Allocation			Allocation
Equity securities		39 - 49%		40 - 60%		42	%		52	%
Fixed income securities		51 - 61%		40 - 60%		58	%		48	%
Total						100	%		100	%

Schedule of Fair Value Measurements of Plan Assets

			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Balance at		Assets		Inputs		Inputs
	September 30, 2015		(Level 1)		(Level 2)		(Level 3)
Cash	$	3.5	$	3.5	$	-	$	-
Equities
U.S. companies		47.1		-		47.1		-
International companies		44.8		-		44.8		-
Fixed income securities		123.7		-		123.7		-
Total plan assets at fair value	$	219.1	$	3.5	$	215.6	$	-

			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Balance at		Assets		Inputs		Inputs
	September 30, 2014		(Level 1)		(Level 2)		(Level 3)
Cash	$	2.1	$	2.1	$	-	$	-
Equities
U.S. companies		101.7		101.7		-		-
International companies		38.7		38.7		-		-
Fixed income securities		133.2		66.8		66.4		-
Other		0.4		0.4		-		-
Total plan assets at fair value	$	276.1	$	209.7	$	66.4	$	-

Schedule of Estimated Future Benefit Payments

	Pension Benefits
2016	$	12.3
2017	$	12.8
2018	$	13.3
2019	$	14.0
2020	$	14.8
2021-2025	$	86.5

Postretirement Health Care Plan [Member]

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule of Changes in Obligations, Assets and Funded Status

	Years Ended September 30
	2015			2014
Change in benefit obligation:
Benefit obligation at beginning of year	$	11.2		$	9.8
Service cost		0.4			0.4
Interest cost		0.4			0.4
Acquired obligation		14.1			-
Actuarial gain		(0.9	)		(0.2	)
Benefits paid		(0.2	)		(0.2	)
Retiree contributions		0.1			0.2
Special termination benefits		-			0.8
Benefit obligation at end of year	$	25.1		$	11.2
Amounts recorded in the Consolidated Balance Sheets:
Accrued benefits obligation, current portion	$	1.8		$	1.1
Accrued benefits obligation, long-term		23.3			10.1
Net amount recognized	$	25.1		$	11.2

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OTHER COMPREHENSIVE INCOME (Tables)

12 Months Ended

Sep. 30, 2015

OTHER COMPREHENSIVE INCOME [Abstract]

Schedule of Changes in AOCL by Component

	Year Ended September 30, 2015
	Other comprehensive income (loss)														Accumulated other comprehensive loss
	Prior to reclassification			Reclassification from		Pre-tax			Tax effect			Net of tax			Beginning balance			Net activity			Ending balance
Available-for-sale securities     and currency hedges	$	(0.6	)	$	0.6	$	-		$	-		$	-		$	-		$	-		$	-
Foreign currency translation     adjustment		(58.6	)		-		(58.6	)		-			(58.6	)		(34.2	)		(58.6	)		(92.8	)
Change in pension and postretirement      defined benefit plans		(28.7	)		15.5		(13.2	)		5.1			(8.1	)		(39.9	)		(8.1	)		(48.0	)
Total	$	(87.9	)	$	16.1	$	(71.8	)	$	5.1		$	(66.7	)	$	(74.1	)	$	(66.7	)	$	(140.8	)
	Year  Ended September 30, 2014
	Other comprehensive income (loss)														Accumulated other comprehensive loss
	Prior to reclassification			Reclassification from		Pre-tax			Tax effect			Net of tax			Beginning balance			Net activity			Ending balance
Available-for-sale securities     and currency hedges	$	0.3		$	0.1	$	0.4		$	(0.1	)	$	0.3		$	(0.3	)	$	0.3		$	-
Foreign currency translation      adjustment		(29.6	)		-		(29.6	)		-			(29.6	)		(4.6	)		(29.6	)		(34.2	)
Change in pension and postretirement      defined benefit plans		(16.8	)		2.7		(14.1	)		5.0			(9.1	)		(30.8	)		(9.1	)		(39.9	)
Total	$	(46.1	)	$	2.8	$	(43.3	)	$	4.9		$	(38.4	)	$	(35.7	)	$	(38.4	)	$	(74.1	)

Schedule of Items Reclassified out of AOCL

	Years Ended September 30
	2015							2014
	Amount reclassified		Tax effect			Net of tax		Amount reclassified		Tax effect			Net of tax
Change in pension and postretirement      defined benefit plans (1)	$	15.5	$	(5.6	)	$	9.9	$	2.7	$	(1.0	)	$	1.7
Available-for-sale securities     and currency hedges (2)	$	0.6	$	(0.2	)	$	0.4	$	0.1	$	-		$	0.1

 

(1)	Reclassified from accumulated other comprehensive loss into cost of goods sold and selling and administrative expenses. These components are included in the computation of net periodic pension and postretirement benefit expense.
(2)	Reclassified from accumulated other comprehensive loss into other income (expense), net.

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RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Schedule of Net Periodic Benefit Cost) (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Defined Benefit Plan Disclosure [Line Items]
Settlement charge		$ 9.6
Special termination benefits	$ 3.2
Master Defined Benefit Retirement Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost		5.4	$ 5.0	$ 6.1
Interest cost		14.6	14.4	13.2
Expected return on plan assets		(16.7)	(16.7)	(15.9)
Amortization of unrecognized prior service cost, net		0.6	0.6	0.6
Amortization of net loss		5.2	3.2	7.8
Net periodic benefit cost		9.1	$ 6.5	$ 11.8
Settlement charge		$ 9.6
Special termination benefits	$ 2.4		$ 2.4
Net pension expense		$ 18.7	$ 8.9	$ 11.8

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ACQUISITIONS (Acquisition of Welch Allyn) (Details) - USD ($) $ in Millions		12 Months Ended
	Sep. 08, 2015	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Business Acquisition [Line Items]
Purchase price of entity, net of cash acquired		$ 1,638.7	$ 239.5
Fair value of the assets acquired and liabilities assumed:
Goodwill		1,610.5	$ 399.8	$ 342.8
Consideration:
Fair value of common stock issued		416.3
Cash payment, net of cash acquired		1,638.7	$ 239.5
Term Loans [Member]
Business Acquisition [Line Items]
Proceeds from new borrowings		1,800.0
Senior Notes [Member]
Business Acquisition [Line Items]
Proceeds from new borrowings		425.0
Welch Allyn Holdings, Inc. [Member]
Business Acquisition [Line Items]
Purchase price of entity	$ 1,687.3
Purchase price of entity, net of cash acquired	$ 1,633.6
Number of shares issued for acquisition	8,133,722
Combined purchase price	$ 2,049.9
Fair value of the assets acquired and liabilities assumed:
Trade receivables	63.2
Inventory	110.5
Other current assets	52.7
Current deferred income taxes	27.3
Property, plant, and equipment	93.2
Goodwill	1,203.5
Other noncurrent assets	30.6
Current liabilities	(161.5)
Noncurrent deferred income taxes	(368.7)
Other noncurrent liabilities	(25.6)
Total purchase price	2,049.9
Consideration:
Fair value of common stock issued	416.3
Cash payment, net of cash acquired	1,633.6
Total consideration	2,049.9
Pro Forma Information:
Total revenues		638.0	677.0
Impact to net income		$ (59.0)	$ (61.0)
Welch Allyn Holdings, Inc. [Member] | Trade Name [Member]
Fair value of the assets acquired and liabilities assumed:
Intangible assets (Indefinite Lived)	434.0
Welch Allyn Holdings, Inc. [Member] | Customer Relationships [Member]
Fair value of the assets acquired and liabilities assumed:
Intangible assets (Finite Lived)	516.8
Useful lives assigned to intangibles:
Weighted-average useful life		12 years
Welch Allyn Holdings, Inc. [Member] | Developed Technology [Member]
Fair value of the assets acquired and liabilities assumed:
Intangible assets (Finite Lived)	54.0
Useful lives assigned to intangibles:
Weighted-average useful life		7 years
Welch Allyn Holdings, Inc. [Member] | Other Intangible Assets [Member]
Fair value of the assets acquired and liabilities assumed:
Intangible assets (Finite Lived)	$ 19.9

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COMMON STOCK (Tables)

12 Months Ended

Sep. 30, 2015

COMMON STOCK [Abstract]

Schedule of Stock-Based Compensation Cost

	Years Ended September 30
	2015			2014			2013
Total stock-based compensation cost (pre-tax)	$	25.0		$	18.0		$	13.5
Total income tax benefit		(7.5	)		(6.5	)		(4.9	)
Total stock-based compensation cost, net of tax	$	17.5		$	11.5		$	8.6

Schedule of Weighted Average Fair Value per Share of Stock Options and Related Valuation Assumptions

	Years Ended September 30
	2015			2014			2013
Weighted average fair value per share	$	12.83		$	11.91		$	7.91
Valuation assumptions:
Risk-free interest rate		1.6	%		1.3	%		0.6	%
Expected dividend yield		1.4	%		1.4	%		1.9	%
Expected volatility		35.0	%		36.1	%		40.2	%
Weighted average expected life		4.9 years			4.9 years			4.9 years

Schedule of Transactions under Stock Option Plans

	Weighted					Weighted
	Average			Weighted		Average		Aggregate
	Number of			Average		Remaining		Intrinsic
	Shares			Exercise		Contractual		Value (1)
	(in thousands)			Price		Term		(in millions)
Balance Outstanding at October 1, 2014		1,992		$	31.99
Granted		381			45.01
Exercised		(371	)		31.83
Cancelled/Forfeited		(101	)		36.63
Balance Outstanding at September 30, 2015		1,901		$	34.38		6.6 years	$	33.5
Exercisable at September 30, 2015		1,060		$	30.98		5.3 years	$	22.3
Options Expected to Vest		773		$	38.34		8.0 years	$	10.6

(1) The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $51.99, as reported by the New York Stock Exchange on September 30, 2015. This amount, which changes continuously based on the fair value of our common stock, would have been received by the option holders had all option holders exercised their options as of the balance sheet date.

Schedule of Transactions for Nonvested RSUs

				Weighted
	Number of			Average
	Share Units			Grant Date
	(in thousands)			Fair Value
Nonvested RSUs at October 1, 2014		431		$	34.92
Granted		351			47.85
Vested		(93	)		37.76
Forfeited		(55	)		35.90
Nonvested RSUs at September 30, 2015		634		$	41.35

Schedule of Weighted Average Fair Value per Share of PSUs and Related Valuation Assumptions

	Years Ended September 30
		2015			2014			2013
Weighted average fair value per share		$	47.82		$	47.91		$	19.77
Valuation assumptions:
Risk-free interest rate			0.9	%		0.5	%		0.3	%
Expected dividend yield			0.0	%		0.0	%		0.0	%
Expected volatility			23.5	%		30.1	%		32.6	%

Schedule of Transactions for Nonvested PSUs

				Weighted
	Number of			Average
	Share Units			Grant Date
	(in thousands)			Fair Value
Nonvested PSUs as of October 1, 2014		586		$	29.98
Granted		331			49.27
Vested		(414	)		30.11
Cancelled		(76	)		24.57
Forfeited		(73	)		41.15
Nonvested PSUs at September 30, 2015		354		$	42.16

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SPECIAL CHARGES (Tables)

12 Months Ended

Sep. 30, 2015

SPECIAL CHARGES [Abstract]

Restructuring Activity

Balance at September 30, 2014	$	11.7
Expenses		23.1
Cash Payments		(10.0	)
Reversals		(0.5	)
Balance at September 30, 2015	$	24.3

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STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY [Abstract]
Comprehensive income, tax effect	$ 5.1	$ 4.9	$ (18.1)

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INCOME TAXES (Tables)

12 Months Ended

Sep. 30, 2015

INCOME TAXES [Abstract]

Schedule of Components of Income before Income Taxes

	Years Ended September 30
	2015		2014		2013
Income before income taxes:
Domestic	$	49.2	$	87.0	$	120.0
Foreign		15.9		28.2		24.0
Total	$	65.1	$	115.2	$	144.0

Schedule of Income Tax Expense

Income tax expense:
Current provision
Federal	$	35.3		$	40.2		$	45.0
State		3.6			3.1			1.8
Foreign		1.7			7.4			7.0
Total current provision		40.6			50.7			53.8
Deferred provision:
Federal		(18.1	)		(12.2	)		(9.9	)
State		(1.3	)		(1.0	)		1.1
Foreign		(2.9	)		17.1			(6.0	)
Total deferred provision		(22.3	)		3.9			(14.8	)
Income tax expense	$	18.3		$	54.6		$	39.0

Reconciliation of Income Tax Expense to Income Taxes at Statutory Rate

	Years Ended September 30
	2015						2014						2013
				% of						% of						% of
				Pretax						Pretax						Pretax
	Amount			Income			Amount			Income			Amount			Income
Federal income tax (a)	$	22.8			35.0		$	40.3			35.0		$	50.4			35.0
State income tax (b)		1.6			2.4			2.0			1.7			2.5			1.7
Foreign income tax (c)		(10.2	)		(15.7	)		(7.7	)		(6.7	)		(5.7	)		(4.0	)
Application of federal tax credits		(2.2	)		(3.4	)		(0.6	)		(0.5	)		(3.5	)		(2.4	)
Adjustment of estimated income tax accruals		(1.6	)		(2.4	)		(0.6	)		(0.5	)		(1.5	)		(1.0	)
Valuation of tax attributes		4.0			6.2			21.3			18.5			0.6			0.4
Domestic manufacturer's deduction		(1.5	)		(2.3	)		(1.8	)		(1.5	)		(2.2	)		(1.5	)
Capitalized transaction costs		2.5			3.8			0.3			0.2			-			-
Other, net		2.9			4.5			1.4			1.2			(1.6	)		(1.1	)
Income tax expense	$	18.3			28.1		$	54.6			47.4		$	39.0			27.1

(a) At statutory rate.

(b) Net of Federal benefit.

(c) Federal tax rate differential.

Schedule of Deferred Taxes

	Years Ended September 30
	2015			2014
Deferred tax assets:
Employee benefit accruals	$	106.4		$	49.3
Inventory		6.2			13.9
Reserve for bad debts		8.4			10.0
Net operating loss carryforwards		45.8			40.3
Tax credit carryforwards		11.7			2.5
Other, net		39.6			25.7
		218.1			141.7
Less:  Valuation allowance		(40.7	)		(28.3	)
Total deferred tax assets		177.4			113.4
Deferred tax liabilities:
Depreciation		(35.3	)		(13.9	)
Amortization		(409.1	)		(62.8	)
Other, net		(16.4	)		(4.9	)
Total deferred tax liabilities		(460.8	)		(81.6	)
Deferred tax asset (liability) - net	$	(283.4	)	$	31.8

Reconciliation of the Beginning and Ending Amount of Unrecognized Tax Benefits

	Years Ended September 30
	2015			2014			2013
Balance at October 1	$	4.1		$	4.6		$	9.8
Increases in tax position of prior years		0.4			2.1			-
Decreases in tax position of prior years		(1.3	)		(0.9	)		(0.5	)
Increases in tax positions related to the current year		-			-			0.1
Settlements with taxing authorities		(1.2	)		(0.1	)		(3.2	)
Lapse of applicable statute of limitations		(1.3	)		(1.5	)		(1.7	)
Increase in positions due to acquisitions		5.5			-			-
Foreign currency adjustments		(0.4	)		(0.1	)		0.1
Total change		1.7			(0.5	)		(5.2	)
Balance at September 30	$	5.8		$	4.1		$	4.6

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COMMITMENTS AND CONTINGENCIES (Lease Commitments and Long-Term Agreement) (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Lease Commitments
Rental expense	$ 25.2	$ 24.7	$ 21.5
Minimum annual rental commitments	73.8
2016	28.2
2017	18.4
2018	12.1
2019	6.3
2020	3.2
2021 and beyond	$ 5.6

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Intangible Assets) (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Goodwill:
Cost	$ 2,083.3	$ 872.6	$ 815.6
Amortization and Impairment	472.8	472.8	472.8
Total
Cost	3,635.4	1,417.0
Amortization and Impairment	777.2	756.1
Amortization expense	44.6	41.0	45.6
Indefinite-lived intangible assets	466.9	32.9
Expected future amortization:
2016	92.9
2017	85.8
2018	81.6
2019	78.0
2020	74.4
2021 and beyond	368.1
Capitalized computer software:
Net book value of computer software costs	42.5	23.9
Amortization expense of capitalized software costs	$ 9.8	11.5	$ 17.8
Minimum [Member]
Other intangible assets:
Useful life	3 years
Maximum [Member]
Other intangible assets:
Useful life	20 years
Software [Member]
Other intangible assets:
Cost	$ 181.7	170.5
Amortization and Impairment	139.2	146.6
Patents and Trademarks [Member]
Other intangible assets:
Cost	497.6	67.1
Amortization and Impairment	16.9	16.0
Others [Member]
Other intangible assets:
Cost	872.8	306.8
Amortization and Impairment	$ 148.3	$ 120.7
Capitalized Software Costs [Member] | Minimum [Member]
Other intangible assets:
Useful life	3 years
Capitalized Software Costs [Member] | Maximum [Member]
Other intangible assets:
Useful life	10 years

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FINANCING AGREEMENTS (Schedule of Fair Value) (Details) - USD ($) $ in Millions	Sep. 30, 2015	Sep. 30, 2014
Debt Instrument [Line Items]
Total debt	$ 2,243.2	$ 230.7
Senior Secured Term Loan A [Member]
Debt Instrument [Line Items]
Fair value of term loan	990.7
Senior Secured Term Loan B [Member]
Debt Instrument [Line Items]
Fair value of term loan	780.7
Senior Unsecured 5.75% Notes due on September 1, 2023 [Member]
Debt Instrument [Line Items]
Fair value of unsecured notes	$ 428.4
Term Loan under August 2012 Credit Facility [Member]
Debt Instrument [Line Items]
Fair value of term loan		$ 175.2
Unsecured Debentures [Member]
Debt Instrument [Line Items]
Fair value of unsecured notes	$ 43.4	$ 55.5

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SPECIAL CHARGES (Narrative) (Details) $ in Millions	3 Months Ended							12 Months Ended
	Mar. 31, 2015 USD ($)	Jun. 30, 2014 USD ($)	Mar. 31, 2014 USD ($) employees	Dec. 31, 2013 USD ($) employees	Sep. 30, 2013 USD ($)	Jun. 30, 2013 USD ($)	Mar. 31, 2013 USD ($) employees	Sep. 30, 2015 USD ($) employees	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)
Restructuring Cost and Reserve [Line Items]
Special charge								$ 41.2	$ 37.1	$ 5.7
Settlement charge								9.6
Reversals of previously recorded expenses								0.5
Welch Allyn Integration [Member]
Restructuring Cost and Reserve [Line Items]
Special charge								$ 14.4
Number of positions eliminated | employees								80
Expected additional costs								$ 3.0
Site Consolidation [Member]
Restructuring Cost and Reserve [Line Items]
Number of positions eliminated | employees								160
Expected additional costs								$ 3.0
Site Consolidation [Member] | Employee Termination and Severance [Member]
Restructuring Cost and Reserve [Line Items]
Special charge								2.7
Site Consolidation [Member] | Other Restructuring [Member]
Restructuring Cost and Reserve [Line Items]
Special charge								$ 1.8
Global Restructuring Program [Member]
Restructuring Cost and Reserve [Line Items]
Special charge									$ 24.9
Number of positions planned to be eliminated | employees								200
Total expected charges associated with actions								$ 37.6
Global Restructuring Program [Member] | Employee Termination and Severance [Member]
Restructuring Cost and Reserve [Line Items]
Reversals of previously recorded expenses	$ 0.5
Global Restructuring Program [Member] | Employee Termination and Severance [Member] | Europe [Member]
Restructuring Cost and Reserve [Line Items]
Special charge								6.0
Global Restructuring Program [Member] | Other Restructuring [Member]
Restructuring Cost and Reserve [Line Items]
Special charge								7.2
Global Restructuring Program [Member] | Minimum [Member] | Europe [Member]
Restructuring Cost and Reserve [Line Items]
Expected additional costs								5.0
Global Restructuring Program [Member] | Maximum [Member] | Europe [Member]
Restructuring Cost and Reserve [Line Items]
Expected additional costs								$ 10.0
Plan to Discontinue Third Party Payer Rentals [Member]
Restructuring Cost and Reserve [Line Items]
Impairment of certain tangible assets			$ 7.7
Number of positions planned to be eliminated | employees			70
Plan to Discontinue Third Party Payer Rentals [Member] | Employee Termination and Severance [Member]
Restructuring Cost and Reserve [Line Items]
Special charge			$ 2.0
Plan to Discontinue Third Party Payer Rentals [Member] | Other Restructuring [Member]
Restructuring Cost and Reserve [Line Items]
Special charge			$ 1.6
Reversals of previously recorded expenses		$ 0.2
Batesville, Indiana Plant Restructuring [Member]
Restructuring Cost and Reserve [Line Items]
Special charge				$ 1.0
Number of positions eliminated | employees				35
Fiscal 2013 Action [Member]
Restructuring Cost and Reserve [Line Items]
Special charge					$ 2.0	$ 0.8
Impairment of certain tangible assets							$ 0.2
Number of positions eliminated | employees							100
Fiscal 2013 Action [Member] | Employee Termination and Severance [Member]
Restructuring Cost and Reserve [Line Items]
Special charge							$ 1.7
Fiscal 2013 Action [Member] | Lease and Other Contract Termination [Member]
Restructuring Cost and Reserve [Line Items]
Special charge							0.6
Fiscal 2013 Action [Member] | Other Restructuring [Member]
Restructuring Cost and Reserve [Line Items]
Special charge							$ 1.0
Fiscal 2012 Action [Member]
Restructuring Cost and Reserve [Line Items]
Reversals of previously recorded expenses						$ 0.6

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STATEMENTS OF CONSOLIDATED INCOME - USD ($) shares in Thousands, $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Net Revenue
Capital sales	$ 1,604.5	$ 1,301.4	$ 1,308.3
Rental revenue	383.7	384.7	407.9
Total revenue	1,988.2	1,686.1	1,716.2
Cost of Revenue
Cost of goods sold	921.2	730.2	747.8
Rental expenses	186.7	176.0	188.1
Total cost of revenue	1,107.9	906.2	935.9
Gross Profit	880.3	779.9	780.3
Research and development expenses	91.8	71.9	70.2
Selling and administrative expenses	664.2	548.3	549.5
Special charges (Note 8)	41.2	37.1	5.7
Operating Profit	83.1	122.6	154.9
Interest expense	(18.4)	(9.8)	(9.5)
Investment income and other, net	0.4	2.4	(1.4)
Income Before Income Taxes	65.1	115.2	144.0
Income tax expense (Note 9)	18.3	54.6	39.0
Net Income	46.8	$ 60.6	$ 105.0
Less: Net loss attributable to noncontrolling interests	(0.9)
Net Income Attributable to Common Shareholders	$ 47.7	$ 60.6	$ 105.0
Net Income Attributable to Common Shareholders per Common Share - Basic	$ 0.83	$ 1.05	$ 1.75
Net Income Attributable to Common Shareholders per Common Share - Diluted	0.82	1.04	1.74
Dividends per Common Share	$ 0.6325	$ 0.5950	$ 0.5250
Average Common Shares Outstanding - Basic (thousands) (Note 10)	57,249	57,555	59,910
Average Common Shares Outstanding - Diluted (thousands) (Note 10)	58,536	58,523	60,250

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ACQUISITIONS (Acquisition of Trumpf Medical) (Details) - USD ($) $ in Millions		12 Months Ended
	Aug. 01, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Business Acquisition [Line Items]
Purchase price of entity, net of cash acquired		$ 1,638.7	$ 239.5
Fair value of the assets acquired and liabilities assumed:
Goodwill		$ 1,610.5	399.8	$ 342.8
Trumpf Medical [Member]
Business Acquisition [Line Items]
Purchase price of entity	$ 232.9
Purchase price of entity, net of cash acquired	226.6
Revenues included in statements of operations			39.0
Fair value of the assets acquired and liabilities assumed:
Trade receivables	67.6
Inventory	63.6
Other current assets	23.4
Property, plant, and equipment	42.1
Goodwill	66.0
Other noncurrent assets	0.7
Deferred tax asset	12.9
Current liabilities	(74.4)
Long term debt	(6.0)
Noncurrent liabilities	(8.1)
Total purchase price	232.9
Pro Forma Information:
Total revenues			$ 218.0	$ 235.0
Trumpf Medical [Member] | Trade Name [Member]
Fair value of the assets acquired and liabilities assumed:
Intangible assets (Finite Lived)	6.7
Useful lives assigned to intangibles:
Weighted-average useful life		5 years
Trumpf Medical [Member] | Customer Relationships [Member]
Fair value of the assets acquired and liabilities assumed:
Intangible assets (Finite Lived)	15.8
Useful lives assigned to intangibles:
Weighted-average useful life		10 years
Trumpf Medical [Member] | Developed Technology [Member]
Fair value of the assets acquired and liabilities assumed:
Intangible assets (Finite Lived)	17.8
Useful lives assigned to intangibles:
Weighted-average useful life		8 years
Trumpf Medical [Member] | Other Intangible Assets [Member]
Fair value of the assets acquired and liabilities assumed:
Intangible assets (Finite Lived)	$ 4.8

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STATEMENTS OF CONSOLIDATED CASH FLOWS - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Operating Activities
Net income	$ 46.8	$ 60.6	$ 105.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	73.6	65.4	71.2
Amortization	10.5	12.2	17.9
Acquisition-related intangible asset amortization	34.1	28.8	27.7
Provision for deferred income taxes	(22.3)	3.9	(14.8)
Loss on disposal of property, equipment leased to others, intangible assets and impairments	0.5	$ 7.2	$ 1.5
Pension settlement charge	9.6
Stock compensation	25.0	$ 18.0	$ 13.5
Excess tax benefits from employee stock plans	(3.6)	0.3	(0.3)
Change in working capital excluding cash, current debt, acquisitions and dispositions:
Trade accounts receivable	(39.7)	17.1	30.8
Inventories	11.0	9.1	8.4
Other current assets	(7.7)	(2.6)	(6.5)
Trade accounts payable	0.7	7.0	0.1
Accrued expenses and other liabilities	53.8	(12.5)	(0.2)
Other, net	21.5	(4.2)	8.9
Net cash provided by operating activities	213.8	210.3	263.2
Investing Activities
Capital expenditures and purchases of intangible assets	(121.3)	(62.7)	(65.3)
Proceeds on sale of property and equipment leased to others	1.5	2.4	$ 5.9
Payment for acquisition of businesses, net of cash acquired	$ (1,638.7)	(239.5)
Refund on acquisition of businesses		4.6	$ 0.8
Other	$ 2.1	0.7
Net cash used in investing activities	(1,756.4)	(294.5)	$ (58.6)
Financing Activities
Net change in short-term debt	(0.7)	(0.2)
Borrowings on revolving credit facility	95.0	252.0
Payments on revolving credit facility	(135.0)	(57.0)	$ (35.0)
Proceeds from long-term debt	2,225.0	0.8
Payment of long-term debt	$ (401.6)	(11.4)	$ (10.1)
Payment of acquired debt		$ (26.8)
Repurchase of registered debentures	$ (5.9)
Debt issuance costs	(50.3)
Purchase of noncontrolling interest of former joint venture	(1.9)	$ (1.3)	$ (1.6)
Payment of cash dividends	(37.1)	(34.2)	(31.2)
Proceeds from exercise of stock options	12.1	11.5	7.6
Proceeds from stock issuance	2.8	2.5	2.5
Excess tax benefits from employee stock plans	3.6	(0.3)	0.3
Treasury stock acquired	(63.3)	(71.8)	(94.0)
Net cash provided by (used in) financing activities	1,642.7	63.8	(161.5)
Effect of exchange rate changes on cash	(6.6)	(7.7)
Net Cash Flows	93.5	(28.1)	43.1
Cash and Cash Equivalents
At beginning of period	99.3	127.4	84.3
At end of period	192.8	99.3	127.4
Supplemental cash flow information:
Cash paid for income taxes	49.1	44.4	68.1
Cash paid for interest	6.3	7.8	7.5
Non-cash investing and financing activities:
Treasury stock issued under stock compensation plans	32.4	$ 20.6	$ 18.4
Common stock issued for acquisition of businesses	$ 416.3

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RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Schedule of Accumulated Benefit Obligation) (Details) - USD ($) $ in Millions	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Master Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
PBO	$ 292.5	$ 319.1
ABO	275.3	303.2
Plan Assets	218.9	275.8
International Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
PBO	17.9	20.3
ABO	16.3	18.5
Plan Assets	0.2	0.3
Supplemental Executive Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
PBO	5.1	4.4
ABO	$ 5.1	$ 4.2
Plan Assets
Master Defined Benefit Retirement Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
PBO	$ 315.5	$ 343.8	$ 297.9
ABO	296.7	325.9
Plan Assets	$ 219.1	$ 276.1	$ 254.4

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QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Tables)

12 Months Ended

Sep. 30, 2015

QUARTERLY FINANCIAL INFORMATION (UNAUDITED) [Abstract]

Schedule of Selected Consolidated Financial Data

2015 Quarter Ended	December 31, 2014		March 31, 2015			June 30, 2015		September 30, 2015
Net revenue	$	465.0	$	474.8		$	474.5	$	573.9
Gross profit	$	199.9	$	214.2		$	209.5	$	256.7
Net income (loss) attributable to common shareholders	$	12.1	$	26.1		$	19.1	$	(9.6	)
Basic net income (loss) attributable to common        shareholders per common share	$	0.21	$	0.46		$	0.34	$	(0.16	)
Diluted net income (loss) attributable to common        shareholders per common share	$	0.21	$	0.45		$	0.33	$	(0.16	)
2014 Quarter Ended	December 31, 2013		March 31, 2014			June 30, 2014			September 30, 2014
Net revenue	$	393.4	$	415.3		$	397.6	$	479.8
Gross profit	$	176.8	$	202.7		$	187.1	$	213.3
Net income (loss) attributable to common shareholders	$	13.2	$	(3.3	)	$	26.1	$	24.6
Basic net income (loss) attributable to common        shareholders per common share	$	0.23	$	(0.06	)	$	0.46	$	0.43
Diluted net income (loss) attributable to common        shareholders per common share	$	0.22	$	(0.06	)	$	0.45	$	0.42

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COMMON STOCK (Narrative) (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Share Repurchases
Value of share repurchase authorization	$ 190.0
Stock-Based Compensation
Number of shares authorized	15,300,000
Shares available for future grants	4,300,000
Treasury stock, shares	23,291,738	22,884,001
Common Stock [Member]
Share Repurchases
Shares repurchased	1,200,000	1,700,000	2,800,000
Value of shares repurchased	$ 54.8	$ 70.5	$ 92.7
Stock Options [Member]
Stock-Based Compensation
Maximum contractual term	10 years
Total intrinsic value of options exercised	$ 6.3	4.6	1.6
Unrecognized compensation expense	$ 4.1
Unrecognized compensation expense, weighted-average recognition period	2 years 4 months 24 days
Stock Options [Member] | Minimum [Member]
Stock-Based Compensation
Vesting period	3 years
Stock Options [Member] | Maximum [Member]
Stock-Based Compensation
Vesting period	4 years
Restricted Stock Units (RSUs) [Member]
Stock-Based Compensation
Unrecognized compensation expense	$ 13.4
Unrecognized compensation expense, weighted-average recognition period	2 years
Total vest date fair value of shares that vested	$ 4.3	$ 5.3	$ 5.4
Restricted Stock Units (RSUs) [Member] | Minimum [Member]
Stock-Based Compensation
Vesting period	1 year
Restricted Stock Units (RSUs) [Member] | Maximum [Member]
Stock-Based Compensation
Vesting period	4 years
Performance Shares [Member]
Stock-Based Compensation
Unrecognized compensation expense	$ 10.2
Total vest date fair value of shares that vested	$ 20.5

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Valuation and Qualifying Accounts

12 Months Ended

Sep. 30, 2015

Valuation and Qualifying Accounts [Abstract]

Valuation and Qualifying Accounts

Valuation and Qualifying Accounts

For The Fiscal Years Ended September 30, 2015, 2014 and 2013

(Dollars in millions)

			ADDITIONS
	BALANCE AT		CHARGED TO		CHARGED TO				DEDUCTIONS				BALANCE
	BEGINNING		COSTS AND		OTHER				NET OF				AT END
DESCRIPTION	OF PERIOD		EXPENSES		ACCOUNTS				RECOVERIES				OF PERIOD
Reserves deducted from assets to which they apply:
Allowance for possible losses and sales returns -
accounts receivable:
Period Ended:
September 30, 2015	$	31.4	$	1.8	$	0.1		(a)	$	(7.3	)	(b)	$	26.0
September 30, 2014	$	30.1	$	1.5	$	8.6		(a)	$	(8.8	)	(b)	$	31.4
September 30, 2013	$	38.5	$	2.7	$	(0.1	)	(a)	$	(11.0	)	(b)	$	30.1
Allowance for inventory valuation:
Period Ended:
September 30, 2015	$	42.9	$	0.9	$	5.7		(c)	$	(4.0	)	(d)	$	45.5
September 30, 2014	$	22.0	$	4.0	$	19.8		(c)	$	(2.9	)	(d)	$	42.9
September 30, 2013	$	22.0	$	1.8	$	-			$	(1.8	)	(d)	$	22.0
Valuation allowance against deferred tax assets:
Period Ended:
September 30, 2015	$	28.3	$	4.0	$	11.1		(c)	$	(2.7	)	(e)	$	40.7
September 30, 2014	$	8.9	$	21.3	$	-			$	(1.9	)	(e)	$	28.3
September 30, 2013	$	8.6	$	0.6	$	-			$	(0.3	)	(e)	$	8.9

(a)	Reduction of gross revenue for uncollectible health care rental reimbursements, cash discounts and other adjustments in determining net revenue. Also includes the effect of acquired businesses, if any.
(b)	Generally reflects the write-off of specific receivables against recorded reserves.
(c)	Generally reflects the effect of acquired businesses, if any.
(d)	Generally reflects the write-off of specific inventory against recorded reserves.
(e)	Primarily reflects write-offs of deferred tax assets against the valuation allowance and other movement of the valuation allowance offset by an opposing change in deferred tax assets.

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Sep. 30, 2015

COMMITMENTS AND CONTINGENCIES [Abstract]

Schedule of Future Minimum Rental Payments

	Amount
2016	$	28.2
2017	$	18.4
2018	$	12.1
2019	$	6.3
2020	$	3.2
2021 and beyond	$	5.6

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Sep. 30, 2015

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Schedule of Inventories

	September 30
	2015		2014
Finished products	$	133.2	$	93.5
Work in process		46.1		17.3
Raw materials		88.1		65.4
Total	$	267.4	$	176.2

Schedule of Ranges of Estimated Useful Lives

Property, plant and equipment is recorded at cost and depreciated over the estimated useful life of the assets using principally the straight-line method. Ranges of estimated useful lives are as follows:

	Useful Life
Land improvements	6 - 15 years
Buildings and building equipment	10 - 40 years
Machinery and equipment	3 - 10 years
Equipment leased to others	2 -10 years

Schedule of Major Components of Property and Related Accumulated Depreciation

	September 30
	2015				2014
			Accumulated				Accumulated
	Cost		Depreciation		Cost		Depreciation
Land and land improvements	$	23.3	$	2.8	$	19.4	$	2.3
Buildings and building equipment		196.2		90.3		158.3		88.6
Machinery and equipment		369.5		226.5		321.3		213.7
Equipment leased to others		387.4		278.4		350.6		283.5
Total	$	976.4	$	598.0	$	849.6	$	588.1

Schedule of Intangible Assets and Related Accumulated Amortization and Impairment Losses

	September 30
	2015				2014
			Amortization				Amortization
	Cost		and Impairment		Cost		and Impairment
Goodwill	$	2,083.3	$	472.8	$	872.6	$	472.8
Software		181.7		139.2		170.5		146.6
Patents and Trademarks		497.6		16.9		67.1		16.0
Other		872.8		148.3		306.8		120.7
Total	$	3,635.4	$	777.2	$	1,417.0	$	756.1

Schedule of Expected Amortization Expense

	Amount
2016	$	92.9
2017	$	85.8
2018	$	81.6
2019	$	78.0
2020	$	74.4
2021 and beyond	$	368.1

Reconciliation of Changes in Warranty Reserve

	2015			2014			2013
Balance at October 1	$	28.4		$	38.1		$	42.2
Provision for warranties during the period		14.7			9.8			29.2
Warranty reserves acquired		7.1			3.0			(2.6	)
Warranty claims incurred during the period		(18.1	)		(22.5	)		(30.7	)
Balance at September 30	$	32.1		$	28.4		$	38.1

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COMMON STOCK (Schedule of Transactions under Stock Option Plans) (Details) $ / shares in Units, shares in Thousands, $ in Millions	12 Months Ended
	Sep. 30, 2015 USD ($) $ / shares shares
Stock-Based Compensation
Closing stock price	$ 51.99
Stock Options [Member]
Weighted Average Number of Shares
Balance Outstanding at October 1, 2014 | shares	1,992
Granted | shares	381
Exercised | shares	(371)
Cancelled/Forfeited | shares	(101)
Balance Outstanding at September 30, 2015 | shares	1,901
Exercisable at September 30, 2015 | shares	1,060
Options Expected to Vest | shares	773
Weighted Average Exercise Price
Balance Outstanding at October 1, 2014	$ 31.99
Granted	45.01
Exercised	31.83
Cancelled/Forfeited	36.63
Balance Outstanding at September 30, 2015	34.38
Exercisable at September 30, 2015	30.98
Options Expected to Vest	$ 38.34
Weighted Average Remaining Contractual Term
Balance Outstanding at September 30, 2015	6 years 7 months 6 days
Exercisable at September 30, 2015	5 years 3 months 18 days
Options Expected to Vest	8 years
Aggregate Intrinsic Value
Balance Outstanding at September 30, 2015 | $	$ 33.5	[1]
Exercisable at September 30, 2015 | $	22.3	[1]
Options Expected to Vest | $	$ 10.6	[1]

[1] The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $51.99, as reported by the New York Stock Exchange on September 30, 2015. This amount, which changes continuously based on the fair value of our common stock, would have been received by the option holders had all option holders exercised their options as of the balance sheet date.

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STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY - USD ($) $ in Millions	Total	Common Stock Outstanding [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Common Stock in Treasury [Member]	Total Equity Attributable to Common Shareholders [Member]	Noncontrolling Interests [Member]
Beginning Balance at Sep. 30, 2012	$ 812.6		$ 4.4	$ 116.8	$ 1,400.3	$ (78.0)	$ (630.9)	$ 812.6
Balance, shares at Sep. 30, 2012		60,796,923					(19,526,989)
Net income	105.0				$ 105.0			105.0
Other comprehensive income (loss), net of tax of ($18.1), $4.9 and $5.1 in 2013, 2014, and 2015	42.3					$ 42.3		42.3
Dividends	(31.2)			$ 0.3	$ (31.5)			(31.2)
Treasury shares acquired	(94.0)						$ (94.0)	(94.0)
Treasury shares acquired, shares		(2,844,765)					(2,844,765)
Stock awards and option exercises	24.0			$ 5.6			$ 18.4	24.0
Stock awards and option exercises, shares		571,234					(571,234)
Ending Balance at Sep. 30, 2013	858.7		$ 4.4	$ 122.7	$ 1,473.8	$ (35.7)	$ (706.5)	858.7
Balance, shares at Sep. 30, 2013		58,523,392					(21,800,520)
Net income	60.6				$ 60.6			60.6
Other comprehensive income (loss), net of tax of ($18.1), $4.9 and $5.1 in 2013, 2014, and 2015	(38.4)					$ (38.4)		(38.4)
Dividends	(34.2)			$ 0.4	$ (34.6)			(34.2)
Treasury shares acquired	(71.8)						$ (71.8)	(71.8)
Treasury shares acquired, shares		(1,709,523)					(1,709,523)
Stock awards and option exercises	31.6			$ 11.0			$ 20.6	31.6
Stock awards and option exercises, shares		626,042					(626,042)
Ending Balance at Sep. 30, 2014	806.5		$ 4.4	$ 134.1	$ 1,499.8	$ (74.1)	$ (757.7)	806.5
Balance, shares at Sep. 30, 2014		57,439,911					(22,884,001)
Net income	46.8				$ 47.7			$ 47.7	$ (0.9)
Consolidation of noncontrolling interest	10.9								$ 10.9
Other comprehensive income (loss), net of tax of ($18.1), $4.9 and $5.1 in 2013, 2014, and 2015	(66.7)					$ (66.7)		$ (66.7)
Dividends	(37.1)			$ 0.5	$ (37.6)			(37.1)
Issuance of common stock	416.3			$ 416.3				416.3
Issuance of common stock, shares		8,133,722
Treasury shares acquired	(63.3)						$ (63.3)	(63.3)
Treasury shares acquired, shares		(1,373,321)					(1,373,321)
Stock awards and option exercises	43.5			$ 11.1			$ 32.4	43.5
Stock awards and option exercises, shares		965,584					(965,584)
Ending Balance at Sep. 30, 2015	$ 1,156.9		$ 4.4	$ 562.0	$ 1,509.9	$ (140.8)	$ (788.6)	$ 1,146.9	$ 10.0
Balance, shares at Sep. 30, 2015		65,165,896					(23,291,738)

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STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS) [Abstract]
Net Income	$ 46.8	$ 60.6	$ 105.0
Other Comprehensive Income (Loss), Net of Tax:
Available-for-sale securities and currency hedges		0.3	0.1
Foreign currency translation adjustment	$ (58.6)	(29.6)	12.6
Change in pension and postretirement defined benefit plans	(8.1)	(9.1)	29.6
Total Other Comprehensive Income (Loss), Net of Tax	(66.7)	(38.4)	42.3
Total Comprehensive Income (Loss)	(19.9)	$ 22.2	$ 147.3
Less: Comprehensive loss attributable to noncontrolling interests	(0.9)
Total Comprehensive Income (Loss) Attributable to Common Shareholders	$ (19.0)	$ 22.2	$ 147.3

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INCOME TAXES

12 Months Ended

Sep. 30, 2015

INCOME TAXES [Abstract]

INCOME TAXES

NOTE 9. INCOME TAXES

The significant components of income before income taxes and the consolidated income tax provision were as follows:

	Years Ended September 30
	2015		2014		2013
Income before income taxes:
Domestic	$	49.2	$	87.0	$	120.0
Foreign		15.9		28.2		24.0
Total	$	65.1	$	115.2	$	144.0

Income tax expense:
Current provision
Federal	$	35.3		$	40.2		$	45.0
State		3.6			3.1			1.8
Foreign		1.7			7.4			7.0
Total current provision		40.6			50.7			53.8
Deferred provision:
Federal		(18.1	)		(12.2	)		(9.9	)
State		(1.3	)		(1.0	)		1.1
Foreign		(2.9	)		17.1			(6.0	)
Total deferred provision		(22.3	)		3.9			(14.8	)
Income tax expense	$	18.3		$	54.6		$	39.0

Differences between income tax expense reported for financial reporting purposes and that computed based upon the application of the statutory U.S. Federal tax rate to the reported income before income taxes were as follows:

	Years Ended September 30
	2015						2014						2013
				% of						% of						% of
				Pretax						Pretax						Pretax
	Amount			Income			Amount			Income			Amount			Income
Federal income tax (a)	$	22.8			35.0		$	40.3			35.0		$	50.4			35.0
State income tax (b)		1.6			2.4			2.0			1.7			2.5			1.7
Foreign income tax (c)		(10.2	)		(15.7	)		(7.7	)		(6.7	)		(5.7	)		(4.0	)
Application of federal tax credits		(2.2	)		(3.4	)		(0.6	)		(0.5	)		(3.5	)		(2.4	)
Adjustment of estimated income tax accruals		(1.6	)		(2.4	)		(0.6	)		(0.5	)		(1.5	)		(1.0	)
Valuation of tax attributes		4.0			6.2			21.3			18.5			0.6			0.4
Domestic manufacturer's deduction		(1.5	)		(2.3	)		(1.8	)		(1.5	)		(2.2	)		(1.5	)
Capitalized transaction costs		2.5			3.8			0.3			0.2			-			-
Other, net		2.9			4.5			1.4			1.2			(1.6	)		(1.1	)
Income tax expense	$	18.3			28.1		$	54.6			47.4		$	39.0			27.1

(a) At statutory rate.

(b) Net of Federal benefit.

(c) Federal tax rate differential.

The tax effect of temporary differences that gave rise to the deferred tax balance sheet accounts were as follows:

	Years Ended September 30
	2015			2014
Deferred tax assets:
Employee benefit accruals	$	106.4		$	49.3
Inventory		6.2			13.9
Reserve for bad debts		8.4			10.0
Net operating loss carryforwards		45.8			40.3
Tax credit carryforwards		11.7			2.5
Other, net		39.6			25.7
		218.1			141.7
Less:  Valuation allowance		(40.7	)		(28.3	)
Total deferred tax assets		177.4			113.4
Deferred tax liabilities:
Depreciation		(35.3	)		(13.9	)
Amortization		(409.1	)		(62.8	)
Other, net		(16.4	)		(4.9	)
Total deferred tax liabilities		(460.8	)		(81.6	)
Deferred tax asset (liability) - net	$	(283.4	)	$	31.8

At September 30, 2015, we had $43.2 million of deferred tax assets related to operating loss carryforwards in foreign jurisdictions that are subject to various carryforward periods with the majority eligible to be carried forward for an unlimited period. Additionally, we had $2.2 million of deferred tax assets related to federal net operating loss carryforwards which will expire between 2019 and 2033 and $0.4 million of deferred tax assets related to state net operating loss carryforwards, which expire between 2016 and 2033.  We had $11.7 million of deferred tax assets related to state tax credits, some of which will be carried forward for an unlimited period and some of which will expire between 2016 and 2026.

The gross deferred tax assets as of September 30, 2015 were reduced by valuation allowances of $40.7 million primarily related to certain foreign deferred tax attributes and state tax credit carryforwards as it is more likely than not that some portion or all of these tax attributes will not be realized.  In evaluating whether it is more likely than not that we would recover our deferred tax assets, future taxable income, the reversal of existing temporary differences and tax planning strategies were considered. We believe that our estimates for the valuation allowances recorded against deferred tax assets are appropriate based on current facts and circumstances.

We operate under tax holidays in both Singapore and Puerto Rico.  The Singapore tax holiday is effective through 2016 with potential to extend through 2018 while the Puerto Rico tax holiday is effective through 2025.  Both incentives are conditional on meeting certain employment and/or investment thresholds.  The impact of these tax holidays decreased foreign taxes by $4.3 million in fiscal 2015, $4.0 million for fiscal 2014 and $2.9 million for fiscal 2013.  The benefit of the tax holidays on net income per share (diluted) was $0.07, $0.07 and $0.05 for fiscal 2015, 2014 and 2013, respectively.

With respect to the undistributed earnings of Welch Allyn's foreign subsidiaries, given the timing of the acquisition, we are still evaluating the investment of such foreign earnings. As for the undistributed earnings of Hill-Rom's foreign subsidiaries, including Welch Allyn for the post-acquisition period, foreign earnings are considered to be indefinitely reinvested for use in meeting working capital, business expansion and development, and other general needs. Accordingly, no provision has been made for deferred taxes related to the future repatriation of such earnings. If such earnings were repatriated, additional tax expense may result. It is not practicable to estimate the amount of tax that may be payable upon any such distribution.

We file a consolidated federal income tax return as well as multiple state, local and foreign jurisdiction tax returns.  In the normal course of business, we are subject to examination by the taxing authorities in each of the jurisdictions where we file tax returns.  During fiscal 2015, the Internal Revenue Service (“IRS”) concluded its audit for fiscal year 2013 and initiated its post-filing examination of the fiscal 2014 consolidated federal return.  We continue to participate in the IRS Compliance Assurance Program (“CAP”) for fiscal year 2015 and have submitted the application to remain in the CAP for fiscal years 2016 and 2017.  The CAP provides the opportunity for the IRS to review certain tax matters prior to us filing our tax return for the year, thereby reducing the time it takes to complete the post-filing examination. We are also subject to state and local or foreign income tax examinations by taxing authorities for years back to fiscal 2009.

Welch Allyn also filed a consolidated federal income tax return as well as multiple state, local and foreign jurisdiction tax returns. In the normal course of business, Welch Allyn is subject to examination by the taxing authorities in each of the jurisdictions where it files tax returns. During calendar year 2015, the Internal Revenue Service (“IRS”) concluded its post-filing audit for calendar year 2013 (subject to certain exceptions), and initiated its post-filing examination of the calendar year 2014 consolidated federal return. Welch Allyn continues to participate in the IRS Compliance Assurance Program (“CAP”) for 2015 to include the period up through the date of the acquisition by Hill-Rom on September 8, 2015. Thereafter, Welch Allyn will be integrated into Hill-Rom's CAP going forward. Welch Allyn has received Partial Acceptance Letters from the IRS under CAP for calendar years 2011 through 2014 primarily for an issue that's before Competent Authority.

We also have on-going audits in various stages of completion in several state and foreign jurisdictions, one or more of which may conclude within the next 12 months. Such settlements could involve some or all of the following: the payment of additional taxes, the adjustment of certain deferred taxes and/or the recognition of unrecognized tax benefits.  The resolution of these matters, in combination with the expiration of certain statutes of limitations in various jurisdictions, make it reasonably possible that our unrecognized tax benefits may decrease as a result of either payment or recognition by approximately $0.5 to $1.5 million in the next twelve months, excluding interest.

The total amount of gross unrecognized tax benefits as of September 30, 2015, 2014 and 2013 was $5.8 million, $4.1 million and $4.6 million, which includes $3.3 million, $2.7 million and $3.9 million that, if recognized, would impact the effective tax rate in future periods. The remaining amount relates to items which, if recognized, would not impact our effective tax rate.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	Years Ended September 30
	2015			2014			2013
Balance at October 1	$	4.1		$	4.6		$	9.8
Increases in tax position of prior years		0.4			2.1			-
Decreases in tax position of prior years		(1.3	)		(0.9	)		(0.5	)
Increases in tax positions related to the current year		-			-			0.1
Settlements with taxing authorities		(1.2	)		(0.1	)		(3.2	)
Lapse of applicable statute of limitations		(1.3	)		(1.5	)		(1.7	)
Increase in positions due to acquisitions		5.5			-			-
Foreign currency adjustments		(0.4	)		(0.1	)		0.1
Total change		1.7			(0.5	)		(5.2	)
Balance at September 30	$	5.8		$	4.1		$	4.6

We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense.  Accrued interest and penalties, which are not presented in the reconciliation table above, were $3.0 million, $0.4 million and $0.6 million at September 30, 2015, 2014 and 2013. Related to interest and penalties, we recognized an income tax benefit (expense) of $0.2 million in 2015, $0.2 million in 2014 and $0.1 million in 2013.

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Document and Entity Information - USD ($) $ in Billions	12 Months Ended
	Sep. 30, 2015	Nov. 12, 2015	Mar. 31, 2015
Document And Entity Information Abstract
Document Type	10-K
Amendment Flag	false
Document Period End Date	Sep. 30, 2015
Entity Registrant Name	Hill-Rom Holdings, Inc.
Entity Central Index Key	0000047518
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		65,169,068
Entity Current Reporting Status	Yes
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Public Float			$ 2.8
Trading Symbol	HRC

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EARNINGS PER COMMON SHARE

12 Months Ended

Sep. 30, 2015

EARNINGS PER COMMON SHARE [Abstract]

EARNINGS PER COMMON SHARE

NOTE 10. EARNINGS PER COMMON SHARE

Basic earnings per share is calculated based upon the weighted average number of outstanding common shares for the period, plus the effect of deferred vested shares. Diluted earnings per share is calculated consistent with the basic earnings per share calculation plus the effect of dilutive unissued common shares related to stock-based employee compensation programs. For all years presented, anti-dilutive stock options were excluded from the calculation of dilutive earnings per share. Excluded shares were 0.2 million, 0.3 million and 1.4 million for fiscal years 2015, 2014 and 2013. Cumulative treasury stock acquired, less cumulative shares reissued, have been excluded in determining the average number of shares outstanding.

Earnings per share is calculated as follows:

	Years Ended September 30
	2015		2014		2013
Net income attributable to common shareholders	$	47.7	$	60.6	$	105.0
Average shares outstanding - Basic (thousands)		57,249		57,555		59,910
Add potential effect of exercise of stock options
and other unvested equity awards (thousands)		1,287		968		340
Average shares outstanding - Diluted (thousands)		58,536		58,523		60,250
Net income attributable to common shareholders per common share - Basic	$	0.83	$	1.05	$	1.75
Net income attributable to common shareholders per common share - Diluted	$	0.82	$	1.04	$	1.74

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SEGMENT REPORTING (Schedule of Segment Information) (Details) $ in Millions		3 Months Ended								12 Months Ended
		Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Sep. 30, 2014 USD ($)	Jun. 30, 2014 USD ($)	Mar. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Sep. 30, 2015 USD ($) units	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)
Segment Reporting Information [Line Items]
Number of reportable business segments | units										3
Revenue		$ 573.9	$ 474.5	$ 474.8	$ 465.0	$ 479.8	$ 397.6	$ 415.3	$ 393.4	$ 1,988.2	$ 1,686.1	$ 1,716.2
Special charge										41.2	37.1	5.7
Operating profit										83.1	122.6	154.9
Interest expense										(18.4)	(9.8)	(9.5)
Investment income and other, net										0.4	2.4	(1.4)
Income Before Income Taxes										65.1	115.2	144.0
Corporate and Other [Member]
Segment Reporting Information [Line Items]
Operating profit										(173.1)	(98.8)	(131.4)
Segment Reconciling Items [Member]
Segment Reporting Information [Line Items]
Special charge										41.2	$ 37.1	$ 5.7
Welch Allyn Holdings, Inc. [Member]
Segment Reporting Information [Line Items]
Revenue	[1]									50.2
North America Segment [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenue										1,002.0	$ 888.9	$ 958.3
Operating profit										204.1	165.0	201.7
Surgical and Respiratory Care Segment [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenue										506.6	301.6	245.8
Operating profit										80.5	68.6	56.8
International [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenue										429.4	495.6	512.1
Operating profit										$ 12.8	$ 24.9	$ 33.5

[1] Welch Allyn is not considered a separate reportable segment but is presented as a reconciling item to total consolidated revenue.

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Sep. 30, 2015	Sep. 30, 2014
Current Assets
Cash and cash equivalents	$ 192.8	$ 99.3
Trade accounts receivable, less allowances of $26.0 in 2015 and $31.4 in 2014 (Note 1)	494.7	411.0
Inventories (Note 1)	267.4	176.2
Deferred income taxes (Notes 1 and 9)	77.0	40.9
Other current assets	109.1	51.9
Total current assets	1,141.0	779.3
Property, plant, and equipment (Note 1)	976.4	849.6
Less accumulated depreciation	(598.0)	(588.1)
Property, plant, and equipment, net	378.4	261.5
Intangible assets:
Goodwill (Notes 1, 2 and 3)	1,610.5	399.8
Software and other, net (Notes 1 and 2)	1,247.7	261.1
Deferred income taxes (Notes 1 and 9)	21.6	23.0
Other assets	58.4	26.6
Total Assets	4,457.6	1,751.3
Current Liabilities
Trade accounts payable	136.3	112.7
Short-term borrowings (Note 4)	58.0	126.9
Accrued compensation	171.8	89.2
Accrued product warranties (Note 1)	32.1	28.4
Accrued rebates	33.7	7.1
Other current liabilities	146.9	78.0
Total current liabilities	578.8	442.3
Long-term debt (Note 4)	2,175.2	364.1
Accrued pension and postretirement benefits (Note 6)	118.8	76.9
Deferred income taxes (Notes 1 and 9)	380.6	31.0
Other long-term liabilities	47.3	30.5
Total Liabilities	$ 3,300.7	$ 944.8
Commitments and Contingencies (Note 13)
SHAREHOLDERS' EQUITY (Note 7)
Preferred stock - without par value: Authorized - 1,000,000 shares; none issued or outstanding
Common stock - without par value: Authorized - 199,000,000 Issued - 88,457,634 shares in 2015 and 80,323,912 shares in 2014	$ 4.4	$ 4.4
Additional paid-in-capital	562.0	134.1
Retained earnings	1,509.9	1,499.8
Accumulated other comprehensive loss (Note 1)	(140.8)	(74.1)
Treasury stock, common shares at cost: 2015 - 23,291,738 and 2014 - 22,884,001	(788.6)	(757.7)
Total Shareholders' Equity Attributable to Common Shareholders	1,146.9	$ 806.5
Noncontrolling interests	10.0
Total Shareholders' Equity	1,156.9	$ 806.5
Total Liabilities and Shareholders' Equity	$ 4,457.6	$ 1,751.3

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FINANCING AGREEMENTS

12 Months Ended

Sep. 30, 2015

FINANCING AGREEMENTS [Abstract]

FINANCING AGREEMENTS

NOTE 4. FINANCING AGREEMENTS

Total debt consists of the following:

	September 30
	2015		2014
Revolving credit facilities	$	-	$	265.0
Current portion of long-term debt		58.0		16.2
Senior secured Term Loan A, long-term portion		931.7		-
Senior secured Term Loan B, long-term portion		778.3		-
Senior unsecured 5.75% notes due on September 1, 2023		418.2		-
Term loan under August 2012 credit facility, long-term portion		-		159.6
Unsecured 7.00% debentures due on February 15, 2024		13.8		19.2
Unsecured 6.75% debentures due on December 15, 2027		29.6		29.6
Other		3.6		1.4
Total debt		2,233.2		491.0
Less current portion of debt		58.0		126.9
Total long-term debt	$	2,175.2	$	364.1

The following table summarizes the scheduled maturities of long-term debt for fiscal years 2016 through 2020:

	Term Loan A		Term Loan B		Total
2016	$	50.0	$	8.0	$	58.0
2017	$	75.0	$	8.0	$	83.0
2018	$	100.0	$	8.0	$	108.0
2019	$	100.0	$	8.0	$	108.0
2020	$	675.0	$	8.0	$	683.0

In September 2015, the Company entered into four new credit facilities for purposes of financing the Welch Allyn acquisition as well as refinancing our previously outstanding revolving credit facility. These new facilities consisted of the following:

•$1.0 billion senior secured Term Loan A facility (“TLA Facility”), maturing in September 2020

•$800.0 million senior secured Term Loan B facility (“TLB Facility”), maturing in September 2022

•Senior secured revolving credit facility (“Revolving Credit Facility”), providing borrowing capacity of up to $500.0 million, maturing in September 2020

•$425.0 million of senior unsecured notes (“Senior Notes”), maturing in September 2023

The TLA Facility, TLB Facility, and Revolving Credit Facility (collectively, the “Senior Secured Credit Facilities”) all bear interest at variable rates which are currently less than 4.0 percent. These interest rates are based primarily on the London Interbank Offered Rate (LIBOR), but under certain conditions could also be based on the U.S. Federal Funds Rate or the U.S. Prime Rate, at the Company's option. The TLA Facility and TLB Facility have required principal payments. The TLA Facility requires minimum principal payments of $50.0 million in fiscal 2016, $75.0 million in fiscal 2017, and $100.0 million annually thereafter, with the remaining unpaid principal balance due at maturity. The TLB Facility requires annual principal payments of $8.0 million with the remaining unpaid principal balance due at maturity. We will be able to voluntarily prepay outstanding loans under the TLA Facility and the TLB Facility at any time.

At September 30, 2015, there were no borrowings on the Revolving Credit Facility, but available borrowing capacity was $490.9 million after giving effect to $9.1 million of outstanding standby letters of credit. At September 30, 2014, there were $42.4 million of outstanding standby letters of credit under our previous revolving credit agreements, $39.8 million of which pertained to one standby letter of credit issued in connection with the Trumpf acquisition, which expired in January 2015. The availability of borrowings under our Revolving Credit Facility is subject to our ability at the time of borrowing to meet certain specified conditions, including compliance with covenants contained in the governing credit agreement.

The Senior Secured Credit Facilities are held with a syndicate of banks, which includes over 20 institutions. The general corporate assets of the Company and its subsidiaries collateralize these obligations. The credit agreement governing these facilities contains financial covenants which specify a maximum secured net leverage ratio and a minimum interest coverage ratio, as such terms are defined in the credit agreement. These financial covenants are measured at the end of each fiscal quarter, with the first measurement date on December 31, 2015. The required ratios vary through December 31, 2019 providing a gradually decreasing maximum secured net leverage ratio and a gradually increasing minimum interest coverage ratio, as set forth in the table below:

Fiscal Quarter Ended	Maximum Secured Net Leverage Ratio	Minimum Interest Coverage Ratio
December 31, 2015	4.75x	3.25x
December 31, 2016	4.50x	3.25x
December 31, 2017	4.00x	3.50x
December 31, 2018	3.50x	3.75x
December 31, 2019 and thereafter	3.00x	4.00x

The Senior Notes bear interest at a fixed rate of 5.75 percent annually. These notes were issued at par in a private placement offering and are not registered securities on any public market. All of the Senior Notes are outstanding as of September 30, 2015. We are not required to make any mandatory redemption or sinking fund payments with respect to the Notes, other than in certain circumstances such as a change in control or material sale of assets. We may redeem the notes prior to maturity, but doing so prior to September 1, 2021 would require payment of a premium on any amounts redeemed, the amount of which varies based on the timing of the redemption. The indenture governing the Senior Notes contains certain covenants which impose limitations on the amount of dividends we may pay and the amount of common shares we may repurchase in the open market, but we do not expect these covenants to affect our current dividend policy or open share repurchase program. The terms of this indenture also impose certain restrictions on the amount and type of additional indebtedness we may obtain in the future, as well as the types of liens and guarantees we may provide.

We are in compliance with all applicable financial covenants as of September 30, 2015.

In conjunction with the issuance of the Senior Secured Credit Facilities and the Senior Notes, the Company incurred $48.7 million of debt issuance costs. As stated in Note 1, the Company has elected to early-adopt ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” Following this guidance, as of September 30, 2015, unamortized debt issuance costs of $39.1 million have been recorded as a reduction of the carrying value of the related debt, in addition to $9.4 million attributable to the Revolving Credit Facility, which are recorded as a component of other long-term assets on the Consolidated Balance Sheet. These costs will amortize into interest expense over the terms of the related credit facilities.

Unsecured debentures outstanding at September 30, 2015 and September 30, 2014 have fixed rates of interest. We have deferred gains included in the amounts above from the termination of previous interest rate swap agreements, and those deferred gains amounted to less than $1.0 million at both September 30, 2015 and September 30, 2014. The deferred gains on the termination of the swaps are being amortized and recognized as a reduction of interest expense over the remaining term of the related debt, and as a result, the effective interest rates on that debt have been and will continue to be lower than the stated interest rates on the debt.

From August 2012 through April 2015, we had a credit facility that provided for revolving loans of up to $500.0 million, plus a term loan in the aggregate amount of $200.0 million. In May 2015, we entered into an Amended and Restated Credit Agreement which provided for revolving loans of up to $900.0 million and a term loan of $165.0 million, which replaced the remaining unpaid principal balance of the term loan from the August 2012 credit facility. A portion of the proceeds from the issuance of the Senior Secured Credit Facility and the Senior Notes in September 2015 were used to fully repay these previously outstanding credit facilities, which are now terminated. The termination of these facilities resulted in a charge of $2.6 million due to acceleration of debt issuance costs which were unamortized as of September 2015. 

We are exposed to market risk from fluctuations in interest rates. The Company sometimes manages its exposure to interest rate fluctuations through the use of interest rate swaps (cash flow hedges). As of September 30, 2014, we had one interest rate swap agreement to hedge the variability of cash flows associated with a portion of the variable interest rate payments on then-outstanding term loans. The interest rate swap was designated as a cash flow hedge and was an asset with a fair value of less than $1.0 million as of September 30, 2014. We classify fair value measurements on our interest rate swaps as Level 2, as described in Note 1. Effective with the issuance of the Senior Secured Credit Facilities, the interest rate swap was terminated at an immaterial loss.

The fair value of our debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same remaining maturities. The book values of our short-term debt instruments approximate fair value. The estimated fair values of our long-term debt instruments are described in the table below:

	September 30
	2015		2014
Senior secured Term Loan A	$	990.7	$	-
Senior secured Term Loan B		780.7		-
Senior unsecured 5.75% notes due on September 1, 2023		428.4		-
Term loan under August 2012 credit facility		-		175.2
Unsecured debentures		43.4		55.5
Total debt	$	2,243.2	$	230.7

The estimated fair values of our long-term unsecured debentures were based on observable inputs such as quoted prices in markets that are not active. The estimated fair values of our term loans and the Senior Notes were based on quoted prices for similar liabilities. These fair value measurements were classified as Level 2, as described in Note 1.

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GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS

12 Months Ended

Sep. 30, 2015

GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS [Abstract]

GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS

NOTE 3. GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS

The following summarizes goodwill activity by reportable segment:

	North America			Surgical and Respiratory Care			International			Welch Allyn		Total
Balances at September 30, 2013:
Goodwill	$	383.0		$	279.0		$	153.6		$	-	$	815.6
Accumulated impairment losses		(358.1	)		-			(114.7	)		-		(472.8	)
Goodwill, net at September 30, 2013		24.9			279.0			38.9			-		342.8
Changes in Goodwill during the period:
Goodwill related to acquisitions		7.6			57.3			(2.8	)		-		62.1
Currency translation effect		-			(2.8	)		(2.3	)		-		(5.1	)
Balances at September 30, 2014:
Goodwill		390.6			333.5			148.5			-		872.6
Accumulated impairment losses		(358.1	)		-			(114.7	)		-		(472.8	)
Goodwill, net at September 30, 2014		32.5			333.5			33.8			-		399.8
Changes in Goodwill during the period:
Goodwill related to acquisitions		-			22.1			-			1,203.5		1,225.6
Currency translation effect		-			(11.8	)		(3.1	)		-		(14.9	)
Balances at September 30, 2015:
Goodwill		390.6			343.8			145.4			1,203.5		2,083.3
Accumulated impairment losses		(358.1	)		-			(114.7	)		-		(472.8	)
Goodwill, net at September 30, 2015	$	32.5		$	343.8		$	30.7		$	1,203.5	$	1,610.5

We acquired Welch Allyn on September 8, 2015 and Trumpf on August 1, 2014. All goodwill associated with the Welch Allyn acquisition is presented as a reconciling item in the table above, as it has not yet been assigned to a reportable segment. All goodwill related to the Trumpf acquisition was assigned to the Surgical and Respiratory Care segment. During fiscal 2015, we recorded adjustments to goodwill related to the Trumpf acquisition completed during the fourth quarter of fiscal 2014. We also consolidated an investment made in fiscal 2015 that was determined to be a VIE in which we have a controlling financial interest. The consolidation resulted in $12.1 million of goodwill being recorded within our Surgical and Respiratory Care segment. We acquired Virtus on March 31, 2014 and recorded goodwill of $9.4 million. This goodwill was allocated between our North America and International segments based on the expected benefits resulting from the acquisition. Refer to Note 2 for additional information regarding these acquisitions.

As discussed in Note 11, we operate in three reportable business segments.  Goodwill impairment testing is performed at the reporting unit level, which is one level below a reportable business segment.  We have determined that we have ten reporting units, with the Welch Allyn reporting units yet to be defined. Goodwill is assigned to reporting units at the date the goodwill is initially recorded and has been reallocated as necessary based on the restructuring of reporting units over time. Once goodwill has been assigned to reporting units, it no longer retains its association with a particular acquisition, and all of the activities within a reporting unit, whether acquired or organically grown, are available to support the value of the goodwill.

Testing for impairment must be performed annually, or on an interim basis upon the occurrence of a triggering event or change in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The annual evaluation of goodwill performed during the third quarter of fiscal 2015 and 2014 did not result in any impairments.

A 10 percent reduction in the fair value of any of our reporting units would not result in an impairment charge.

Indefinite-lived intangible assets

We have various indefinite-lived intangible assets representing trade names with a carrying value of $466.9 million at September 30, 2015 and $32.9 million at September 30, 2014. Testing for impairment must be performed annually, or on an interim basis upon the occurrence of a triggering event or change in circumstances that would more likely than not reduce the fair value of an indefinite-lived intangible asset below its carrying amount. The annual evaluation of indefinite-lived intangible assets performed during the third quarter of fiscal 2015 and 2014 did not result in impairment.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Sep. 30, 2015

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Nature of Operations

Nature of Operations

Hill-Rom Holdings, Inc. (the “Company,” “Hill-Rom,” “we,” “us,” or “our”) was incorporated on August 7, 1969 in the State of Indiana and is headquartered in Chicago, Illinois. We are a leading global medical technology company with more than 10,000 employees worldwide.  We partner with health care providers in more than 100 countries by focusing on patient care solutions that improve clinical and economic outcomes in five core areas: Advancing Mobility, Wound Care and Prevention, Clinical Workflow, Surgical Safety and Efficiency, and Respiratory Health. Around the world, Hill-Rom's people, products, and programs work towards one mission: Enhancing outcomes for patients and their caregivers.

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

The Consolidated Financial Statements include the accounts of Hill-Rom and its wholly-owned subsidiaries. In addition, we also consolidate variable interest entities (VIEs) where Hill-Rom is deemed to have a controlling financial interest. Intercompany accounts and transactions have been eliminated in consolidation, including the intercompany transactions with consolidated VIEs. Where our ownership interest is less than 100 percent, the noncontrolling interests are reported in our Consolidated Financial Statements. Certain prior year amounts have been reclassified to conform to current year presentation.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. Examples of such estimates include our accounts receivable reserves (Note 1), accrued warranties (Note 1), the impairment of intangibles and goodwill (Note 3), income taxes (Notes 1 and 9) and commitments and contingencies (Note 13), among others.

Cash and Cash Equivalents

Cash and Cash Equivalents

We consider investments in marketable securities and other highly liquid instruments with a maturity of three months or less at date of purchase to be cash equivalents. Investments which have no stated maturity are also considered cash equivalents. All of our marketable securities may be freely traded.

Trade Accounts Receivable

Trade Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and do not bear interest, unless the transaction is an installment sale with payment terms exceeding one year. Reserves for uncollectible accounts represent our best estimate of the amount of probable credit losses and collection risk in our existing accounts receivable. We determine such reserves based on historical write-off experience by industry and reimbursement platform. Receivables are generally reviewed on a pooled basis based on historical collection experience for each reimbursement and receivable type. Receivables for sales transactions are also reviewed individually for collectability. Account balances are charged against the allowance when we believe it is probable the receivable will not be recovered. We do not have any off-balance sheet credit exposure related to our customers. If circumstances change, such as higher than expected claims denials, payment defaults, changes in our business composition or processes, adverse changes in general economic conditions, unfavorable impacts of austerity measures initiated by some governmental authorities, instability or disruption of credit markets, or an unexpected material adverse change in a major customer's or payer's ability to meet its obligations, our estimates of the realizability of trade receivables could be reduced by a material amount.

Within rental revenue, the domestic third-party payers' reimbursement process requires extensive documentation, which has had the effect of slowing both the billing and cash collection cycles relative to the rest of the business, and therefore, increasing total accounts receivable. Because of the extensive documentation required and the requirement to settle a claim with the primary payer prior to billing the secondary and/or patient portion of the claim, the collection period for a claim in a portion of our business may, in some cases, be extended.

We generally hold our trade accounts receivable until they are paid. Certain long-term receivables are occasionally sold to third parties; however, any recognized gain or loss on such sales has historically not been material.

Inventories

Inventories

Inventories are valued at the lower of cost or market. Inventory costs are determined by the last-in, first-out (“LIFO”) method for approximately 21 and 29 percent of our inventories at September 30, 2015 and 2014. Costs for other inventories have been determined principally by the first-in, first-out (“FIFO”) method. Inventories consist of the following:

	September 30
	2015		2014
Finished products	$	133.2	$	93.5
Work in process		46.1		17.3
Raw materials		88.1		65.4
Total	$	267.4	$	176.2

If the FIFO method of inventory accounting, which approximates current cost, had been used for all inventories, they would have been approximately $3.2 million and $4.0 million higher than reported at September 30, 2015 and 2014.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment is recorded at cost and depreciated over the estimated useful life of the assets using principally the straight-line method. Ranges of estimated useful lives are as follows:

	Useful Life
Land improvements	6 - 15 years
Buildings and building equipment	10 - 40 years
Machinery and equipment	3 - 10 years
Equipment leased to others	2 -10 years

When property, plant and equipment is retired from service or otherwise disposed of, the cost and related amount of depreciation or amortization are eliminated from the asset and accumulated depreciation accounts. The difference, if any, between the net asset value and the proceeds on sale are charged or credited to income. Total depreciation expense for fiscal years 2015, 2014 and 2013 was $73.6 million, $65.4 million and $71.2 million. The major components of property and the related accumulated depreciation were as follows:

	September 30
	2015				2014
			Accumulated				Accumulated
	Cost		Depreciation		Cost		Depreciation
Land and land improvements	$	23.3	$	2.8	$	19.4	$	2.3
Buildings and building equipment		196.2		90.3		158.3		88.6
Machinery and equipment		369.5		226.5		321.3		213.7
Equipment leased to others		387.4		278.4		350.6		283.5
Total	$	976.4	$	598.0	$	849.6	$	588.1

Intangible Assets

Intangible Assets

Intangible assets are stated at cost and consist predominantly of goodwill, software, patents, acquired technology, trademarks, and acquired customer relationship assets. With the exception of goodwill and certain trademarks, our intangible assets are amortized on a straight-line basis over periods generally ranging from 3 to 20 years.

We assess the carrying value of goodwill and non-amortizable intangibles annually, during the third quarter of each fiscal year, or more often if events or changes in circumstances indicate there may be impairment. Goodwill is allocated among the reporting units based on the relative fair value of those units.

The majority of our goodwill and many of our intangible assets are not deductible for income tax purposes. A summary of intangible assets and the related accumulated amortization and impairment losses follows:

	September 30
	2015				2014
			Amortization				Amortization
	Cost		and Impairment		Cost		and Impairment
Goodwill	$	2,083.3	$	472.8	$	872.6	$	472.8
Software		181.7		139.2		170.5		146.6
Patents and Trademarks		497.6		16.9		67.1		16.0
Other		872.8		148.3		306.8		120.7
Total	$	3,635.4	$	777.2	$	1,417.0	$	756.1

Amortization expense for fiscal years 2015, 2014 and 2013 was $44.6 million, $41.0 million and $45.6 million. As further discussed in Note 3, we have various indefinite-lived intangible assets representing trade names with a carrying value of $466.9 million at September 30, 2015 and $32.9 million at September 30, 2014. Amortization expense for all other intangibles is expected to approximate the following for each of the next five fiscal years and thereafter:

	Amount
2016	$	92.9
2017	$	85.8
2018	$	81.6
2019	$	78.0
2020	$	74.4
2021 and beyond	$	368.1

Software consists mainly of capitalized costs associated with internal use software, including applicable costs associated with the implementation/upgrade of our Enterprise Resource Planning systems. In addition, software includes capitalized development costs for software products to be sold. The net book value of computer software costs, included within intangible assets, was $42.5 million and $23.9 million at September 30, 2015 and 2014. Capitalized software costs are amortized on a straight-line basis over periods ranging from three to ten years. Software amortization expense approximated $9.8 million, $11.5 million and $17.8 million for fiscal years 2015, 2014 and 2013, and is included in the total intangibles amortization presented earlier.

Fair Value Measurements

Fair Value Measurements

Fair value measurements are classified and disclosed in one of the following three categories:

 Level 1:  Financial instruments with unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets and liabilities.

 Level 2:  Financial instruments with observable inputs other than those included in Level 1 such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 Level 3:  Financial instruments with unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.  Unobservable inputs reflect our own assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).  Unobservable inputs shall be developed based on the best information available in the circumstances, which might include our own data.

We record cash and cash equivalents, as disclosed on our Consolidated Balance Sheets, as Level 1 instruments and certain other investments and insignificant derivatives as either Level 2 or 3 instruments. Refer to Note 4 for disclosure of our debt instrument fair values.

Guarantees

Guarantees

We routinely grant limited warranties on our products with respect to defects in material and workmanship. The terms of these warranties are generally one year, however, certain components and products have substantially longer warranty periods. We recognize a reserve with respect to these obligations at the time of product sale, with subsequent warranty claims recorded directly against the reserve. The amount of the warranty reserve is determined based on historical trend experience for the covered products. For more significant warranty-related matters which might require a broad-based correction, separate reserves are established when such events are identified and the cost of correction can be reasonably estimated.

A reconciliation of changes in our warranty reserve is as follows:

	2015			2014			2013
Balance at October 1	$	28.4		$	38.1		$	42.2
Provision for warranties during the period		14.7			9.8			29.2
Warranty reserves acquired		7.1			3.0			(2.6	)
Warranty claims incurred during the period		(18.1	)		(22.5	)		(30.7	)
Balance at September 30	$	32.1		$	28.4		$	38.1

In the normal course of business we enter into various other guarantees and indemnities in our relationships with suppliers, service providers, customers, business partners and others. Examples of these arrangements would include guarantees of product performance, indemnifications to service providers and indemnifications of our actions to business partners. These guarantees and indemnifications have not historically nor do we expect them to have a material impact on our financial condition or results of operations, although indemnifications associated with our actions generally have no dollar limitations.

In conjunction with our acquisition and divestiture activities, we have entered into select guarantees and indemnifications of performance with respect to the fulfillment of our commitments under applicable purchase and sale agreements. The arrangements generally indemnify the buyer or seller for damages associated with breach of contract, inaccuracies in representations and warranties surviving the closing date and satisfaction of liabilities and commitments retained under the applicable contract. With respect to sale transactions, we also routinely enter into non-competition agreements for varying periods of time. Guarantees and indemnifications with respect to acquisition and divestiture activities, if triggered, could have a materially adverse impact on our financial condition and results of operations.

Accrued Rebates

Accrued Rebates

We provide rebates and sales incentives to certain customer groups and distributors. Provisions for rebates are recorded as a reduction in net revenue when revenue is recognized. In some cases, rebates may be payable directly to the customer or distributor. We also have arrangements where we provide rebates to certain distributors that sell to end-user customers at prices determined under a contract between us and the end-user customer.

Employee Benefits Change

Employee Benefits Change

During the second quarter of fiscal 2014, we implemented a new paid time off policy as part of our employee benefits programs, replacing certain previously existing vacation and sick time policies.  In conjunction with these changes in policies, the vesting provisions with respect to the accumulation of paid time off were delayed resulting in the recognition and utilization of paid time off in the same benefits year.  As a result of this change, significant portions of our existing accrued vacation balance were no longer necessary and we reversed $12.2 million in the second quarter of fiscal 2014 and an additional $1.2 million in the third quarter of fiscal 2014 to reflect the change in vesting provisions.  All accounting with respect to this change in policy is complete.

Retirement Plans

Retirement Plans

We sponsor retirement and postretirement plans covering select employees. Expense recognized in relation to these defined benefit retirement plans and postretirement health care plans in the U.S. is based upon actuarial valuations and inherent in those valuations are key assumptions including discount rates, and where applicable, expected returns on assets, projected future salary rates and projected health care cost trends. The discount rates used in the valuation of our defined benefit pension and postretirement plans are evaluated annually based on current market conditions. In setting these rates we utilize long-term bond indices and yield curves as a preliminary indication of interest rate movements, and then make adjustments to the respective indices to reflect differences in the terms of the bonds covered under the indices in comparison to the projected outflow of our obligations. Our overall expected long-term rate of return on pension assets is based on historical and expected future returns, which are inflation adjusted and weighted for the expected return for each component of the investment portfolio. Our rate of assumed compensation increase is also based on our specific historical trends of wage adjustments.

We account for our defined benefit pension and other postretirement plans by recognizing the funded status of a benefit plan in the statement of financial position. We also recognize in accumulated other comprehensive income (loss) certain gains and losses that arose during the period. See Note 6 for key assumptions and further discussion related to our pension and postretirement plans.

Environmental Liabilities

Environmental Liabilities

Expenditures that relate to an existing condition caused by past operations, and which do not contribute to future revenue generation, are expensed. A reserve is established when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These reserves are determined without consideration of possible loss recoveries from third parties.

Specific costs included in environmental expense and reserves include site assessment, development of a remediation plan, clean-up costs, post-remediation expenditures, monitoring, fines, penalties and legal fees. Reserve amounts represent the expected undiscounted future cash outflows associated with such plans and actions.

Self Insurance

Self Insurance

We are also involved in other possible claims, including product and general liability, workers' compensation, auto liability and employment related matters. Such claims in the United States have deductibles and self-insured retentions ranging from $25 thousand to $1.0 million per occurrence or per claim, depending upon the type of coverage and policy period. International deductibles and self-insured retentions are lower. We are also generally self-insured up to certain stop-loss limits for certain employee health benefits, including medical, drug and dental. Our policy is to estimate reserves based upon a number of factors including known claims, estimated incurred but not reported claims and outside actuarial analysis, which are based on historical information along with certain assumptions about future events. Such estimated reserves are classified as Other Current Liabilities and Other Long-Term Liabilities within the Consolidated Balance Sheets.

Treasury Stock

Treasury Stock

Treasury stock consists of our common shares that have been issued, but subsequently reacquired. We account for treasury stock purchases under the cost method. When these shares are reissued, we use an average-cost method to determine cost. Proceeds in excess of cost are credited to additional paid-in capital.

Revenue Recognition - Sales and Rentals

Revenue Recognition — Sales and Rentals

Net revenue reflects gross revenue less sales discounts and allowances and customer returns for product sales and rental revenue reserves. Revenue is evaluated under the following criteria and recognized when each is met:

•Evidence of an arrangement: An agreement with the customer reflecting the terms and conditions to deliver products or services serves as evidence of an arrangement.

•Delivery: For products, delivery is considered to occur upon transfer of title and risk of loss per the respective sales terms. For rental services, delivery is considered to occur when the services are rendered.

•Fixed or determinable price: The sales price is considered fixed or determinable if it is not subject to refund or measurable adjustment.

•Collection is deemed probable: At or prior to the time of a transaction, credit reviews of each customer are performed to determine the creditworthiness of the customer. Collection is deemed probable if the customer is expected to be able to pay amounts under the arrangement as those amounts become due. If collection is not probable, revenue is recognized when collection becomes probable, generally upon cash collection.

As a general interpretation of the above guidelines, revenue for health care and surgical products is generally recognized upon the assumption of risk of loss and other risks and rewards of ownership by the customer. Local business customs and non-standard sales terms can sometimes result in deviations to this normal practice in certain instances; however, in no case is revenue recognized prior to the transfer of risk of loss and rewards of ownership.

For non-invasive therapy products and medical equipment management services, the majority of product offerings are rental products for which revenue is recognized consistent with the rendering of the service and use of products. For The Vest® product, revenue is generally recognized at the time of receipt of authorization for billing from the applicable paying entity as this serves as evidence of the arrangement and sets a fixed or determinable price.

For health care products and services in the information technology space, various revenue recognition techniques are used, depending on the offering. Arrangements to provide services, routinely under separately sold service and maintenance contracts, result in the deferral of revenue until specified services are performed. Service contract revenue is generally recognized ratably over the contract period, if applicable, or as services are rendered. Product-related goods are generally recognized upon delivery to the customer.

Revenue is presented in the Statements of Consolidated Income net of certain discounts, GPO fees, and sales adjustments. For product sales, we record reserves resulting in a reduction of revenue for contractual discounts, as well as price concessions and product returns. Likewise, rental revenue reserves, reflecting contractual and other routine billing adjustments, are recorded as a reduction of revenue. Reserves for revenue are estimated based upon historical rates for revenue adjustments. 

Taxes Collected from Customers and Remitted to Governmental Units

Taxes Collected from Customers and Remitted to Governmental Units

Taxes assessed by a governmental authority that are directly imposed on a revenue producing transaction between us and our customers, including but not limited to sales taxes, use taxes, and value added taxes, are accounted for on a net (excluded from revenue and cost) basis.

Cost of Revenue

Cost of Revenue

Cost of goods sold for product sales consists primarily of purchased material costs, fixed manufacturing expense, variable direct labor, overhead costs and costs associated with the distribution and delivery of products to our customers. Rental expenses consist of costs associated directly with rental revenue, including depreciation, maintenance, logistics and service center facility and personnel costs.

Research and Development Costs

Research and Development Costs

Research and development costs are expensed as incurred. Costs were $91.8 million, $71.9 million and $70.2 million for fiscal years 2015, 2014 and 2013.

In addition, certain costs for software development technology held for sale are capitalized as intangibles and are amortized over a period of three to five years once the software is ready for its intended use. The amount capitalized during fiscal years 2015, 2014 and 2013 was approximately $2.6 million, $2.6 million and $2.4 million.

Advertising Costs

Advertising Costs

Advertising costs are expensed as incurred. Costs were $6.8 million, $7.3 million and $7.4 million for fiscal years 2015, 2014 and 2013.

Comprehensive Income

Comprehensive Income 

We include the net-of-tax effect of unrealized gains or losses on our available-for-sale securities, foreign currency translation adjustments and pension or other defined benefit postretirement plans' actuarial gains or losses and prior service costs or credits in comprehensive income. See Note 5 for further details.

Foreign Currency Translation

Foreign Currency Translation

The functional currency of foreign operations is generally the local currency in the country of domicile. Assets and liabilities of foreign operations are primarily translated into U.S. dollars at year-end rates of exchange and the income statements are translated at the average rates of exchange prevailing during the year. Adjustments resulting from translation of the financial statements of foreign operations into U.S. dollars are excluded from the determination of net income, but included as a component of accumulated other comprehensive income (loss). Foreign currency gains and losses resulting from foreign currency transactions are included in our results of operations and are not material. 

Stock-Based Compensation

Stock-Based Compensation

We account for stock-based compensation under fair value provisions. Stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period. In order to determine the fair value of stock options and other performance-based stock awards on the date of grant, we utilize a Binomial model. Inherent in this model are assumptions related to a volatility factor, expected life, risk-free interest rate, dividend yield and expected forfeitures. The risk-free interest rate is based on factual data derived from public sources. The volatility factor, expected life, dividend yield and expected forfeiture assumptions require judgment utilizing historical information, peer data and future expectations. Deferred stock (also known as restricted stock units (“RSUs”)) is measured based on the fair market price of our common stock on the date of grant, as reported by the New York Stock Exchange, multiplied by the number of units granted. See Note 7 for further details.

Income Taxes

Income Taxes 

The Company and our eligible domestic subsidiaries file a consolidated U.S. income tax return. Foreign operations file income tax returns in a number of jurisdictions. Deferred income taxes are computed using an asset and liability approach to reflect the net tax effects of temporary differences between the financial reporting carrying amounts of assets and liabilities and the corresponding income tax amounts. We have a variety of deferred tax assets in numerous tax jurisdictions. These deferred tax assets are subject to periodic assessment as to recoverability. If it is determined that it is more likely than not that the benefits will not be realized, valuation allowances are recognized. In evaluating whether it is more likely than not that we would recover these deferred tax assets, future taxable income, the reversal of existing temporary differences and tax planning strategies are considered.

We account for uncertain income tax positions using a threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The difference between the tax benefit recognized in the financial statements for an uncertain income tax position and the tax benefit claimed in the tax return is referred to as an unrecognized tax benefit. See Note 9 for further details.

Derivative Instruments and Hedging Activity

Derivative Instruments and Hedging Activity

We use derivative financial instruments to manage the economic impact of fluctuations in currency exchange and interest rates. Derivative financial instruments related to currency exchange rates include forward purchase and sale agreements which generally have terms no greater than 15 months. Additionally, interest rate swaps are sometimes used to convert some or all of our long-term debt to either a fixed or variable rate.

Derivative financial instruments are recognized on the Consolidated Balance Sheets as either assets or liabilities and are measured at fair value. Changes in the fair value of derivatives are recorded each period in the Statement of Consolidated Income or the Statement of Consolidated Comprehensive Income, depending on whether a derivative is designated and considered effective as part of a hedge transaction, and if it is, the type of hedge transaction.  Gains and losses on derivative instruments reported in accumulated other comprehensive income (loss) are subsequently included in the Statement of Consolidated Income in the periods in which earnings are affected by the hedged item. These activities have not had a material effect on our financial position or results of operations for the periods presented herein.

Recently Issued Accounting Guidance

Recently Issued Accounting Guidance 

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers”, which provides guidance for revenue recognition. The standard's core principle, as further amended, is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 which delayed the effective date of the new revenue guidance by one year. As a result, the provisions of ASU 2014-09 will be effective for us in the first quarter of fiscal 2019, ending December 31, 2018. Early adoption is permitted as of the original effective date, but not earlier. We are currently in the process of evaluating the impact of adoption of this ASU on our Consolidated Financial Statements.

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issuedASU No. 2015-15, “Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.” This standard permits an entity to defer and present debt issuance costs related to line-of-credit arrangements as an asset and to subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement.These new standards do not affect the recognition and measurement of debt issuance costs. As permitted, the Company has elected to early-adopt these standards in the fourth quarter of fiscal 2015. This guidance is effective on a retrospective basis, as a change in accounting principle. The impact of the early adoption on our Consolidated Balance Sheet as of September 30, 2014 was a decrease to other assets and a decrease to long-term debt of $0.8 million.

In September 2015, the Company adopted ASU 2015-16, "Simplifying the Accounting for Measurement Period Adjustments." This update eliminates the need to retrospectively adjust prior period information in the financial statements for acquisition adjustments to goodwill during the measurement period. The impact of ASU 2015-16 will be dependent on any future measurement period adjustments for acquisitions.

In February 2013, an accounting standards update was issued that amends the reporting of amounts reclassified out of accumulated other comprehensive income (loss). This standard does not change the current requirements for reporting net income or other comprehensive income (loss) in the financial statements. However, the guidance requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income (loss) by component, either on the face of the financial statement where net income is presented or in the notes to the financial statements. The company adopted this standard in fiscal 2014, and the disclosures of reclassifications out of accumulated other comprehensive loss are included in Note 5.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's consolidated financial statements upon adoption.

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SEGMENT REPORTING

12 Months Ended

Sep. 30, 2015

SEGMENT REPORTING [Abstract]

SEGMENT REPORTING

NOTE 11. SEGMENT REPORTING

We disclose segment information that is consistent with the way in which management operates and views the business. Beginning in fiscal 2014, we changed our definition of divisional income within our internal reporting to management to exclude the impacts of acquisition-related intangible asset amortization. All segment information included below has been updated to reflect this change.

Our operating structure consists of the following three reporting segments:

•North America - sells and rents our patient support and near-patient technologies and services, as well as our health information technology solutions, in the U.S. and Canada.

•Surgical and Respiratory Care - sells and rents our surgical and respiratory care products globally.

•International - sells and rents similar products as our North America segment in regions outside of the U.S. and Canada.

Our performance under each reportable segment is measured on a divisional income basis before non-allocated operating and administrative costs, impairment of other intangibles, litigation, special charges, acquisition and integration costs, acquisition-related intangible asset amortization, and other unusual events. Divisional income generally represents the division's gross profit less its direct operating costs along with an allocation of manufacturing and distribution costs, research and development and certain corporate functional expenses.

Non-allocated operating and administrative costs include functional expenses that support the entire organization such as administration, finance, legal and human resources, expenses associated with strategic developments, acquisition-related intangible asset amortization, and other events that are not indicative of operating trends. We exclude such amounts from divisional income to allow management to evaluate and understand divisional operating trends without the effects of such items.

In September 2015, we acquired Welch Allyn Holdings, Inc. (“Welch Allyn”). The results of Welch Allyn's operations for the 22 days under our ownership are reported as a reconciling item in our segment disclosures for the year ended September 30, 2015. 

	Years Ended September 30
	2015			2014			2013
Revenue:
North America	$	1,002.0		$	888.9		$	958.3
Surgical and Respiratory Care		506.6			301.6			245.8
International		429.4			495.6			512.1
Welch Allyn1		50.2			-			-
Total revenue	$	1,988.2		$	1,686.1		$	1,716.2
Divisional income:
North America	$	204.1		$	165.0		$	201.7
Surgical and Respiratory Care		80.5			68.6			56.8
International		12.8			24.9			33.5
Other:
Non-allocated operating costs, administrative costs, and other		173.1			98.8			131.4
Special charges		41.2			37.1			5.7
Operating profit		83.1			122.6			154.9
Interest expense		(18.4	)		(9.8	)		(9.5	)
Investment income and other, net		0.4			2.4			(1.4	)
Income before income taxes	$	65.1		$	115.2		$	144.0

¹ Welch Allyn is not considered a separate reportable segment but is presented as a reconciling item to total consolidated revenue.

Geographic Information

Geographic data for net revenue and long-lived assets (which consist mainly of property and equipment leased to others) were as follows:

	Years Ended September 30
	2015		2014		2013
Net revenue to unaffiliated customers: (a)
United States	$	1,273.0	$	1,070.8	$	1,116.4
Foreign		715.2		615.3		599.8
Total revenue	$	1,988.2	$	1,686.1	$	1,716.2
Long-lived assets: (b)
United States	$	263.9	$	151.7	$	158.0
Foreign		114.5		109.8		76.3
Total long-lived assets	$	378.4	$	261.5	$	234.3

(a)	Net revenue is attributed to geographic areas based on the location of the customer.
(b)	Includes property and equipment leased to others.

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COMMITMENTS AND CONTINGENCIES (Self Insurance and Legal Proceedings) (Details) - Uninsured Risk [Member] $ in Thousands	Sep. 30, 2015 USD ($)
Loss Contingencies [Line Items]
Deductibles and self-insured retentions, minimum	$ 25
Deductibles and self-insured retentions, maximum	$ 1,000

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COMMON STOCK

12 Months Ended

Sep. 30, 2015

COMMON STOCK [Abstract]

COMMON STOCK

NOTE 7. COMMON STOCK

Share Repurchases

We repurchased 1.2 million, 1.7 million and 2.8 million shares of our common stock during fiscal years 2015, 2014 and 2013 for $54.8 million, $70.5 million and $92.7 million, respectively, in the open market. The common stock was acquired under a $190 million share repurchase program approved by the Board of Directors in September 2013, which does not have an expiration date. There are no plans to terminate this program in the future, but repurchases will be suspended temporarily as we allocate free cash flow to debt service following the Welch Allyn acquisition. Repurchases may be made on the open market or via private transactions, and are used for general business purposes.

Stock-Based Compensation

We have stock-based compensation plans under which employees and non-employee directors may be granted options to purchase shares of Company common stock at the fair market value at the time of grant. In addition to stock options, we grant performance share units (“PSUs”) and RSUs to certain management level employees and vested deferred stock to non-employee directors. We also offer eligible employees the opportunity to buy shares of our common stock at a discount via an Employee Stock Purchase Plan (“ESPP”). 

Our primary stock-based compensation program is the Stock Incentive Plan, which has been approved by our shareholders.  Under the Stock Incentive Plan, we have a total of 15.3 million authorized shares. At September 30, 2015, 4.3 million shares were available for future grants under our stock-based compensation plans. We generally settle our stock-based awards with treasury shares. As of September 30, 2015, we had 23.3 million treasury shares available for use to settle stock-based awards.

The following table sets forth a summary of the annual stock-based compensation cost that was charged against income for all types of awards:

	Years Ended September 30
	2015			2014			2013
Total stock-based compensation cost (pre-tax)	$	25.0		$	18.0		$	13.5
Total income tax benefit		(7.5	)		(6.5	)		(4.9	)
Total stock-based compensation cost, net of tax	$	17.5		$	11.5		$	8.6

Stock Options

Stock options granted by our Compensation Committee under the Stock Incentive Plan are non-qualified stock options. These awards are generally granted with exercise prices equal to the average of the high and low prices of our common stock on the date of grant. They vest in equal annual installments over a three or four year period and the maximum contractual term is ten years. We use a Binomial option-pricing model to estimate the fair value of stock options, and compensation cost is recognized on a straight-line basis over the requisite service period.

The following table sets forth the weighted average fair value per share of stock options and the related valuation assumptions used in the determination of those fair values:

	Years Ended September 30
	2015			2014			2013
Weighted average fair value per share	$	12.83		$	11.91		$	7.91
Valuation assumptions:
Risk-free interest rate		1.6	%		1.3	%		0.6	%
Expected dividend yield		1.4	%		1.4	%		1.9	%
Expected volatility		35.0	%		36.1	%		40.2	%
Weighted average expected life		4.9 years			4.9 years			4.9 years

The risk-free interest rate is based upon observed U.S. Treasury interest rates appropriate for the term of our employee stock options. Expected dividend yield is based on the history and our expectation of dividend payouts. Expected volatility was based on our historical stock price volatility. Expected life represents the weighted average period the stock options are expected to remain outstanding and is a derived output of the Binomial model. The expected life of employee stock options is impacted by the above assumptions as well as the post-vesting forfeiture rate and the exercise factor used in the Binomial model. These two variables are based on the history of exercises and forfeitures for previous stock options granted by us.

The following table summarizes transactions under our stock option plans for fiscal year 2015:

	Weighted					Weighted
	Average			Weighted		Average		Aggregate
	Number of			Average		Remaining		Intrinsic
	Shares			Exercise		Contractual		Value (1)
	(in thousands)			Price		Term		(in millions)
Balance Outstanding at October 1, 2014		1,992		$	31.99
Granted		381			45.01
Exercised		(371	)		31.83
Cancelled/Forfeited		(101	)		36.63
Balance Outstanding at September 30, 2015		1,901		$	34.38		6.6 years	$	33.5
Exercisable at September 30, 2015		1,060		$	30.98		5.3 years	$	22.3
Options Expected to Vest		773		$	38.34		8.0 years	$	10.6

(1) The aggregate intrinsic value represents the total pre-tax intrinsic value, based on our closing stock price of $51.99, as reported by the New York Stock Exchange on September 30, 2015. This amount, which changes continuously based on the fair value of our common stock, would have been received by the option holders had all option holders exercised their options as of the balance sheet date.

The total intrinsic value of options exercised during fiscal years 2015, 2014 and 2013 was $6.3 million, $4.6 million and $1.6 million.

As of September 30, 2015, there was $4.1 million of unrecognized compensation expense related to stock options granted under the Plan. This unrecognized compensation expense does not reflect a reduction for our estimate of potential forfeitures, and is expected to be recognized over a weighted average period of 2.4 years.

Restricted Stock Units

RSUs are granted to certain employees with fair values equal to the average of the high and low prices of our common stock on the date of grant, multiplied by the number of units granted. RSU grants are contingent upon continued employment and vest over periods ranging from one to four years. Dividends, payable in common stock equivalents, accrue on the grants and are subject to the same specified terms as the original grants, including the risk of forfeiture.

The following table summarizes transactions for our nonvested RSUs for fiscal year 2015:

				Weighted
	Number of			Average
	Share Units			Grant Date
	(in thousands)			Fair Value
Nonvested RSUs at October 1, 2014		431		$	34.92
Granted		351			47.85
Vested		(93	)		37.76
Forfeited		(55	)		35.90
Nonvested RSUs at September 30, 2015		634		$	41.35

As of September 30, 2015, there was $13.4 million of total unrecognized compensation expense related to nonvested RSUs granted under the Stock Incentive Plan. This unrecognized compensation expense does not reflect a reduction for our estimate of potential forfeitures, and is expected to be recognized over a weighted average period of 2 years. The total vest date fair value of shares that vested during fiscal years 2015, 2014 and 2013 was $4.3 million, $5.3 million and $5.4 million.

Performance Share Units

Our Compensation Committee grants PSUs to certain employees and these awards are subject to any stock dividends, stock splits, and other similar rights inuring to common stock, but unlike our RSUs are not entitled to dividend reinvestment.  Vesting of the grants is contingent upon achievement of performance targets and corresponding service requirements.

The fair value of the PSUs is equal to the average of the high and low prices of our common stock on the date of grant, multiplied by the number of units granted.  For PSUs with a market condition such as total shareholder return, the Monte-Carlo simulation method is used to determine fair value.  The Monte-Carlo simulation is a generally accepted statistical technique used to generate a defined number of stock price paths in order to develop a reasonable estimate of the range of our and the Peer Group's future expected stock prices.

The following table sets forth the weighted average fair value per share for PSUs and the related valuation assumptions used in the determination of those fair values. PSUs granted in both fiscal 2015 and 2014 are based on company-specific performance targets, with a total shareholder return collar, while grants in fiscal 2013 are based entirely on shareholder return targets.

	Years Ended September 30
		2015			2014			2013
Weighted average fair value per share		$	47.82		$	47.91		$	19.77
Valuation assumptions:
Risk-free interest rate			0.9	%		0.5	%		0.3	%
Expected dividend yield			0.0	%		0.0	%		0.0	%
Expected volatility			23.5	%		30.1	%		32.6	%

The basis for the assumptions listed above is similar to the valuation assumptions used for stock options, as discussed previously.

The following table summarizes transactions for our nonvested PSUs for fiscal 2015:

				Weighted
	Number of			Average
	Share Units			Grant Date
	(in thousands)			Fair Value
Nonvested PSUs as of October 1, 2014		586		$	29.98
Granted		331			49.27
Vested		(414	)		30.11
Cancelled		(76	)		24.57
Forfeited		(73	)		41.15
Nonvested PSUs at September 30, 2015		354		$	42.16

As of September 30, 2015, there was $10.2 million of unrecognized compensation expense related to PSUs granted under the Stock Incentive Plan based on the expected achievement of certain performance targets or market conditions. This unrecognized compensation expense does not reflect a reduction for our estimate of potential forfeitures, and is expected to be recognized by the end of fiscal 2017. The total vest date fair value of shares that vested during fiscal 2015 was $20.5 million.

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RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Schedule of Actuarial Assumptions) (Details) - Master Defined Benefit Retirement Plan [Member]	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Weighted average assumptions to determined benefit obligations at the measurement date:
Discount rate for obligation	4.40%	4.50%	5.00%
Rate of compensation increase	3.00%	3.00%	3.30%
Weighted average assumptions to determined benefit cost for the year:
Discount rate for expense	4.50%	5.00%	4.10%
Expected rate of return on plan assets	6.80%	7.00%	7.00%
Rate of compensation increase	3.00%	3.30%	3.30%

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OTHER COMPREHENSIVE INCOME

12 Months Ended

Sep. 30, 2015

OTHER COMPREHENSIVE INCOME [Abstract]

OTHER COMPREHENSIVE INCOME

NOTE 5. OTHER COMPREHENSIVE INCOME

The following tables represent the changes in accumulated other comprehensive loss by component for the year to date periods ended September 30, 2015 and 2014:

	Year Ended September 30, 2015
	Other comprehensive income (loss)														Accumulated other comprehensive loss
	Prior to reclassification			Reclassification from		Pre-tax			Tax effect			Net of tax			Beginning balance			Net activity			Ending balance
Available-for-sale securities     and currency hedges	$	(0.6	)	$	0.6	$	-		$	-		$	-		$	-		$	-		$	-
Foreign currency translation     adjustment		(58.6	)		-		(58.6	)		-			(58.6	)		(34.2	)		(58.6	)		(92.8	)
Change in pension and postretirement      defined benefit plans		(28.7	)		15.5		(13.2	)		5.1			(8.1	)		(39.9	)		(8.1	)		(48.0	)
Total	$	(87.9	)	$	16.1	$	(71.8	)	$	5.1		$	(66.7	)	$	(74.1	)	$	(66.7	)	$	(140.8	)
	Year  Ended September 30, 2014
	Other comprehensive income (loss)														Accumulated other comprehensive loss
	Prior to reclassification			Reclassification from		Pre-tax			Tax effect			Net of tax			Beginning balance			Net activity			Ending balance
Available-for-sale securities     and currency hedges	$	0.3		$	0.1	$	0.4		$	(0.1	)	$	0.3		$	(0.3	)	$	0.3		$	-
Foreign currency translation      adjustment		(29.6	)		-		(29.6	)		-			(29.6	)		(4.6	)		(29.6	)		(34.2	)
Change in pension and postretirement      defined benefit plans		(16.8	)		2.7		(14.1	)		5.0			(9.1	)		(30.8	)		(9.1	)		(39.9	)
Total	$	(46.1	)	$	2.8	$	(43.3	)	$	4.9		$	(38.4	)	$	(35.7	)	$	(38.4	)	$	(74.1	)

The following table represents the items reclassified out of accumulated other comprehensive loss and the related tax effects during fiscal 2015 and 2014:

	Years Ended September 30
	2015							2014
	Amount reclassified		Tax effect			Net of tax		Amount reclassified		Tax effect			Net of tax
Change in pension and postretirement      defined benefit plans (1)	$	15.5	$	(5.6	)	$	9.9	$	2.7	$	(1.0	)	$	1.7
Available-for-sale securities     and currency hedges (2)	$	0.6	$	(0.2	)	$	0.4	$	0.1	$	-		$	0.1

 

(1)	Reclassified from accumulated other comprehensive loss into cost of goods sold and selling and administrative expenses. These components are included in the computation of net periodic pension and postretirement benefit expense.
(2)	Reclassified from accumulated other comprehensive loss into other income (expense), net.

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RETIREMENT AND POSTRETIREMENT BENEFIT PLANS

12 Months Ended

Sep. 30, 2015

RETIREMENT AND POSTRETIREMENT BENEFIT PLANS [Abstract]

RETIREMENT AND POSTRETIREMENT BENEFIT PLANS

NOTE 6. RETIREMENT AND POSTRETIREMENT BENEFIT PLANS

Our retirement plans consist of defined benefit plans, postretirement healthcare plans, and defined contribution savings plans. Plans cover certain employees both in and outside of the U.S.

Retirement Plans

We sponsor five defined benefit plans. Those plans include a master defined benefit retirement plan, a nonqualified supplemental executive defined benefit retirement plan, and three defined benefit retirement plans covering employees in Germany and France.    Benefits for such plans are based primarily on years of service and the employee's level of compensation during specific periods of employment. We contribute funds to trusts as necessary to provide for current service and for any unfunded projected future benefit obligation over a reasonable period of time. All of our plans have a September 30 measurement date.

Effect on Operations

The components of net periodic benefit cost for our defined benefit retirement plans were as follows:

	Years Ended September 30
	2015			2014			2013
Service cost	$	5.4		$	5.0		$	6.1
Interest cost		14.6			14.4			13.2
Expected return on plan assets		(16.7	)		(16.7	)		(15.9	)
Amortization of unrecognized prior service cost, net		0.6			0.6			0.6
Amortization of net loss		5.2			3.2			7.8
Net periodic benefit cost		9.1			6.5			11.8
Settlement charge		9.6			-			-
Special termination benefits		-			2.4			-
Net pension expense	$	18.7		$	8.9		$	11.8

In April, 2015, we offered all terminated vested participants of our domestic master defined benefit retirement plan an option to receive a lump sum cash payout in lieu of their right to future periodic benefit payments under the plan upon their retirement. Lump sums of $42.3 million were paid to participants in September 2015, triggering a plan settlement charge of $9.6 million, which is recorded as a component of Special charges on the Statements of Consolidated Income.

During the second quarter of fiscal 2014, we initiated a domestic early retirement program, which offered certain special termination benefits relating to our pension and postretirement health care plans.  This program and the related special termination benefits resulted in a non-cash charge of $3.2 million, of which $2.4 million related to our master defined benefit retirement plan and $0.8 million for our postretirement health care plan.  The $0.8 million postretirement healthcare charge also reflects a $1.3 million reversal recorded as certain participants elected alternative coverage separate from the postretirement health care plan.  The employee elections were not known until the third and fourth quarters of fiscal 2014.  The reversal was recorded to the special charges caption and is offset by charges recorded to reflect our incremental cost associated with the alternative coverage.  Refer to Note 8 for more details.

Obligations and Funded Status

The change in benefit obligations, plan assets and funded status, along with amounts recognized in the Consolidated Balance Sheets for our defined benefit retirement plans were as follows:

	Years Ended September 30
	2015			2014
Change in benefit obligation:
Benefit obligation at beginning of year	$	343.8		$	297.9
Service cost		5.4			5.0
Interest cost		14.6			14.4
Actuarial loss		12.5			31.4
Benefits paid		(54.0	)		(10.2	)
Acquisitions		-			4.3
Special termination benefits		-			2.4
Plan settlement		(4.4	)		-
Exchange rate gain		(2.4	)		(1.4	)
Benefit obligation at end of year		315.5			343.8
Change in plan assets:
Fair value of plan assets at beginning of year		276.1			254.4
Actual return on plan assets		(3.9	)		30.9
Employer contributions		0.9			1.0
Benefits paid		(54.0	)		(10.2	)
Fair value of plan assets at end of year		219.1			276.1
Funded status and net amounts recognized	$	(96.4	)	$	(67.7	)
Amounts recorded in the Consolidated Balance Sheets:
Accrued pension benefits, current portion	$	(1.0	)	$	(1.0	)
Accrued pension benefits, long-term		(95.4	)		(66.7	)
Net amount recognized	$	(96.4	)	$	(67.7	)

In addition to the amounts above, net actuarial losses of $79.3 million and prior service costs of $1.0 million, less an applicable aggregate tax effect of $30.0 million are included as components of accumulated other comprehensive loss at September 30, 2015. In addition to the amounts above, net actuarial losses of $65.0 million and prior service costs of $1.7 million, less an applicable aggregate tax effect of $24.8 million are included as components of accumulated other comprehensive loss at September 30, 2014.

The estimated net actuarial loss and prior service cost for our defined benefit retirement plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year are $4.5 million and $0.3 million, respectively.

Accumulated Benefit Obligation

The accumulated benefit obligation for all defined benefit pension plans was $296.7 million and $325.9 million at September 30, 2015 and 2014. Selected information for our plans, including plans with accumulated benefit obligations exceeding plan assets, was as follows:

	September 30
	2015						2014
	PBO		ABO		Plan Assets		PBO		ABO		Plan Assets
Master plan	$	292.5	$	275.3	$	218.9	$	319.1	$	303.2	$	275.8
International plans		17.9		16.3		0.2		20.3		18.5		0.3
Supplemental executive plan		5.1		5.1		-		4.4		4.2		-
	$	315.5	$	296.7	$	219.1	$	343.8	$	325.9	$	276.1

Actuarial Assumptions

The weighted average assumptions used in accounting for our domestic pension plans were as follows:

	2015			2014			2013
Weighted average assumptions to determine benefit
obligations at the measurement date:
Discount rate for obligation		4.4	%		4.5	%		5.0	%
Rate of compensation increase		3.0	%		3.0	%		3.3	%
Weighted average assumptions to determine benefit
cost for the year:
Discount rate for expense		4.5	%		5.0	%		4.1	%
Expected rate of return on plan assets		6.8	%		7.0	%		7.0	%
Rate of compensation increase		3.0	%		3.3	%		3.3	%

The discount rates used in the valuation of our defined benefit pension plans are evaluated annually based on current market conditions. In setting these rates we utilize long-term bond indices and yield curves as a preliminary indication of interest rate movements, and then make adjustments to the respective indices to reflect differences in the terms of the bonds covered under the indices in comparison to the projected outflow of our pension obligations. The overall expected long-term rate of return is based on historical and expected future returns, which are inflation adjusted and weighted for the expected return for each component of the investment portfolio, as well as taking into consideration economic and capital market conditions. The rate of assumed compensation increase is also based on our specific historical trends of past wage adjustments. The weighted average discount rate assumptions used for our international plans are lower than our domestic plan assumptions and do not significantly affect the consolidated net benefit obligation or net periodic benefit cost balances.

Plan Assets

The weighted average asset allocations of our master defined benefit retirement plan at September 30, 2015 and 2014, by asset category, along with target allocations, are as follows:

	2015		2014		2015			2014
	Target		Target		Actual			Actual
	Allocation		Allocation		Allocation			Allocation
Equity securities		39 - 49%		40 - 60%		42	%		52	%
Fixed income securities		51 - 61%		40 - 60%		58	%		48	%
Total						100	%		100	%

We have a Plan Committee that sets investment guidelines with the assistance of an external consultant. These guidelines are established based on market conditions, risk tolerance, funding requirements and expected benefit payments. The Plan Committee also oversees the investment allocation process and monitors asset performance. As pension liabilities are long-term in nature, we employ a long-term total return approach to maximize the long-term rate of return on plan assets for a prudent level of risk. Target allocations are guidelines, not limitations, and plan fiduciaries may occasionally approve allocations above or below a target range or elect to rebalance the portfolio within the targeted range.

The investment portfolio contains a diversified portfolio of primarily equities and fixed income securities. Securities are also diversified in terms of domestic and international securities, short- and long-term securities, growth and value styles, large cap and small cap stocks. The primary investment strategy is a dynamic target allocation method that periodically rebalances among various investment categories depending on the current funded positions. This program is designed to actively move from return-seeking investments (such as equities) toward liability-hedging investments (such as long-duration fixed income) as funding levels improve.

Trust assets are invested subject to the following policy restrictions: short-term securities must be rated A2/P2 or higher; all fixed-income securities shall have a credit quality rating “BBB” or higher; investments in equities in any one company may not exceed 10 percent of the equity portfolio.

Fair Value Measurements of Plan Assets

The following table summarizes the valuation of our pension plan assets by pricing categories:

			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Balance at		Assets		Inputs		Inputs
	September 30, 2015		(Level 1)		(Level 2)		(Level 3)
Cash	$	3.5	$	3.5	$	-	$	-
Equities
U.S. companies		47.1		-		47.1		-
International companies		44.8		-		44.8		-
Fixed income securities		123.7		-		123.7		-
Total plan assets at fair value	$	219.1	$	3.5	$	215.6	$	-

			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Balance at		Assets		Inputs		Inputs
	September 30, 2014		(Level 1)		(Level 2)		(Level 3)
Cash	$	2.1	$	2.1	$	-	$	-
Equities
U.S. companies		101.7		101.7		-		-
International companies		38.7		38.7		-		-
Fixed income securities		133.2		66.8		66.4		-
Other		0.4		0.4		-		-
Total plan assets at fair value	$	276.1	$	209.7	$	66.4	$	-

The Level 2 investments are commingled funds and/or collective trusts valued using the net asset value (“NAV”) unit price provided by the fund administrator. The NAV is based on the value of the underlying assets owned by the fund. For further descriptions of the asset Levels used in the above chart, refer to Note 1.

Cash Flows

Our U.S. qualified defined benefit plan is funded in excess of 80 percent, as measured under the requirements of the Pension Protection Act of 2006, and therefore we expect that the plan will not be subject to the “at risk” funding requirements of this legislation.

During 2015 and 2014, we contributed cash of $0.9 million and $1.0 million to our defined benefit retirement plans. We will not be required to contribute to our master defined benefit retirement plan in fiscal year 2016 due to the current funding level; however, minimal contributions will be required for our unfunded plans.

Estimated Future Benefit Payments

The benefit payments, which are expected to be funded through plan assets and company contributions and reflect expected future service, are expected to be paid as follows:

	Pension Benefits
2016	$	12.3
2017	$	12.8
2018	$	13.3
2019	$	14.0
2020	$	14.8
2021-2025	$	86.5

Defined Contribution Savings Plans

We have defined contribution savings plans that cover substantially all U.S. employees and certain non-U.S. employees. The general purpose of these plans is to provide additional financial security during retirement by providing employees with an incentive to make regular savings.  Company contributions to the plans are based on eligibility and employee contributions.  Expense under these plans was $17.4 million, $15.0 million and $15.8 million in fiscal years 2015, 2014 and 2013.

Postretirement Health Care Plans

In addition to defined benefit retirement plans, we also offer two domestic postretirement health care plans, one of which was assumed in the acquisition of Welch Allyn, that provide health care benefits to qualified retirees and their dependents. The plans are closed to new participants and include retiree cost sharing provisions and generally extends retiree coverage for medical and prescription benefits beyond the COBRA continuation period to the date of Medicare eligibility. We use a measurement date of September 30 for these plans.

The postretirement health care plans, including the Welch Allyn plan on a post-acquisition basis, reflected a credit during fiscal 2015, 2014 and 2013 of ($0.2) million, ($0.2) million and ($0.1) million. The change in the accumulated postretirement benefit obligation was as follows:

	Years Ended September 30
	2015			2014
Change in benefit obligation:
Benefit obligation at beginning of year	$	11.2		$	9.8
Service cost		0.4			0.4
Interest cost		0.4			0.4
Acquired obligation		14.1			-
Actuarial gain		(0.9	)		(0.2	)
Benefits paid		(0.2	)		(0.2	)
Retiree contributions		0.1			0.2
Special termination benefits		-			0.8
Benefit obligation at end of year	$	25.1		$	11.2
Amounts recorded in the Consolidated Balance Sheets:
Accrued benefits obligation, current portion	$	1.8		$	1.1
Accrued benefits obligation, long-term		23.3			10.1
Net amount recognized	$	25.1		$	11.2

We contributed less than $0.2 million to the plans in fiscal 2015, including the post-acquisition period for the Welch Allyn plan, compared with $0.1 million contributed in fiscal 2014.

In addition to the amounts above, net actuarial gains of $2.4 million and prior service credits of $1.4 million, less an applicable aggregate tax effect of $1.5 million are included as components of accumulated other comprehensive loss at September 30, 2015. In addition to the amounts above, net actuarial gains of $1.7 million and prior service credits of $2.3 million, less an applicable aggregate tax effect of ($1.6) million are included as components of accumulated other comprehensive loss at September 30, 2014.

The estimated net actuarial gain and prior service benefit for our postretirement health care plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year are ($0.1) million and ($0.9) million.

The discount rate used to determine the net periodic benefit cost for the postretirement health care plans during the fiscal year ended September 30, 2015, 2014 and 2013 was 3.7, 4.1 and 3.3 percent. The discount rate used to determine the benefit obligation as of September 30, 2015, 2014 and 2013 was 3.5, 3.7 and 4.1 percent. As of September 30, the health care-cost trend rates for the plans were generally assumed to be in the ranges of 5.25 to 7.0 percent, trending down to a rate between 4 and 5 percent over the long-term.

A one-percentage-point increase/decrease in the assumed health care cost trend rates as of September 30, 2015 would cause an increase/decrease in service and interest costs of less than $0.1 million, along with an increase/decrease in the benefit obligation of $1.9 million and $1.7 million, respectively.

We fund the postretirement health care plans as benefits are paid, and current plan benefits are expected to require net company contributions of approximately $1.8 million in fiscal 2016 and $2 million per year thereafter.

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SPECIAL CHARGES

12 Months Ended

Sep. 30, 2015

SPECIAL CHARGES [Abstract]

SPECIAL CHARGES

NOTE 8. SPECIAL CHARGES

Over the past several years, we have placed a focus on improving our cost structure and business processes through various means including consolidation of certain manufacturing and select back office operations, customer rationalizations and various other organizational changes.  As a result of these actions, we recognized special charges of $41.2 million, $37.1 million, and $5.7 million for the fiscal years ended September 30, 2015, 2014, and 2013, respectively. These charges are summarized below.

Welch Allyn Integration

In conjunction with the acquisition of Welch Allyn in September 2015, we eliminated approximately 80 positions, primarily in Welch Allyn's corporate support and administrative functions, which became redundant as a result of merging into Hill-Rom. We recorded $14.4 million of special charges in conjunction with this action in fiscal 2015 for severance and employee benefits provided to affected employees. Many of the affected employees must continue service for a specified period of time after completion of the merger in order to receive the severance benefits offered. As a result, additional charges related to this action of approximately $3 million will be recorded in fiscal 2016 until those service obligations are fulfilled.

Pension Settlement Charge

As disclosed in Note 6, we offered lump sum settlements to all terminated vested participants in our domestic master defined benefit retirement plan, which resulted in a settlement charge of $9.6 million. This charge was recorded as a component of special charges in fiscal 2015.

Site Consolidation

In the third quarter of fiscal 2015, we initiated a plan to streamline our operations and simplify our supply chain by consolidating certain manufacturing and distribution operations. As part of this action, we announced the closure of sites in Redditch, England and Charleston, South Carolina. Upon closure, each site's operations will either be relocated to other existing Company facilities or outsourced to third-party suppliers. For the year ended September 30, 2015, we recorded severance and benefit charges of $2.7 million for approximately 160 employees to be displaced by the closures, as well as $1.8 million of other related costs. We expect to incur approximately $3 million of additional charges in the first half of fiscal 2016 for personnel costs and site closure expenses related to this action until the closures are complete.

Global Restructuring Program

During the second quarter of fiscal 2014, we announced a global restructuring program focused on improving our cost structure. This action included early retirement and reduction in force programs that eliminated over 200 net positions, primarily in the U.S., where the action was substantially completed in fiscal 2014 with cash expenditures continuing during fiscal 2015. The program also included a reduction of our European manufacturing capacity and a streamlining of global operations by, among other things, executing a back office process transformation program in Europe. The restructuring in Europe is in process and has resulted in severance and benefit charges of $6.0 million for the year ended September 30, 2015, as well as other costs of $7.2 million related to legal and professional fees, temporary labor, project management, and other administrative functions. In the second quarter of fiscal 2015, we also reversed $0.5 million of previously recorded severance and benefit charges due to certain plan participants declining continuing healthcare coverage.

Since the inception of the global restructuring program through September 30, 2015, we have recognized aggregate special charges of $37.6 million, which are recorded in both fiscal 2014 and 2015. Charges of $24.9 million were recorded in the year ended September 30, 2014, net of reversals. We expect to incur $5 to $10 million of additional European restructuring costs through the completion of the program.

Discontinuance of Third-Party Payer Rentals

Also during the second quarter of fiscal 2014, we initiated a plan to discontinue third-party payer rentals of therapy products occurring primarily in home care settings. Special charges recorded for this action included a $7.7 million non-cash tangible asset impairment charge, a $2.0 million charge for severance and other benefits for approximately 70 eliminated positions, and $1.6 million in other related costs, net of a reversal of $0.2 million which was recorded in the third quarter of fiscal 2014. This action is substantially complete.

Batesville Manufacturing Early Retirement Program

During the first quarter of fiscal 2014, we initiated a plan to improve our cost structure and streamline our organization by offering an early retirement program to certain manufacturing employees in our Batesville, Indiana plant, meeting specific eligibility requirements, and other minor reduction in force actions. These programs resulted in the elimination of approximately 35 positions and required recognition of a special charge of approximately $1 million for lump sum payments under the program and severance and other benefits provided to other affected employees. This action was substantially complete by the end of the second quarter of fiscal 2014.

Fiscal 2013 Restructuring Program

During the second quarter of fiscal 2013, we announced a plan to improve our cost structure and streamline our organization by eliminating in excess of 100 positions across the Company, roughly half of which were contract and open positions. This resulted in a special charge of $1.7 million related to severance and other benefits to be provided to affected employees. We also incurred a contract termination charge of $0.6 million, a non-cash asset impairment charge of $0.2 million related to a product discontinuance action and $1.0 million in other related costs. We reversed $0.6 million of a fiscal 2012 severance and other benefits charge that was determined to be excessive during the second quarter of fiscal 2013. During the third and fourth quarters of fiscal 2013, we continued actions under the previously announced plan and incurred charges of $0.8 million and $2.0 million, respectively. These actions and the related cash expenditures are substantially complete.

For all accrued severance and other benefit charges described above, we record restructuring reserves within other current liabilities and other long-term liabilities. The reserve activity for severance and other benefits during fiscal 2015 was as follows:

Balance at September 30, 2014	$	11.7
Expenses		23.1
Cash Payments		(10.0	)
Reversals		(0.5	)
Balance at September 30, 2015	$	24.3

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RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Schedule of Postretirement Health Care Plan) (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Amounts recorded in the Consolidated Balance Sheets:
Accrued pension benefits, long-term	$ 118.8	$ 76.9
Postretirement Health Care Plan [Member]
Change in benefit obligation:
Benefit obligation at beginning of year	11.2	9.8
Service cost	0.4	0.4
Interest cost	0.4	$ 0.4
Acquired obligation	14.1
Actuarial gain	(0.9)	$ (0.2)
Benefits paid	(0.2)	(0.2)
Retiree contributions	0.1	0.2
Special termination benefits		0.8
Benefit obligation at end of year	25.1	11.2
Amounts recorded in the Consolidated Balance Sheets:
Accrued benefits obligation, current portion	1.8	1.1
Accrued pension benefits, long-term	23.3	10.1
Net amount recognized	$ 25.1	$ 11.2

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Valuation and Qualifying Accounts (Details) - USD ($) $ in Millions		12 Months Ended
		Sep. 30, 2015		Sep. 30, 2014		Sep. 30, 2013
Allowance for Possible Losses and Sales Returns - Accounts Receivable [Member]
Reserves deducted from assets to which they apply:
BALANCE AT BEGINNING OF PERIOD		$ 31.4		$ 30.1		$ 38.5
CHARGED TO COSTS AND EXPENSES		1.8		1.5		2.7
CHARGED TO OTHER ACCOUNTS	[1]	0.1		8.6		(0.1)
DEDUCTIONS NET OF RECOVERIES	[2]	(7.3)		(8.8)		(11.0)
BALANCE AT END OF PERIOD		26.0		31.4		30.1
Allowance for Inventory Valuation [Member]
Reserves deducted from assets to which they apply:
BALANCE AT BEGINNING OF PERIOD		42.9		22.0		22.0
CHARGED TO COSTS AND EXPENSES		0.9		4.0		$ 1.8
CHARGED TO OTHER ACCOUNTS		5.7	[3]	19.8	[3]
DEDUCTIONS NET OF RECOVERIES	[4]	(4.0)		(2.9)		$ (1.8)
BALANCE AT END OF PERIOD		45.5		42.9		22.0
Valuation Allowance Against Deferred Tax Assets [Member]
Reserves deducted from assets to which they apply:
BALANCE AT BEGINNING OF PERIOD		28.3		8.9		8.6
CHARGED TO COSTS AND EXPENSES		4.0		$ 21.3		$ 0.6
CHARGED TO OTHER ACCOUNTS		11.1	[3]
DEDUCTIONS NET OF RECOVERIES	[5]	(2.7)		$ (1.9)		$ (0.3)
BALANCE AT END OF PERIOD		$ 40.7		$ 28.3		$ 8.9

[1] Reduction of gross revenue for uncollectible health care rental reimbursements, cash discounts and other adjustments in determining net revenue. Also includes the effect of acquired businesses, if any.

[2] Generally reflects the write-off of specific receivables against recorded reserves.

[3] Generally reflects the effect of acquired businesses, if any.

[4] Generally reflects the write-off of specific inventory against recorded reserves.

[5] Primarily reflects write-offs of deferred tax assets against the valuation allowance and other movement of the valuation allowance offset by an opposing change in deferred tax assets.

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COMMON STOCK (Schedule of Stock-Based Compensation Cost) (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
COMMON STOCK [Abstract]
Total stock-based compensation cost (pre-tax)	$ 25.0	$ 18.0	$ 13.5
Total income tax benefit	(7.5)	(6.5)	(4.9)
Total stock-based compensation cost, net of tax	$ 17.5	$ 11.5	$ 8.6

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RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Schedule of Estimated Future Benefit Payments) (Details) - Master Defined Benefit Retirement Plan [Member] $ in Millions	Sep. 30, 2015 USD ($)
Estimated Future Benefit Payments
2016	$ 12.3
2017	12.8
2018	13.3
2019	14.0
2020	14.8
2021 - 2025	$ 86.5

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SEGMENT REPORTING (Tables)

12 Months Ended

Sep. 30, 2015

SEGMENT REPORTING [Abstract]

Reconciliation of Segment Information to Consolidated Financial Information

	Years Ended September 30
	2015			2014			2013
Revenue:
North America	$	1,002.0		$	888.9		$	958.3
Surgical and Respiratory Care		506.6			301.6			245.8
International		429.4			495.6			512.1
Welch Allyn1		50.2			-			-
Total revenue	$	1,988.2		$	1,686.1		$	1,716.2
Divisional income:
North America	$	204.1		$	165.0		$	201.7
Surgical and Respiratory Care		80.5			68.6			56.8
International		12.8			24.9			33.5
Other:
Non-allocated operating costs, administrative costs, and other		173.1			98.8			131.4
Special charges		41.2			37.1			5.7
Operating profit		83.1			122.6			154.9
Interest expense		(18.4	)		(9.8	)		(9.5	)
Investment income and other, net		0.4			2.4			(1.4	)
Income before income taxes	$	65.1		$	115.2		$	144.0

¹ Welch Allyn is not considered a separate reportable segment but is presented as a reconciling item to total consolidated revenue.

Schedule of Geographic Information

	Years Ended September 30
	2015		2014		2013
Net revenue to unaffiliated customers: (a)
United States	$	1,273.0	$	1,070.8	$	1,116.4
Foreign		715.2		615.3		599.8
Total revenue	$	1,988.2	$	1,686.1	$	1,716.2
Long-lived assets: (b)
United States	$	263.9	$	151.7	$	158.0
Foreign		114.5		109.8		76.3
Total long-lived assets	$	378.4	$	261.5	$	234.3

(a)	Net revenue is attributed to geographic areas based on the location of the customer.
(b)	Includes property and equipment leased to others.

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FINANCING AGREEMENTS (Narrative) (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013	May. 01, 2015	Apr. 30, 2015
Debt Instrument [Line Items]
Outstanding letters of credit	$ 9.1	$ 42.4
Deferred gains from the termination of previous interest rate swap agreements	1.0	$ 1.0
Repayment of unsecured debentures	5.9
Debt issuance costs incurred	48.7
Unamortized debt issuance costs	39.1
Interest Rate Swap [Member]
Debt Instrument [Line Items]
Interest rate swap, fair value		$ 1.0
Senior Secured Term Loan A [Member]
Debt Instrument [Line Items]
Senior revolving credit facility, maximum borrowing amount	$ 1,000.0
Debt instrument, maturity date	Sep. 30, 2020
Maximum interest rate during period	4.00%
Senior Secured Term Loan B [Member]
Debt Instrument [Line Items]
Senior revolving credit facility, maximum borrowing amount	$ 800.0
Debt instrument, maturity date	Sep. 30, 2022
Maximum interest rate during period	4.00%
Senior Secured Revolving Credit Facility [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Senior revolving credit facility, maximum borrowing amount	$ 500.0
Debt instrument, maturity date	Sep. 30, 2020
Maximum interest rate during period	4.00%
Current borrowing capacity under the facility	$ 490.9
Unamortized debt issuance costs	9.4
Senior Unsecured 5.75% Notes due on September 1, 2023 [Member]
Debt Instrument [Line Items]
Aggregate value of debt	$ 425.0
Debt instrument, maturity date	Sep. 01, 2023
Guarantee of Trumpf Outstanding Debt [Member]
Debt Instrument [Line Items]
Outstanding letters of credit		$ 39.8
Previous Credit Facility [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Senior revolving credit facility, maximum borrowing amount				$ 900.0	$ 500.0
Charge due to acceleration of unamortized debt issuance costs	$ 2.6
Previous Credit Facility [Member] | Term Loan under August 2012 Credit Facility [Member]
Debt Instrument [Line Items]
Aggregate value of debt				$ 165.0	$ 200.0

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Sep. 30, 2015

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 13. COMMITMENTS AND CONTINGENCIES

Lease Commitments

Rental expense for fiscal years 2015, 2014 and 2013 was $25.2 million, $24.7 million and $21.5 million. The table below indicates the minimum annual rental commitments (excluding renewable periods) aggregating $73.8 million, for manufacturing facilities, warehouse distribution centers, service centers and sales offices, under non-cancelable operating leases.

	Amount
2016	$	28.2
2017	$	18.4
2018	$	12.1
2019	$	6.3
2020	$	3.2
2021 and beyond	$	5.6

Self Insurance

We are involved with various possible claims, including product and general liability, workers' compensation, auto liability and employment related matters. Such claims in the United States have deductibles and self-insured retentions ranging from $25 thousand to $1.0 million per occurrence or per claim, depending upon the type of coverage and policy period. International deductibles and self-insured retentions are lower. We are also generally self-insured up to certain stop-loss limits for certain employee health benefits, including medical, drug and dental. Our policy is to estimate reserves based upon a number of factors including known claims, estimated incurred but not reported claims and outside actuarial analysis, which are based on historical information along with certain assumptions about future events. Such estimated reserves are classified as Other Current Liabilities and Other Long-Term Liabilities within the Consolidated Balance Sheets.

Legal Proceedings

Universal Hospital Services, Inc. Litigation

On January 13, 2015, Universal Hospital Services, Inc. filed a complaint against us in the United States District Court for the Western District of Texas. The plaintiff alleges, among other things, that we engaged in certain customer contracting practices in violation of state and federal antitrust laws. The plaintiff also has asserted claims for tortious interference with business relationships. The plaintiff seeks injunctive relief and money damages in an unspecified amount. We believe that the allegations are without merit and intend to defend this matter vigorously.

Stryker Litigation

On April 4, 2011, we filed two separate actions against Stryker Corporation alleging infringement of certain Hill-Rom patents covering proprietary communications networks, status information systems and powered wheels used in our beds or stretchers. Both suits sought monetary damages and injunctions against Stryker for selling or distributing any beds, stretchers or ancillary products that infringe on Hill-Rom's patents. On August 14, 2012, we entered into a confidential favorable settlement agreement with Stryker Corporation to resolve our claims about our powered wheel patents, and on March 26, 2015, we entered into a confidential favorable settlement agreement with Stryker Corporation to resolve our claims about our status information systems. No trial date for the remaining claims covering proprietary communications networks has been set, and accordingly we cannot, at this time, assess the likelihood of any potential outcome or damages or other relief.

General

We are subject to various other claims and contingencies arising out of the normal course of business, including those relating to governmental investigations and proceedings, 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 us, and that any such unfavorable decisions could have a material adverse effect on our financial condition, results of operations and cash flows.

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GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS (Tables)

12 Months Ended

Sep. 30, 2015

GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS [Abstract]

Schedule of Goodwill Activity

	North America			Surgical and Respiratory Care			International			Welch Allyn		Total
Balances at September 30, 2013:
Goodwill	$	383.0		$	279.0		$	153.6		$	-	$	815.6
Accumulated impairment losses		(358.1	)		-			(114.7	)		-		(472.8	)
Goodwill, net at September 30, 2013		24.9			279.0			38.9			-		342.8
Changes in Goodwill during the period:
Goodwill related to acquisitions		7.6			57.3			(2.8	)		-		62.1
Currency translation effect		-			(2.8	)		(2.3	)		-		(5.1	)
Balances at September 30, 2014:
Goodwill		390.6			333.5			148.5			-		872.6
Accumulated impairment losses		(358.1	)		-			(114.7	)		-		(472.8	)
Goodwill, net at September 30, 2014		32.5			333.5			33.8			-		399.8
Changes in Goodwill during the period:
Goodwill related to acquisitions		-			22.1			-			1,203.5		1,225.6
Currency translation effect		-			(11.8	)		(3.1	)		-		(14.9	)
Balances at September 30, 2015:
Goodwill		390.6			343.8			145.4			1,203.5		2,083.3
Accumulated impairment losses		(358.1	)		-			(114.7	)		-		(472.8	)
Goodwill, net at September 30, 2015	$	32.5		$	343.8		$	30.7		$	1,203.5	$	1,610.5

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FINANCING AGREEMENTS (Schedule of Total Debt) (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Long-term Debt, by Current and Noncurrent [Abstract]
Total debt	$ 2,233.2	$ 491.0
Current portion of long-term debt	58.0	16.2
Less current portion of debt	58.0	126.9
Total long-term debt	$ 2,175.2	364.1
Revolving Credit Facility [Member]
Long-term Debt, by Current and Noncurrent [Abstract]
Total debt		$ 265.0
Senior Secured Term Loan A [Member]
Long-term Debt, by Current and Noncurrent [Abstract]
Total long-term debt	$ 931.7
Debt instrument, maturity date	Sep. 30, 2020
Senior Secured Term Loan B [Member]
Long-term Debt, by Current and Noncurrent [Abstract]
Total long-term debt	$ 778.3
Debt instrument, maturity date	Sep. 30, 2022
Senior Unsecured 5.75% Notes due on September 1, 2023 [Member]
Long-term Debt, by Current and Noncurrent [Abstract]
Total long-term debt	$ 418.2
Unsecured debenture interest rate	5.75%
Debt instrument, maturity date	Sep. 01, 2023
Term Loan under August 2012 Credit Facility [Member]
Long-term Debt, by Current and Noncurrent [Abstract]
Total long-term debt		$ 159.6
Unsecured 7.00% Debentures due on February 15, 2024 [Member]
Long-term Debt, by Current and Noncurrent [Abstract]
Total debt	$ 13.8	19.2
Unsecured debenture interest rate	7.00%
Debt instrument, maturity date	Feb. 15, 2024
Unsecured 6.75% Debentures due on December 15, 2027 [Member]
Long-term Debt, by Current and Noncurrent [Abstract]
Total debt	$ 29.6	29.6
Unsecured debenture interest rate	6.75%
Debt instrument, maturity date	Dec. 15, 2027
Other [Member]
Long-term Debt, by Current and Noncurrent [Abstract]
Total debt	$ 3.6	$ 1.4

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Guarantees) (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Guarantees
Balance at October 1	$ 28.4	$ 38.1	$ 42.2
Provision for warranties during the period	14.7	9.8	29.2
Warranty reserves acquired	7.1	3.0	(2.6)
Warranty claims incurred during the period	(18.1)	(22.5)	(30.7)
Balance at September 30	$ 32.1	$ 28.4	$ 38.1

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2015	Sep. 30, 2014
CONSOLIDATED BALANCE SHEETS [Abstract]
Trade accounts receivable, allowances	$ 26.0	$ 31.4
Preferred stock, no par value
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, no par value
Common stock, shares authorized	199,000,000	199,000,000
Common stock, shares issued	88,457,634	80,323,912
Treasury stock, shares	23,291,738	22,884,001

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ACQUISITIONS

12 Months Ended

Sep. 30, 2015

ACQUISITIONS [Abstract]

ACQUISITIONS

NOTE 2. ACQUISITIONS

Welch Allyn

On September 8, 2015, we completed the acquisition of Welch Allyn Holdings, Inc. and its subsidiaries (collectively, “Welch Allyn”) for a consideration of $1,687.3 million in cash ($1,633.6 million, net of cash acquired) and 8,133,722 shares of Hill-Rom common stock for a total combined purchase price of approximately $2.1 billion. Welch Allyn is a leading manufacturer of medical diagnostic equipment and offers a diversified portfolio of devices that assess, diagnose, treat, and manage a wide variety of illnesses and diseases.

The cash portion of the consideration is preliminary and subject to adjustment for various true-up provisions as described in the terms of the merger agreement. The transaction was funded with new borrowings, including $1.8 billion in term loans and $425.0 million of senior notes issued in a private placement debt offering. Funds from this new financing were also used to retire pre-existing debt. Refer to Note 4 for additional information regarding our debt obligations.

The following summarizes the fair value of assets acquired and liabilities assumed at the date of the acquisition. These results are preliminary and subject to normal true-up provisions in the purchase agreement and other fair value adjustments.

	Amount
Trade receivables	$	63.2
Inventory		110.5
Other current assets		52.7
Current deferred income taxes		27.3
Property, plant, and equipment		93.2
Goodwill		1,203.5
Trade name (indefinite life)		434.0
Customer relationships (12-year useful life)		516.8
Developed technology (7-year weighted average useful life)		54.0
Other intangibles		19.9
Other noncurrent assets		30.6
Current liabilities		(161.5	)
Noncurrent deferred income taxes		(368.7	)
Other noncurrent liabilities		(25.6	)
Total purchase price, net of cash acquired	$	2,049.9
Fair value of common stock issued	$	416.3
Cash payment, net of cash acquired		1,633.6
Total consideration	$	2,049.9

Goodwill from the Welch Allyn acquisition, which is not deductible for tax purposes, is primarily due to enhanced customer relevance and a stronger competitive position resulting from the business combination, including a complementary commercial position, product portfolio, and enhanced synergies. As stated in Note 11, Welch Allyn is reported as a reconciling item in our segment disclosures for the year ended September 30, 2015. Accordingly, the goodwill from the Welch Allyn acquisition has not yet been allocated to a reportable segment.

Our total revenue on an unaudited pro forma basis, as if the Welch Allyn acquisition had been consummated at the beginning of our 2014 fiscal year, would have been higher by approximately $638 million and $677 million for the years ended September 30, 2015 and 2014, respectively. On the same unaudited pro forma basis, our net income would have been lower by approximately $59 million and $61 million for the years ended September 30, 2015 and 2014, respectively. The pro forma net income in each year has been adversely impacted by significant costs related to the transaction including deal costs, financing costs, restructuring costs incurred in relation to our synergy initiatives, costs associated with triggering the change-in-control provisions of certain equity-based compensation programs at Welch Allyn, and purchase price accounting, including the nonrecurring effects of the inventory step-up. These results are not indicative of expected future performance.

The unaudited pro forma results are based on the Company's historical financial statements and those of the Welch Allyn business and do not necessarily indicate the results of operations that would have resulted had the acquisition been completed at the beginning of the comparable period presented and are not indicative of the results of operations in future periods.

Trumpf Medical

On August 1, 2014, we completed the acquisition of Trumpf Medical (“Trumpf”) and funded the transaction with a combination of cash on hand and borrowings. Trumpf Medical provides a portfolio of well-established operating room (OR) infrastructure products such as surgical tables, surgical lighting, and supply units and expands our product offerings in the surgical suite. 

The purchase price was $232.9 million ($226.6 million net of cash acquired). The results of Trumpf are included in the Consolidated Financial Statements since the date of acquisition. Our reported revenue included $39.0 million for the year ended September 30, 2014 related to Trumpf products and the impact to net income was not significant.

The following summarizes the fair value of assets acquired and liabilities assumed at the date of the acquisition. These results are now considered final.

		Amount
Trade receivables	$	67.6
Inventory		63.6
Other current assets		23.4
Property, plant, and equipment		42.1
Goodwill		66.0
Trade name (5-year useful life)		6.7
Customer relationships (10-year weighted average useful life)		15.8
Developed technology (8-year weighted average useful life)		17.8
Other intangibles		4.8
Other noncurrent assets		0.7
Deferred tax asset		12.9
Current liabilities		(74.4	)
Long term debt		(6.0	)
Noncurrent liabilities		(8.1	)
Total purchase price	$	232.9

Goodwill was allocated entirely to our Surgical and Respiratory Care segment. The goodwill related to the acquired German operations will be tax deductible while the remaining goodwill will not be deductible for tax purposes.

Our total revenue on an unaudited pro forma basis, as if the Trumpf acquisition had been consummated at the beginning of our 2013 fiscal year, would have been higher by approximately $218 million and $235 million for the years ended September 30, 2014 and 2013. The impact to net income on an unaudited pro forma basis would not have been significant to our financial results for those years. The unaudited pro forma results are based on the Company's historical financial statements and those of the Trumpf business and do not necessarily indicate the results of operations that would have resulted had the acquisition been completed at the beginning of the comparable period presented and are not indicative of the results of operations in future periods.

Virtus, Inc.

On March 31, 2014 we completed a stock purchase agreement with the stockholders of Virtus, Inc. (“Virtus”) to acquire the entire equity interest in Virtus: a supplier of finished surfaces and components for our bed and stretcher products. The acquisition of Virtus insources a component of our supply chain.

The purchase price was $17.6 million ($13.0 million net of cash acquired). We funded the transaction primarily with borrowings. The results of Virtus are included in the Consolidated Financial Statements since the date of acquisition.

The following summarizes the fair value of assets acquired and liabilities assumed at the date of the acquisition. During the third quarter of fiscal 2014, the remaining provisions of the stock purchase agreement were settled and the purchase price is now final.

	Amount
Inventory	$	2.6
Other current assets		5.4
Property, plant, and equipment		1.9
Goodwill		9.4
Current liabilities		(1.6	)
Deferred tax liability		(0.1	)
Total purchase price	$	17.6

Goodwill is not deductible for tax purposes and was allocated to both our North America and International segments.

The impact to our total revenue and net income on an unaudited proforma basis, as if the Virtus acquisition had been consummated at the beginning of our 2013 fiscal year, would not have been significant for the fiscal years ended September 30, 2014 and 2013.

Other

We have used cash on hand for other business acquisitions and equity investments which we do not consider individually material to the Company's financial position or results of operations. These included one equity investment in which the investee was determined to be a VIE and Hill-Rom was determined to have a controlling financial interest, resulting in consolidation of the investee. The portion of this investee's assets, liabilities, and operating results which are not attributable to Hill-Rom's equity investment are recognized in our Consolidated Financial Statements as attributable to noncontrolling interests.

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RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Narrative) (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended	6 Months Ended	12 Months Ended
	Sep. 30, 2015	Mar. 31, 2014	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Defined Benefit Plan Disclosure [Line Items]
Settlement loss				$ (9.6)
Special termination benefits		$ (3.2)
Defined Contribution Savings Plans
Defined contribution savings plans expense				17.4	$ 15.0	$ 15.8
Master Defined Benefit Retirement Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Lump sum payments	$ 42.3
Settlement loss				$ (9.6)
Special termination benefits		(2.4)			$ (2.4)
Net actuarial gains (losses) included in Accumulated Other Comprehensive Income (Loss)	(79.3)		$ (65.0)	$ (79.3)	(65.0)
Prior service (credits) costs included in Accumulated Other Comprehensive Income (Loss)	1.0		1.7	1.0	1.7
Pension items in AOCI, aggregate tax effect	30.0		24.8	30.0	24.8
Estimated net actuarial loss that will be amortized over the next fiscal year				4.5
Estimated prior service cost that will be amortized over the next fiscal year				0.3
Retirement plans (benefit) cost				18.7	8.9	$ 11.8
Accumulated Benefit Obligation
Accumulated benefit obligation	$ 296.7		$ 325.9	$ 296.7	325.9
Plan Assets
Equity securities of one entity, maximum percentage of portfolio				10.00%
Cash Flows
Employer contributions				$ 0.9	$ 1.0
Postretirement Health Care Plan
Discount rate for expense				4.50%	5.00%	4.10%
Discount rate for obligation	4.40%		4.50%	4.40%	4.50%	5.00%
Postretirement Health Care Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Special termination benefits		$ (0.8)	$ 1.3
Net actuarial gains (losses) included in Accumulated Other Comprehensive Income (Loss)	$ 2.4		1.7	$ 2.4	$ 1.7
Prior service (credits) costs included in Accumulated Other Comprehensive Income (Loss)	(1.4)		(2.3)	(1.4)	(2.3)
Pension items in AOCI, aggregate tax effect	$ 1.5		$ (1.6)	1.5	(1.6)
Estimated net actuarial loss that will be amortized over the next fiscal year				(0.1)
Estimated prior service cost that will be amortized over the next fiscal year				(0.9)
Retirement plans (benefit) cost				(0.2)	(0.2)	$ (0.1)
Cash Flows
Employer contributions				$ 0.2	$ 0.1
Postretirement Health Care Plan
Discount rate for expense				3.70%	4.10%	3.30%
Discount rate for obligation	3.50%		3.70%	3.50%	3.70%	4.10%
Effect of one-percentage-point increase/decrease on service and interest costs				$ 0.1
Effect of one-percentage-point increase on service and benefit obligation				1.9
Effect of one-percentage-point decrease on service and benefit obligation				1.7
Expected employer contributions required in next year				1.8
Defined benefit plan estimated future employer contributions in next fiscal, per year, thereafter	$ 2.0			$ 2.0
Postretirement Health Care Plan [Member] | Minimum [Member]
Postretirement Health Care Plan
Health care cost trend rate				5.25%
Ultimate health care cost trend rate				4.00%
Postretirement Health Care Plan [Member] | Maximum [Member]
Postretirement Health Care Plan
Health care cost trend rate				7.00%
Ultimate health care cost trend rate				5.00%

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QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended								12 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) [Abstract]
Net revenue	$ 573.9	$ 474.5	$ 474.8	$ 465.0	$ 479.8	$ 397.6	$ 415.3	$ 393.4	$ 1,988.2	$ 1,686.1	$ 1,716.2
Gross profit	256.7	209.5	214.2	199.9	213.3	187.1	202.7	176.8	880.3	779.9	780.3
Net income (loss) attributable to common shareholders	$ (9.6)	$ 19.1	$ 26.1	$ 12.1	$ 24.6	$ 26.1	$ (3.3)	$ 13.2	$ 47.7	$ 60.6	$ 105.0
Basic net income (loss) attributable to common shareholders per common share	$ (0.16)	$ 0.34	$ 0.46	$ 0.21	$ 0.43	$ 0.46	$ (0.06)	$ 0.23	$ 0.83	$ 1.05	$ 1.75
Diluted net income (loss) attributable to common shareholders per common share	$ (0.16)	$ 0.33	$ 0.45	$ 0.21	$ 0.42	$ 0.45	$ (0.06)	$ 0.22	$ 0.82	$ 1.04	$ 1.74

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COMMON STOCK (Schedule of Transactions for Nonvested RSUs) (Details) - Restricted Stock Units (RSUs) [Member] shares in Thousands	12 Months Ended
	Sep. 30, 2015 $ / shares shares
Number of Share Units
Nonvested at October 1, 2014 | shares	431
Granted | shares	351
Vested | shares	(93)
Forfeited | shares	(55)
Nonvested at September 30, 2015 | shares	634
Weighted Average Grant Date Fair Value
Nonvested at October 1, 2014	$ 34.92
Granted	47.85
Vested	37.76
Forfeited	35.90
Nonvested at September 30, 2015	$ 41.35

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FINANCING AGREEMENTS (Tables)

12 Months Ended

Sep. 30, 2015

FINANCING AGREEMENTS [Abstract]

Schedule of Total Debt

	September 30
	2015		2014
Revolving credit facilities	$	-	$	265.0
Current portion of long-term debt		58.0		16.2
Senior secured Term Loan A, long-term portion		931.7		-
Senior secured Term Loan B, long-term portion		778.3		-
Senior unsecured 5.75% notes due on September 1, 2023		418.2		-
Term loan under August 2012 credit facility, long-term portion		-		159.6
Unsecured 7.00% debentures due on February 15, 2024		13.8		19.2
Unsecured 6.75% debentures due on December 15, 2027		29.6		29.6
Other		3.6		1.4
Total debt		2,233.2		491.0
Less current portion of debt		58.0		126.9
Total long-term debt	$	2,175.2	$	364.1

Schedule of Maturities of Long-Term Debt

	Term Loan A		Term Loan B		Total
2016	$	50.0	$	8.0	$	58.0
2017	$	75.0	$	8.0	$	83.0
2018	$	100.0	$	8.0	$	108.0
2019	$	100.0	$	8.0	$	108.0
2020	$	675.0	$	8.0	$	683.0

Schedule of Facilities Covenants

Fiscal Quarter Ended	Maximum Secured Net Leverage Ratio	Minimum Interest Coverage Ratio
December 31, 2015	4.75x	3.25x
December 31, 2016	4.50x	3.25x
December 31, 2017	4.00x	3.50x
December 31, 2018	3.50x	3.75x
December 31, 2019 and thereafter	3.00x	4.00x

Schedule of Fair Values of Long-Term Debt Instruments

	September 30
	2015		2014
Senior secured Term Loan A	$	990.7	$	-
Senior secured Term Loan B		780.7		-
Senior unsecured 5.75% notes due on September 1, 2023		428.4		-
Term loan under August 2012 credit facility		-		175.2
Unsecured debentures		43.4		55.5
Total debt	$	2,243.2	$	230.7

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INCOME TAXES (Schedule of Components of Income before Income Taxes and the Consolidated Income Tax Provision) (Details) - USD ($) $ in Millions	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013
Income before income taxes:
Domestic	$ 49.2	$ 87.0	$ 120.0
Foreign	15.9	28.2	24.0
Total	65.1	115.2	144.0
Current provision
Federal	35.3	40.2	45.0
State	3.6	3.1	1.8
Foreign	1.7	7.4	7.0
Total current provision	40.6	50.7	53.8
Deferred provision:
Federal	(18.1)	(12.2)	(9.9)
State	(1.3)	(1.0)	1.1
Foreign	(2.9)	17.1	(6.0)
Total deferred provision	(22.3)	3.9	(14.8)
Income tax expense	$ 18.3	$ 54.6	$ 39.0

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Inventories) (Details) - USD ($) $ in Millions	Sep. 30, 2015	Sep. 30, 2014
Inventories
Percentage of LIFO inventory	21.00%	29.00%
Inventories consist of the following:
Finished products	$ 133.2	$ 93.5
Work in process	46.1	17.3
Raw materials	88.1	65.4
Total inventory	267.4	176.2
Excess of current costs over reported LIFO value	$ 3.2	$ 4.0

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QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

12 Months Ended

Sep. 30, 2015

QUARTERLY FINANCIAL INFORMATION (UNAUDITED) [Abstract]

QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

NOTE 12. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following table presents selected consolidated financial data by quarter for each of the last two fiscal years.

2015 Quarter Ended	December 31, 2014		March 31, 2015			June 30, 2015		September 30, 2015
Net revenue	$	465.0	$	474.8		$	474.5	$	573.9
Gross profit	$	199.9	$	214.2		$	209.5	$	256.7
Net income (loss) attributable to common shareholders	$	12.1	$	26.1		$	19.1	$	(9.6	)
Basic net income (loss) attributable to common        shareholders per common share	$	0.21	$	0.46		$	0.34	$	(0.16	)
Diluted net income (loss) attributable to common        shareholders per common share	$	0.21	$	0.45		$	0.33	$	(0.16	)
2014 Quarter Ended	December 31, 2013		March 31, 2014			June 30, 2014			September 30, 2014
Net revenue	$	393.4	$	415.3		$	397.6	$	479.8
Gross profit	$	176.8	$	202.7		$	187.1	$	213.3
Net income (loss) attributable to common shareholders	$	13.2	$	(3.3	)	$	26.1	$	24.6
Basic net income (loss) attributable to common        shareholders per common share	$	0.23	$	(0.06	)	$	0.46	$	0.43
Diluted net income (loss) attributable to common        shareholders per common share	$	0.22	$	(0.06	)	$	0.45	$	0.42