BATESVILLE, INDIANA, TUESDAY, DECEMBER, 31, 2002 - Hillenbrand Industries Inc. (NYSE:HB), a leader in the health care and funeral services industries, announced today the Company entered into a comprehensive settlement agreement relating to all pending antitrust litigation between the Company and its Hill-Rom business unit and Kinetic Concepts Inc. of San Antonio, Texas (KCI) and one of its affiliates.
In connection with the settlement, the parties will ask the United States District Court for the Western District of Texas, San Antonio Division, to dismiss the lawsuit with prejudice. Upon dismissal of the lawsuit by the court, Hillenbrand Industries will pay KCI $175 million. Hillenbrand Industries will pay KCI an additional $75 million, without interest, one year after the initial payment, unless certain events have occurred such as a bankruptcy or change of control of KCI. Additionally, upon dismissal of the lawsuit the parties will release each other from all claims relating to the litigation and all pre-settlement claims relating to their respective businesses, as well as the future effects of certain pre-settlement matters. Neither party admitted any liability or fault in connection with the settlement.
A litigation charge has been taken and a litigation accrual established by Hillenbrand Industries in the fourth quarter of fiscal 2002 of $250 million, subject to an adjustment of the accrual if the second payment of $75 million is not made. Hillenbrand Industries intends to fund the initial settlement payment of $175 million from its cash on hand. After funding the initial payment, the Company will still have a significant cash balance, strong cash flows and $500 million in availability under its revolving credit facility to fund the execution of its strategic initiatives
"Though we continue to strongly believe our actions have been both legal and ethical, it is in the best interests of our shareholders to put this matter behind us. We are confident we can create substantially more value for our shareholders through the successful execution of our strategy of profitable growth as opposed to tying up significant capital through protracted and expensive appeal of this litigation. With this matter firmly behind us, we are focused on building our business by investing in new product development and new business development in the healthcare market and ultimately achieving our long-term goals of 10% annual revenue and 15% annual earnings growth," said Frederick W. Rockwood, president and chief executive officer of Hillenbrand Industries.
On August 16, 1995, KCI and Medical Retro Design, Inc. (collectively, the plaintiffs), filed suit against Hillenbrand Industries, and its Hill-Rom subsidiary in the United States District Court for the Western District of Texas, San Antonio Division.
The plaintiffs alleged violation of various antitrust laws, including illegal bundling of products, predatory pricing, refusal to deal and attempting to monopolize the hospital bed industry. They sought monetary damages totaling in excess of $350 million, trebling of any damages that may be allowed by the court, and injunctions to prevent further alleged unlawful activities. On September 27, 2002, the jury in this litigation matter awarded the plaintiffs $173.6 million in damages, subject to trebling, the addition of attorneys fees and potential injunctive relief if the court upheld the jury award. Hillenbrand Industries initially announced its intention to appeal the verdict if it was upheld by the court, a process that could have taken as long as two years.
About Hillenbrand Industries Inc
Hillenbrand Industries, Inc., headquartered in Batesville, Indiana, is a publicly traded holding company for three major wholly owned businesses serving the funeral services and health care industries. All three subsidiaries have headquarters in Batesville, Indiana.
Hill-Rom Company is a recognized leader in the worldwide health care community providing sales, rentals, service and support for products including beds, therapy surfaces, stretchers, infant warmers, incubators, furniture, communication systems, surgical columns, medical gas management systems and modular headwall systems.
Batesville Casket Company and Forethought Financial Services both serve the Funeral Services industry. Batesville Casket is a