8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) January 30, 2008

STERIS Corporation

(Exact name of registrant as specified in its charter)

Ohio	1-14643	34-1482024
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

5960 Heisley Road, Mentor, Ohio	44060-1834
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (440) 354-2600

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. Results of Operations and Financial Condition.

On January 30, 2008, STERIS issued a press release announcing financial results for its fiscal 2008 third quarter ended December 31, 2007. A copy of this press release is attached hereto as Exhibit 99.1.

The information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished to the Securities and Exchange Commission and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. Furthermore, the information contained in Item 2.02 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933.

ITEM 9.01. Financial Statements and Exhibits

(d) Exhibits

Exhibit No.	Description
99.1	Press Release issued by STERIS Corporation on January 30, 2008 regarding its results of operations and financial condition for its fiscal 2008 third quarter ended December 31, 2007.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

STERIS CORPORATION
By:	/s/ Mark D. McGinley
	Mark D. McGinley
	Senior Vice President, General Counsel and Secretary

Date: January 30, 2008

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EXHIBIT INDEX

Exhibit Number	Exhibit Description
99.1	Press Release issued by STERIS Corporation on January 30, 2008 regarding its results of operations and financial condition for its fiscal 2008 third quarter ended December 31, 2007.

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EX-99.1

Exhibit 99.1

STERIS CORPORATION

NEWS ANNOUNCEMENT

FOR IMMEDIATE RELEASE

STERIS CORPORATION ANNOUNCES

FISCAL 2008 THIRD QUARTER RESULTS

Mentor, Ohio (January 30, 2008)—STERIS Corporation (NYSE: STE) today announced financial results for its fiscal 2008 third quarter ended December 31, 2007. Fiscal 2008 third quarter revenues increased 5% to $314.0 million compared with $299.0 million in the third quarter of fiscal 2007, driven by growth in all three segments.

Fiscal 2008 third quarter net income was $21.8 million, or $0.34 per diluted share, compared with net income of $21.3 million, or $0.33 per diluted share, in the third quarter of fiscal 2007. Included in net income for the third quarter of fiscal 2008 and 2007 are expenses associated with the Erie to Mexico transfer of manufacturing operations, which negatively impacted diluted earnings per share by $0.01 and $0.03, respectively. Additionally, the fiscal 2007 third quarter included a gain related to discontinued operations, which contributed $0.01 to diluted earnings per share.

“While demand remains strong across our operations with revenue growth in all three segments and record backlog levels, we are experiencing a slower than anticipated ramp up in production levels at our new Monterrey, Mexico manufacturing facility,” said Walt Rosebrough, President and Chief Executive Officer of STERIS. “Because these capital products have long lead times, these delays have had minimal impact in meeting customer requirements. However, these delays did temper shipment levels and added incremental manufacturing costs beyond where we expected them to be. Currently, our production levels approximate our expected average monthly run rate, which bodes well for better throughput levels in subsequent quarters.

“As we had indicated previously, our performance expectations for the current fiscal year were heavily weighted to the second half. While we are capturing labor cost savings in Mexico, we will not reach the production levels we originally required to achieve our second half revenue and earnings levels. Additionally, raw material cost increases have continued. As a result, we have lowered our earnings

STERIS Corporation

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expectations for the full fiscal year. While we are disappointed that near-term performance will fall short, we are encouraged that the fundamentals of our business remain strong, as evidenced by strong order growth, record backlog levels, new product introductions, and strong free cash flow.”

Quarterly Segment Results

Healthcare revenues in the quarter increased 5% to $220.5 million compared with the third quarter of fiscal 2007. Revenue growth was primarily driven by strength in consumables, as well as solid demand for service. Capital equipment revenues were flat compared with the prior year quarter and partially reflected reduced volume throughput at the Company’s Monterrey, Mexico manufacturing facility. Order backlog levels grew to a record $107.3 million, an increase of 22% compared with the prior year period. Operating income increased 2% year-over-year to $26.2 million. Sales channel and marketing investments related to new product offerings and increased research and development expenses impacted operating income levels.

Life Sciences third quarter revenues were $59.0 million, an increase of 5% compared with the third quarter of fiscal 2007. The segment experienced growth in capital equipment for the research market as well as service and consumables. However, delayed project activity among customers in the pharmaceutical market affected revenues in the quarter. Order backlog increased 30% to $58.3 million compared with the prior year period. Life Sciences operating income was $0.8 million in the quarter compared with $2.5 million in the third quarter of fiscal 2007. Operating income levels were primarily impacted by increased research and development expenses related to product enhancements and by foreign exchange translation.

Fiscal 2008 third quarter revenues for Isomedix Services were $34.6 million, an increase of 4% compared with the same period last year. Revenue growth was primarily driven by increased demand from medical device customers and routine price increases. Operating income increased 12% compared with the prior year quarter to $6.4 million, reflecting increased volumes and pricing.

STERIS Corporation

News Announcement

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Cash Flow

Net cash provided by operations in the first nine months of fiscal 2008 was $94.5 million, compared with net cash provided by operations of $41.4 million in the first nine months of fiscal 2007. Net cash provided by operations in the fiscal 2007 period included a $27.6 million payment to the IRS for tax expenses previously incurred. Free cash flow (see note 1) for the first nine months of fiscal 2008 was $60.1 million, compared with free cash flow of $10.9 million in the first nine months of fiscal 2007. During the third quarter of fiscal 2008, the Company completed the sale of its Erie, Pennsylvania manufacturing facility, which added $4.7 million to free cash flow.

During the quarter, the Company repurchased 1,453,200 shares of its common stock at an average price of $27.97 per common share for a total amount of $40.6 million. For the first nine months of fiscal 2008, the Company has repurchased 3,406,531 shares of its common stock at an average price of $28.26 for a total amount of $96.3 million. Approximately $225 million remains under the current share repurchase authorization.

Outlook

Based upon year-to-date results and current anticipated trends, the Company expects revenue growth in the range of 4-5% and earnings per diluted share of $1.30 to $1.35 for the full fiscal year. This revised outlook largely reflects the impact of the slower than anticipated ramp in production levels at the Company’s manufacturing facility in Monterrey, Mexico.

Conference Call

In conjunction with this press release, STERIS Corporation management will host a conference call today at 10:00 a.m. Eastern time. The conference call can be heard live over the Internet at www.steris-ir.com or via phone by dialing 1-888-392-9976 in the United States and Canada, and 1-517-645-6486 internationally, then referencing the password “STERIS” and the conference leader’s name, “Aidan Gormley.”

For those unable to listen to the conference call live, a replay will be available from 12:00 p.m. Eastern time on January 30, 2008, until 5:00 p.m. Eastern time on February 13, 2008, either over the Internet at www.steris-ir.com or via phone by calling 1-800-756-3940 in the United States and Canada, and 1-402-998-0796 internationally.

STERIS Corporation

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About STERIS

The mission of STERIS Corporation is to provide a healthier today and safer tomorrow through knowledgeable people and innovative infection prevention, decontamination and health science technologies, products and services. The Company’s more than 5,000 dedicated employees around the world work together to supply a broad array of solutions by offering a combination of equipment, consumables and services to healthcare, pharmaceutical, industrial and government customers. The Company is listed on the New York Stock Exchange under the symbol STE. For more information, visit www.steris.com.

Contact: Aidan Gormley, Senior Director, Corporate Communications and Investor Relations at 440-392-7607.

(1) Free cash flow is a non-GAAP number used by the Company as a measure to gauge its ability to fund future growth opportunities, repurchase common shares, and pay cash dividends. Free cash flow is defined as cash flows from operating activities less purchases of property, plant, equipment and intangibles, net (capital expenditures) plus proceeds from the sale of property, plant, equipment and intangibles. STERIS’s calculation of free cash flow may vary from other companies.

# # #

This news release and the conference call referenced here may contain statements concerning certain trends, expectations, forecasts, estimates, or other forward-looking information affecting or relating to the Company or its industry that are intended to qualify for the protections afforded “forward-looking statements” under the Private Securities Litigation Reform Act of 1995 and other laws and regulations. Forward-looking statements speak only as to the date of this report, and may be identified by the use of forward-looking terms such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” “confidence,” and “seeks,” or the negative of such terms or other variations on such terms or comparable terminology. Many important factors could cause actual results to differ materially from those in the forward-looking statements including, without limitation, disruption of production or supplies, changes in market conditions, political events, pending or future claims or litigation, competitive factors, technology advances, and changes in government regulations or the application or interpretation thereof. Other risk factors are described in the Company’s Form 10-K and other securities filings. Many of these important factors are outside STERIS’s control. No assurances can be provided as to any future financial results. Unless legally required, the Company does not undertake to update or revise any forward-looking statements even if events make clear that any projected results, express or implied, will not be realized. Other potential risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, (a) the potential for increased pressure on pricing that leads to erosion of profit margins, (b) the possibility that market demand will not develop for new technologies, products or applications, or the Company’s business initiatives will take longer, cost more or produce lower benefits than anticipated, (c) the possibility that application of or compliance with laws, court rulings, regulations, certifications or other requirements or standards may delay or prevent new product introductions, affect the production and marketing of existing products, or otherwise affect Company performance, results, or value, (d) the potential of international unrest or effects of fluctuations in currencies, tax assessments or rates, raw material costs, benefit or retirement plan costs, or other regulatory compliance costs, (e) the possibility of

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reduced demand, or reductions in the rate of growth in demand, for the Company’s products and services, and (f) the possibility that anticipated cost savings may not be achieved, or that transition, labor, competition, timing, execution, regulatory, governmental, executive transition or other issues or risks associated with the matters described in this release, or the referenced conference call, may adversely impact Company performance, results, or value.

STERIS Corporation

Consolidated Condensed Statements of Income

(In thousands, except per share data)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2007		2006		2007		2006
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Revenues	$	313,974	$	298,967	$	889,920	$	847,570
Cost of revenues		183,775		171,266		517,339		487,733
Gross profit		130,199		127,701		372,581		359,837
Operating expenses:
Selling, general, and administrative		85,612		82,594		260,100		243,789
Restructuring expense		952		3,179		3,041		5,442
Research and development		10,173		8,078		27,963		24,756
		96,737		93,851		291,104		273,987
Income from operations		33,462		33,850		81,477		85,850
Non-operating expense, net		935		1,123		2,572		3,788
Income from continuing operations before income tax expense		32,527		32,727		78,905		82,062
Income tax expense		10,751		11,859		27,908		30,773
Income from continuing operations		21,776		20,868		50,997		51,289
Gain on sale of discontinued operations, net of tax		—		431		—		1,058
Net income	$	21,776	$	21,299	$	50,997	$	52,347
Earnings per common share (EPS) data:
Basic earnings per common share
Continuing operations	$	0.35	$	0.32	$	0.80	$	0.78
Discontinued operations		—		0.01		—		0.02
Net income	$	0.35	$	0.33	$	0.80	$	0.80
Diluted earnings per common share
Continuing operations	$	0.34	$	0.32	$	0.79	$	0.78
Discontinued operations		—		0.01		—		0.02
Net income	$	0.34	$	0.33	$	0.79	$	0.80
Cash dividends declared per common share outstanding	$	0.06	$	0.05	$	0.17	$	0.13
Weighted average number of common shares outstanding used in EPS computation:
Basic number of common shares outstanding		62,995		64,737		64,073		65,255
Diluted number of common shares outstanding		63,836		65,340		64,931		65,796

STERIS Corporation

Consolidated Condensed Balance Sheets

(In thousands)

	December 31, 2007		March 31, 2007
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	55,388	$	52,296
Accounts receivable, net		201,213		251,207
Inventories, net		164,436		131,997
Other current assets		52,174		49,220
Total Current Assets		473,211		484,720
Property, plant, and equipment, net		384,991		388,899
Goodwill and intangible assets, net		333,241		332,947
Other assets		3,352		2,604
Total Assets	$	1,194,795	$	1,209,170
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	62,586	$	76,184
Other current liabilities		136,699		141,215
Total Current Liabilities		199,285		217,399
Long-term debt		132,225		100,800
Other liabilities		109,344		116,679
Shareholders’ equity		753,941		774,292
Total Liabilities and Shareholders’ Equity	$	1,194,795	$	1,209,170

STERIS Corporation

Segment Data

(In thousands)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2007		2006		2007		2006
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Segment Revenues:
Healthcare	$	220,451	$	209,807	$	622,826	$	594,032
Life Sciences		58,968		56,062		162,274		154,394
STERIS Isomedix Services		34,555		33,098		104,820		99,144
Total Segment Revenues	$	313,974	$	298,967	$	889,920	$	847,570
Segment Operating Income:
Healthcare	$	26,222	$	25,598	$	59,952	$	67,142
Life Sciences		813		2,534		1,391		1,496
STERIS Isomedix Services		6,427		5,718		20,134		17,212
Total Segment Operating Income	$	33,462	$	33,850	$	81,477	$	85,850

STERIS Corporation

Consolidated Condensed Statements of Cash Flows

(In thousands)

	Nine Months Ended December 31,
	2007			2006
	(Unaudited)			(Unaudited)
Operating Activities:
Net income	$	50,997		$	52,347
Non-cash items		36,900			45,192
Working capital adjustments		6,605			(56,168	)
Net cash provided by operating activities		94,502			41,371
Investing Activities:
Purchases of property, plant, equipment, and intangibles, net		(39,142	)		(33,066	)
Proceeds from sale of property, plant, equipment and intangibles		4,740			2,577
Proceeds from sale of discontinued operations		—			2,927
Net cash used in investing activities		(34,402	)		(27,562	)
Financing Activities:
Proceeds under credit facilities, net		31,925			11,440
Payments on long-term obligations and capital leases, net		(500	)		(1,436	)
Repurchases of common shares		(94,758	)		(59,628	)
Cash dividends paid to common shareholders		(10,910	)		(8,508	)
Stock options and other equity transactions, net		14,131			8,186
Net cash used in financing activities		(60,112	)		(49,946	)
Effect of exchange rate changes on cash and cash equivalents		3,104			2,416
Increase (decrease) in cash and cash equivalents		3,092			(33,721	)
Cash and cash equivalents at beginning of period		52,296			72,732
Cash and cash equivalents at end of period	$	55,388		$	39,011
	Nine Months Ended December 31,
	2007			2006
Calculation of Free Cash Flow from continuing operations:
Cash flows from operating activities	$	94,502		$	41,371
Purchases of property, plant, equipment, and intangibles, net		(39,142	)		(33,066	)
Proceeds from the sale of property, plant, equipment, and intangibles		4,740			2,577
Free Cash Flow from Continuing Operations	$	60,100		$	10,882

Free cash flow is defined by the Company as cash flows from operating activities less purchases of property, plant, equipment and intangibles, net (capital expenditures) plus proceeds from the sale of property, plant, equipment and intangibles. Free cash flow is a non-GAAP figure under Securities and Exchange Commission rules. The Company uses free cash flow as a measure to gauge its ability to fund future growth opportunities outside of core operations, repurchase common shares, pay cash dividends, and reduce debt. STERIS’s calculation of free cash flow may vary from other companies.