MENTOR, Ohio, May 7, 2008 /PRNewswire-FirstCall via COMTEX News Network/ ----STERIS Corporation (NYSE: STE) today announced financial results for its fiscal 2008 fourth quarter ended March 31, 2008. Fiscal 2008 fourth quarter revenues increased 7% to $375.2 million compared with $349.8 million in the fourth quarter of fiscal 2007.

Fiscal 2008 fourth quarter net income was $26.1 million, or $0.42 per diluted share, compared with net income of $29.8 million, or $0.45 per diluted share, in the fourth quarter of fiscal 2007. Included in net income for the fourth quarter of fiscal 2008 are pre-tax restructuring charges totaling $16.5 million, primarily associated with a previously announced expense reduction program. On the consolidated statements of income, $12.4 million of these charges were recorded as restructuring expenses and $4.1 million were recorded in cost of goods sold. Included in net income for the fourth quarter of fiscal 2007, are pre-tax restructuring expenses of $1.1 million.

Excluding these restructuring charges net of tax, fiscal 2008 fourth quarter net income was $36.4 million, or $0.59 per diluted share, compared with net income of $30.5 million, or $0.47 per diluted share in the fourth quarter of fiscal 2007.

"Strong shipment levels helped drive double-digit revenue growth in Life Sciences while our Healthcare segment experienced continued strong order growth," said Walt Rosebrough, President and Chief Executive Officer of STERIS. "We are particularly pleased that production levels in our Monterrey manufacturing facility are now where we expect them to be. During the fourth quarter, production throughput increased 40% compared with the third quarter, a testament to the hard work and dedication of our people in Monterrey, Mexico over the past several months. Heading into fiscal year 2009, while current order and backlog levels are strong, we are maintaining a conservative view for the full year with overall revenue growth in the mid-single digits. Fiscal 2009 is anticipated to be a year of solid earnings and cash flow performance, as the full year benefits of our Erie to Monterrey manufacturing transfer and increased operating expense leverage contribute to overall earnings growth."

Quarterly Segment Results

[Note: As a result of recent organizational changes, the Company has changed its methodology for reporting segments. The Company will now report four segments: Healthcare, Life Sciences, Isomedix, and Corporate and other. The Corporate and other segment includes the Defense and Industrial business unit (formerly part of Life Sciences) plus costs that are associated with being a publicly traded company and certain other corporate costs. The discussion that follows and the attached financial statements reflect these changes in all periods.]

Healthcare revenues in the quarter increased 5% to $264.2 million compared with the fourth quarter of fiscal 2007. Revenue growth occurred across capital, consumables and service offerings. Order backlog levels were $98.0 million, an increase of 54% compared with the prior year period and are at record levels for the beginning of any new fiscal year. Operating income was $34.6 million, a decline of 24% compared with the prior year period. Excluding restructuring charges, Healthcare operating income was $48.4 million compared with $46.5 million in the prior year quarter. Improved pricing and labor savings associated with the transfer of Erie manufacturing to Monterrey were partially offset by raw material cost increases and the impact of sales and marketing investments.

Life Sciences fourth quarter revenues were $73.0 million, an increase of 20% compared with the fourth quarter of fiscal 2007. The growth in revenues largely reflected increased shipments due to the completion of backlog orders, which were at record levels entering the quarter. Order backlog declined 5% to $44.2 million compared with the prior year period. Life Sciences operating income was $5.6 million in the quarter compared with $4.1 million in the fourth quarter of fiscal 2007. Excluding restructuring charges, segment operating income was $7.1 million compared with $4.4 million in the prior year quarter. Operating income levels primarily benefited from increased volumes, which were partially offset by increased research and development expenses related to product enhancements and by foreign exchange translation.

Fiscal 2008 fourth quarter revenues for Isomedix Services were $35.7 million, an increase of 3% compared with the same period last year. Revenue growth was primarily driven by increased demand from medical device customers, modest pricing improvements and favorable mix. Operating income increased 17% compared with the prior year quarter to $7.1 million. Excluding restructuring charges, Isomedix segment operating income was $7.5 million in the fourth quarter of fiscal 2008 compared with $6.1 million in the prior year quarter.

Full Year Results

For the full fiscal year 2008, revenues increased 6% to $1.27 billion compared with $1.20 billion in the prior year. Revenue for the Healthcare and Isomedix segments each grew 5% while Life Sciences increased 9% for the year.

Net Income was $77.1 million, or $1.20 per diluted share, compared with $82.2 million, or $1.25 per diluted share in fiscal 2007. Included in net income for fiscal 2008 are pre-tax restructuring charges totaling $19.5 million, primarily associated with a previously announced expense reduction program, with $15.4 million recorded as restructuring expenses and $4.1 million recorded in cost of goods sold. Included in net income for fiscal 2007, are pre-tax restructuring expenses of $6.6 million, primarily associated with the transfer of Erie manufacturing to Monterrey, Mexico. Excluding restructuring charges net of tax, net income for fiscal 2008 was $89.3 million, or $1.39 per diluted share, compared with fiscal 2007 net income of $86.2 million, or $1.31 per diluted share.

Cash Flow

Net cash provided by operations for fiscal 2008 was $143.0 million, compared with net cash provided by operations of $95.7 million in 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 fiscal 2008 was $91.1 million, compared with free cash flow of $49.5 million in fiscal 2007. The increase in free cash flow, excluding the tax payment in the previous year, largely reflected an increase in cash earnings and effective working capital management.

During the quarter, the Company repurchased 3,419,019 shares of its common stock at an average price of $25.43 per common share for a total amount of $86.9 million. For fiscal 2008, the Company has repurchased 6,825,550 shares of its common stock at an average price of $26.84 for a total amount of $183.2 million. Approximately $278.3 million remains under the current share repurchase authorization.

Outlook

Based upon current anticipated trends, the Company expects revenue growth in the range of 4-6% and earnings per diluted share of $1.50 to $1.65 for the full fiscal year 2009. This outlook reflects certain key assumptions, some of which are listed below:

 -- Revenue growth
   is expected to be in the mid-single digits in Healthcare and Isomedix and in the low-single digits in Life Sciences. -- The
   Company is assuming that the United States dollar will not change significantly from current rates relative to international
   currencies. -- Overall gross margin is expected to increase by approximately one half of a percentage point reflecting the
   benefits of the Erie/Monterrey manufacturing transfer, increased volume and pricing, partially offset by an assumed increase
   in raw material costs, the impact of inflation on overall costs and a negative impact from foreign currency translation. --
   Operating expenses as a percentage of revenue are anticipated to decline by approximately one percentage point reflecting
   the continuation of the Company's previously announced expense reduction program, partially offset by sales channel and new
   product investments. -- The anticipated effective tax rate is approximately 36%. -- The Company's earnings are expected to
   build throughout the year with approximately 40% of full year earnings occurring in the first half of the fiscal year and
   approximately 60% occurring in the second half. 

For the full fiscal year 2009, free cash flow (see note 1) is anticipated to be approximately $90 million and capital expenditures are anticipated to be approximately $65 million.

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 May 7, 2008, until 5:00 p.m. Eastern time on May 21, 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.

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.

(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 level of share repurchases, earnings and revenue trends, expense reduction or other 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 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, or other issues or risks associated with the matters described in this release, and the conference call referenced here, may adversely impact Company performance, results, or value.

 STERIS Corporation
   Consolidated Condensed Statements of Income (In thousands, except per share data) Three Months Ended Twelve Months Ended March
   31, March 31, 2008 2007 2008 2007 (Unaudited) (Unaudited) (Unaudited) Revenues $375,170 $349,837 $1,265,090 $1,197,407 Cost
   of revenues 223,794 204,867 741,133 692,600 Gross profit 151,376 144,970 523,957 504,807 Operating expenses: Selling, general,
   and administrative 87,935 83,102 348,035 326,896 Restructuring expense 12,420 1,142 15,461 6,584 Research and development
   8,953 8,870 36,916 33,626 109,308 93,114 400,412 367,106 Income from operations 42,068 51,856 123,545 137,701 Non-operating
   expense, net 1,174 983 3,746 4,771 Income from continuing operations before income tax expense 40,894 50,873 119,799 132,930
   Income tax expense 14,785 21,061 42,693 51,833 Income from continuing operations 26,109 29,812 77,106 81,097 Gain on sale
   of discontinued operations, net of tax - - - 1,058 Net income $26,109 $29,812 $77,106 $82,155 Earnings per common share (EPS)
   data: Basic earnings per common share Continuing operations $0.43 $0.46 $1.22 $1.24 Discontinued operations - - - 0.02 Net
   income $0.43 $0.46 $1.22 $1.26 Diluted earnings per common share: Continuing operations $0.42 $0.45 $1.20 $1.23 Discontinued
   operations - - - 0.02 Net income $0.42 $0.45 $1.20 $1.25 Cash dividends declared per common share outstanding $0.06 $0.05
   $0.23 $0.18 Weighted average number of common shares outstanding used in EPS computation: Basic number of common shares outstanding
   60,982 64,931 63,200 65,174 Diluted number of common shares outstanding 61,704 65,539 64,124 65,731 STERIS Corporation Consolidated
   Condensed Balance Sheets (In thousands) March 31, March 31, 2008 2007 Assets (Unaudited) Current assets: Cash and cash equivalents
   $51,868 $52,296 Accounts receivable, net 249,814 251,207 Inventories, net 147,210 131,997 Other current assets 64,484 49,220
   Total Current Assets 513,376 484,720 Property, plant, and equipment, net 384,642 388,899 Goodwill and intangible assets, net
   337,980 332,947 Other assets 3,294 2,604 Total Assets $1,239,292 $1,209,170 Liabilities and Shareholders' Equity Current liabilities:
   Accounts payable $75,532 $76,184 Other current liabilities 154,827 141,215 Total Current Liabilities 230,359 217,399 Long-term
   debt 179,280 100,800 Other liabilities 123,501 116,679 Shareholders' equity 706,152 774,292 Total Liabilities and Shareholders'
   Equity $1,239,292 $1,209,170 STERIS Corporation Segment Data (In thousands) Three Months Ended Twelve Months Ended March 31,
   March 31, 2008 2007 2008 2007 (Unaudited)(Unaudited) (Unaudited) Segment Revenues: Healthcare $264,247 $251,642 $887,073 $845,674
   Life Sciences 73,020 60,835 228,350 209,658 STERIS Isomedix Services 35,738 34,637 140,558 133,781 Corporate and other 2,165
   2,723 9,109 8,294 Total Segment Revenues $375,170 $349,837 $1,265,090 $1,197,407 Segment Operating Income (Loss): Healthcare
   $34,574 $45,580 $103,447 $122,468 Life Sciences 5,560 4,099 11,535 10,953 STERIS Isomedix Services 7,137 6,102 28,964 25,127
   Corporate and other (5,203) (3,925) (20,401) (20,847) Total Segment Operating Income $42,068 $51,856 $123,545 $137,701 As
   a result of changes within the Life Sciences segment, the Company has determined that the Defense and Industrial business
   unit will no longer be deemed a component of that segment. A new segment has been created called "Corporate and Other," which
   will be presented separately and contains the Defense and Industrial business unit plus costs that are associated with being
   a publicly traded company and certain other corporate costs. STERIS Corporation Consolidated Condensed Statements of Cash
   Flows (In thousands) Twelve Months Ended March 31, 2008 2007 (Unaudited) Operating Activities: Net income $77,106 $82,155
   Non-cash items 56,957 62,123 Working capital adjustments 8,895 (48,538) Net cash provided by operating activities 142,958
   95,740 Investing Activities: Purchases of property, plant, equipment, and intangibles, net (56,974) (49,024) Proceeds from
   sale of property, plant, equipment and intangibles 5,154 2,825 Proceeds from sale of discontinued operations - 2,927 Net cash
   used in investing activities (51,820) (43,272) Financing Activities: Proceeds (payments) under credit facilities, net 79,180
   (12,980) Payments on long-term obligations and capital leases, net (700) (1,687) Repurchases of common shares (177,171) (60,170)
   Cash dividends paid to common shareholders (14,609) (11,766) Stock options and other equity transactions, net 14,619 8,997
   Tax Benefit from stock options exercised 3,194 1,927 Net cash used in financing activities (95,487) (75,679) Effect of exchange
   rate changes on cash and cash equivalents 3,921 2,775 (Decrease) increase in cash and cash equivalents (428) (20,436) Cash
   and cash equivalents at beginning of period 52,296 72,732 Cash and cash equivalents at end of period $51,868 $52,296 Twelve
   Months Ended March 31, 2008 2007 (Unaudited) (Unaudited) Calculation of Free Cash Flow from continuing operations: Cash flows
   from operating activities $142,958 $95,740 Purchases of property, plant, equipment, and intangibles, net (56,974) (49,024)
   Proceeds from the sale of property, plant, equipment, and intangibles 5,154 2,825 Free Cash Flow from Continuing Operations
   $91,138 $49,541 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, repurchase common shares, and pay cash dividends.
   STERIS's calculation of free cash flow may vary from other companies. STERIS Corporation Additional Segment Data (In thousands)
   Fiscal Year 2008 (Unaudited) Quarter 1 Quarter 2 Quarter 3 Quarter 4 Full Year Segment Revenues: Healthcare $195,691 $206,684
   $220,451 $264,247 $887,073 Life Sciences 46,702 52,323 56,305 73,020 228,350 STERIS Isomedix Services 35,472 34,793 34,555
   35,738 140,558 Corporate and other 3,079 1,202 2,663 2,165 9,109 Total Segment Revenues $280,944 $295,002 $313,974 $375,170
   $1,265,090 Segment Operating Income (Loss): Healthcare $17,932 $21,598 $29,343 $34,574 $103,447 Life Sciences 269 3,369 2,337
   5,560 11,535 STERIS Isomedix Services 7,721 7,081 7,025 7,137 28,964 Corporate and other (4,355) (5,600) (5,243) (5,203) (20,401)
   Total Segment Operating Income $21,567 $26,448 $33,462 $42,068 $123,545 Fiscal Year 2007 Quarter 1 Quarter 2 Quarter 3 Quarter
   4 Full Year (Un- (Un- (Un- (Un- audited) audited) audited) audited) Segment Revenues: Healthcare $187,131 $197,094 $209,807
   $251,642 $845,674 Life Sciences 43,899 51,389 53,535 60,835 209,658 STERIS Isomedix Services 32,555 33,491 33,098 34,637 133,781
   Corporate and other 1,482 1,562 2,527 2,723 8,294 Total Segment Revenues $265,067 $283,536 $298,967 $349,837 $1,197,407 Segment
   Operating Income (Loss): Healthcare $23,885 $24,275 $28,728 $45,580 $122,468 Life Sciences 189 2,230 4,435 4,099 10,953 STERIS
   Isomedix Services 6,207 6,542 6,276 6,102 25,127 Corporate and other (4,820) (6,513) (5,589) (3,925) (20,847) Total Segment
   Operating Income $25,461 $26,534 $33,850 $51,856 $137,701 As a result of changes within the Life Sciences segment, the Company
   has determined that the Defense and Industrial business unit will no longer be deemed a component of that segment. A new segment
   has been created called "Corporate and Other," which will be presented separately and contains the Defense and Industrial
   business unit plus costs that are associated with being a publicly traded company and certain other corporate costs. Segment
   revenues and operating income (loss) have been restated for fiscal year 2007 and fiscal year 2008 to reflect this new presentation.
   

SOURCE STERIS Corporation

http://www.steris.com/ 

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