MENTOR, Ohio, May 7, 2009 /PRNewswire-FirstCall via COMTEX/ ----STERIS Corporation (NYSE: STE) today announced financial results for its fiscal 2009 year ended March 31, 2009. Revenues for fiscal 2009 increased 3% to $1.3 billion compared with $1.27 billion in the prior year. On a constant currency basis, revenues increased 4%. Healthcare and Isomedix grew revenues 5% and 1%, respectively, while Life Sciences revenues declined 5%.

For fiscal 2009, net income was $110.7 million, or $1.86 per diluted share, compared with $77.1 million, or $1.20 per diluted share in fiscal 2008. Included in net income for fiscal 2009 are restructuring charges related to the third quarter 2009 cost reduction program, as well as the impact of changes to certain benefit policies which resulted in additional pre-tax income during the third quarter. Combined, these two factors resulted in a net pre-tax charge of $6.1 million during the year. For fiscal 2008, pre-tax restructuring charges totaled $19.5 million, associated with our fourth quarter 2008 cost reduction program. Excluding the restructuring charges and the benefit policy change, net of tax, net income for fiscal 2009 increased 28% to $114.5 million, or $1.92 per diluted share, compared with fiscal 2008 net income of $89.3 million, or $1.39 per diluted share. A detailed reconciliation of these items can be found in the attached financial tables.

"We are very pleased with the year we were able to deliver, particularly in what turned out to be a more difficult environment for our Customers in the second half of our fiscal year," said Walt Rosebrough, President and Chief Executive Officer of STERIS. "We improved profitability and cash flow, even beyond our expectations, because our people continued to improve efficiencies. Looking ahead, we anticipate that fiscal 2010 will continue to be a challenging environment, but we remain encouraged by Customer response to our new products. In addition, the cost reduction actions already taken will continue to benefit our profitability. We believe that out new products, past cost control efforts, and continued efficiency gains will allow us to offset marketplace challenges."

Fourth Quarter Results

As anticipated, fourth quarter revenues were lower than the previous year, primarily reflecting lower overall market demand, as well as the Company's efforts to reduce seasonality. Fiscal 2009 fourth quarter revenues were $344.4 million compared with $375.2 million in the fourth quarter of fiscal 2008, a decline of 8%. On a constant currency basis, fourth quarter revenues declined 5%.

Fiscal 2009 fourth quarter net income was $27.8 million, or $0.47 per diluted share, compared with net income of $26.1 million, or $0.42 per diluted share, in the fourth quarter of fiscal 2008. Included in net income for the fourth quarter of fiscal 2009 are pre-tax restructuring charges totaling $1.8 million related to the third quarter 2009 cost reduction program. On the consolidated statements of income, $0.8 million of these charges were recorded as restructuring expenses and $1.0 million were recorded in cost of goods sold. Included in net income for the fourth quarter of fiscal 2008 are pre-tax restructuring charges totaling $16.5 million associated with the 2008 cost 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.

Excluding these restructuring charges net of tax, fiscal 2009 fourth quarter net income was $28.9 million, or $0.49 per diluted share, compared with net income of $36.4 million, or $0.59 per diluted share in the fourth quarter of fiscal 2008.

Segment Results

Healthcare revenues in the quarter were $249.2 million compared with $264.2 million in the fourth quarter of fiscal 2008, a decline of 6%. Strength in new products was more than offset by a slowdown in U.S. hospital spending, as well as the Company's efforts to reduce seasonality. Backlog levels at quarter end were $119.8 million, an increase of 22% compared with the same time last year. Operating income was $38.3 million, compared with $34.6 million in the fourth quarter of fiscal 2008. Excluding restructuring charges, segment operating income was $39.9 million compared with $48.4 million in the prior year quarter driven by lower revenues.

Life Sciences fourth quarter revenues were $58.7 million compared with $73.0 million in the fourth quarter of fiscal 2008, a decline of 20%. Capital equipment sales declined 34% compared with a very strong fourth quarter of last year. Backlog levels at quarter end were $45.2 million, an increase of 2% compared with the prior year period. Life Sciences operating income was $4.0 million in the quarter compared with $5.6 million in the fourth quarter of fiscal 2008. Excluding restructuring charges, segment operating income was $4.2 million compared with $7.1 million in the prior year quarter driven by lower revenues.

Fiscal 2009 fourth quarter revenues for Isomedix Services were $34.2 million compared with $35.7 million in the same period last year, a decline of 4%. Revenues were affected by the previously disclosed sale of a Chicago-area facility in the second quarter of fiscal 2009 as well as some slowdown in spending by medical device Customers. Operating income was $7.9 million in the quarter compared with $7.1 million in the fourth quarter of last year. Included in operating income for the fourth quarter was a gain of $1.7 million related to the sale of the segment's Rhode Island facility to a Customer. Excluding restructuring charges, segment operating income was $7.9 million in the fourth quarter of fiscal 2009 compared with $7.5 million in the prior year quarter.

Cash Flow

Net cash provided by operations for fiscal 2009 was $167.4 million, compared with net cash provided by operations of $143.4 million in fiscal 2008. Free cash flow (see note 1) for fiscal 2009 was $145.8 million, compared with free cash flow of $91.6 million in fiscal 2008. Free cash flow for fiscal 2009 benefited from the increase in earnings, lower capital spending and the sale of the two Isomedix facilities, which combined added $17.5 million to free cash flow. As a result of strong cash flow, the Company ended fiscal 2009 with a cash position of $154.2 million.

During fiscal 2009, the Company repurchased 2,421,177 shares of its common stock at an average price of $30.74 for a total amount of $74.4 million. Approximately $204 million remains under the current share repurchase authorization.

Outlook

Based upon current trends, the Company expects fiscal 2010 revenues to be flat to down mid-single digits from fiscal 2009 levels, and earnings per diluted share of $1.80 to $2.00 for the full fiscal year 2010. This outlook reflects certain key assumptions, some of which are listed below:

   --  Healthcare revenues are anticipated to be flat to down mid-single
   digits, including the previously announced impact of reduced revenues
   from SYSTEM 1.
   --  Life Sciences revenues are anticipated to be flat.
   --  Isomedix revenues are anticipated to decline in the mid-single digits.
   --  The Company has assumed the average forward exchange rates for the U.S.
   dollar and key international currencies as of April 2, 2009.
   --  The Company has assumed a slight increase in raw material costs.
   --  EBIT as a percent of revenue is anticipated to be approximately 14%.
   
   --  The anticipated effective tax rate is approximately 35%.
   
   

For the full fiscal year 2010, free cash flow (see note 1) is anticipated to be approximately $100 million and capital expenditures are anticipated to be approximately $60 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 1-800-369-8428 in the United States and Canada, and 1-773-799-3378 internationally, then referencing the password "STERIS".

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, 2009, until 5:00 p.m. Eastern time on May 21, 2009, either over the Internet at www.steris-ir.com or via phone by calling 1-866-419-8655 in the United States and Canada, and 1-203-369-0784 internationally.

Annual Meeting of Shareholders

The Company will hold its annual meeting of shareholders on July 23, 2009. Further information regarding the time and location will be provided in the Company's annual report and proxy materials.

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, 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," "outlook," "potential," "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, actions of regulatory agencies, 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 outcome from litigation, regulatory action, administrative proceedings, government investigations, warning letters, cost reductions, business strategies, 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, regulatory actions, including without limitation previously disclosed FDA warning letters and government investigations, 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, (f) the possibility that anticipated cost savings or other results 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, (g) the effect of the credit crisis on our ability, as well as the ability of our customers and suppliers, to adequately access the credit markets when needed, and (h) those risks described in our Annual Report on Form 10-K for the year ended March 31, 2008, filed with the SEC on May 30, 2008, under Item 1A, "Risk Factors."

   
   STERIS Corporation
   Consolidated Condensed Statements of Income
   (In thousands, except per share data)
   
   Three Months Ended      Twelve Months Ended
   March 31,               March 31,
   ----------------        ----------------
   2009        2008        2009        2008
   ----        ----        ----        ----
   (Unaudited) (Unaudited) (Unaudited)
   
   Revenues                    $344,366     $375,170   $1,298,525 $1,265,090
   Cost of revenues             204,555      226,977      771,783    754,487
   -------      -------      -------    -------
   Gross profit                 139,811      148,193      526,742    510,603
   
   Operating expenses:
   Selling, general, and
   administrative             83,073       84,752      314,983    334,681
   Research and development     8,291        8,953       32,760     36,916
   Restructuring expense          828       12,420        3,554     15,461
   ---       ------        -----     ------
   Total operating expenses      92,192      106,125      351,297    387,058
   ------      -------      -------    -------
   
   Income from operations        47,619       42,068      175,445    123,545
   Non-operating expense, net     2,749        1,174        8,960      3,746
   Income tax expense            17,054       14,785       55,800     42,693
   ------       ------       ------     ------
   Net income                   $27,816      $26,109     $110,685    $77,106
   =======      =======     ========    =======
   
   Earnings per common
   share (EPS) data:
   Basic                     $0.48        $0.43        $1.88      $1.22
   =====        =====        =====      =====
   Diluted                   $0.47        $0.42        $1.86      $1.20
   =====        =====        =====      =====
   
   Cash dividends declared per
   common share outstanding      $0.08        $0.06        $0.30      $0.23
   
   Weighted average
   number of common shares
   outstanding used in EPS
   computation:
   Basic number of common
   shares outstanding         58,445       60,982       58,778     63,300
   Diluted number of common
   shares outstanding         58,807       61,704       59,544     64,124
   
   
   STERIS Corporation
   Consolidated Condensed Balance Sheets
   (In thousands)
   
   March 31,  March 31,
   2009       2008
   ----       ----
   Assets  (Unaudited)
   Current assets:
   Cash and cash equivalents      $154,180    $51,868
   Accounts receivable, net        238,438    249,814
   Inventories, net                130,218    147,210
   Other current assets             30,294     64,484
   ------     ------
   Total Current Assets          553,130    513,376
   
   Property, plant, and
   equipment, net                 350,996    384,642
   Goodwill and intangible
   assets, net                    305,189    337,980
   Other assets                      7,624      3,294
   -----      -----
   Total Assets                   $1,216,939 $1,239,292
   ========== ==========
   
   Liabilities and Shareholders'
   Equity
   Current liabilities:
   Accounts payable                $68,573    $75,532
   Other current liabilities       133,453    154,827
   -------    -------
   Total Current Liabilities     202,026    230,359
   
   Long-term debt                  210,000    179,280
   Other liabilities                87,177    123,501
   Shareholders' equity            717,736    706,152
   -------    -------
   Total Liabilities and
   Shareholders' Equity          $1,216,939 $1,239,292
   ========== ==========
   
   
   
   STERIS Corporation
   Consolidated Condensed Statements of Cash Flows
   (In thousands)
   
   Twelve Months Ended
   March 31,
   -----------
   2009       2008
   ----       ----
   (Unaudited)
   Operating Activities:
   Net income                               $110,685   $77,106
   Non-cash items                             73,834    67,540
   Working capital adjustments               (17,135)   (1,245)
   -------    ------
   Net cash provided by operating
   activities                                 167,384   143,401
   
   Investing Activities:
   Purchases of property, plant,
   equipment, and intangibles, net         (40,889)  (56,974)
   Proceeds from sale of property,
   plant, equipment and intangibles          19,341     5,154
   Equity investment in joint
   venture                                  (4,150)        -
   ------     ------
   Net cash used in investing activities      (25,698)  (51,820)
   
   Financing Activities:
   Proceeds from the issuance
   of long-term obligations                150,000         -
   (Payments) proceeds under credit
   facilities, net                         (79,180)   79,180
   Payments on long-term obligations        (40,800)     (700)
   Deferred financing fees and debt
   issuance costs                             (476)     (443)
   Repurchases of common shares             (80,466) (177,171)
   Cash dividends paid to common
   shareholders                            (17,657)  (14,609)
   Tax benefit from stock options
   exercised                                 6,982     3,194
   Stock options and other equity
   transactions, net                        33,621    14,619
   ------    ------
   Net cash provided by (used in)
   financing activities                      (27,976)  (95,930)
   Effect of exchange rate changes on cash
   and cash equivalents                      (11,398)    3,921
   -------     -----
   Increase in cash and cash equivalents      102,312      (428)
   Cash and cash equivalents at beginning
   of period                                  51,868    52,296
   ------    ------
   Cash and cash equivalents at end of
   period                                   $154,180   $51,868
   ========   =======
   
   
   STERIS Corporation
   Segment Data
   (In thousands)
   
   Three Months Ended     Twelve Months Ended
   March 31,             December 31,
   -----------           --------------
   2009       2008        2009       2008
   ----       ----        ----       ----
   (Unaudited) (Unaudited) (Unaudited)
   Segment Revenues:
   
   Healthcare                $249,185   $264,247    $931,263   $887,073
   Life Sciences               58,724     73,020     216,701    228,350
   STERIS Isomedix Services    34,169     35,738     142,645    140,558
   ------     ------     -------    -------
   Total Reportable Segments  342,078    373,005   1,290,609  1,255,981
   Corporate and Other          2,288      2,165       7,916      9,109
   -----      -----       -----      -----
   Total Segment Revenues      $344,366   $375,170  $1,298,525 $1,265,090
   ========   ========  ========== ==========
   
   Segment Operating
   Income (Loss):
   
   Healthcare                 $38,267    $34,574    $132,601   $103,447
   Life Sciences                3,987      5,560      18,413     11,535
   STERIS Isomedix Services     7,912      7,137      34,763     28,964
   -----      -----      ------     ------
   Total Reportable Segments   50,166     47,271     185,777    143,946
   Corporate and Other         (2,547)    (5,203)    (10,332)   (20,401)
   ------     ------     -------    -------
   Total Segment Operating
   Income                      $47,619    $42,068    $175,445   $123,545
   =======    =======    ========   ========
   
   
   
   STERIS Corporation
   Non-GAAP Disclosures (Unaudited)
   (In thousands, except per share data)
   
   The following tables present financial measures which are considered to be
   "non-GAAP financial measures" under Securities Exchange Commissions rules.
   The Company has referred to results of operations excluding restructuring
   charges and a change in a benefit policy in order to provide meaningful
   comparative analysis between the periods presented.
   
   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. 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.
   
   
   
   Twelve Months Ended       Plan
   March 31,          Fiscal
   -----------
   2009        2008        2010
   ----        ----        ----
   (Unaudited) (Unaudited)
   Calculation of Free Cash Flow from
   continuing operations:
   
   Cash flows from operating activities   $167,384   $143,401    $160,000
   Purchases of property, plant,
   equipment, and intangibles, net       $(40,889)  $(56,974)   $(60,000)
   Proceeds from the sale of property,
   plant, equipment, and intangibles      $19,341     $5,154          $-
   -------     ------      ------
   Free Cash Flow from Continuing
   Operations                              $145,836    $91,581    $100,000
   ========    =======    ========
   
   
   The following tables reconcile reported net income to net income excluding
   restructuring charges and a change in benefit policy:
   
   
   Three Months Ended March 31,
   ----------------------------------------
   2009                 2008
   ----                 ----
   Amount Diluted EPS    Amount Diluted EPS
   ------ -----------    ------ -----------
   Net Income as Reported          $27,816    $0.47       $26,109    $0.42
   
   Restructuring, Net of Tax   $1,111    $0.02       $10,341    $0.17
   ------    -----       -------    -----
   
   $28,927    $0.49       $36,450    $0.59
   =======    =====       =======    =====
   
   
   
   Twelve Months Ended March 31,
   -----------------------------------------
   2009                  2008
   ----                  ----
   Amount Diluted EPS    Amount Diluted EPS
   ------ -----------    ------ -----------
   Net Income as Reported          $110,685   $1.86      $77,106     $1.20
   
   Restructuring, Net of Tax    $8,750   $0.14      $12,216     $0.19
   Change in Benefit Policy,
   Net of Tax                 $(4,948) $(0.08)          $-        $-
   -------  ------      -------     ------
   $114,487   $1.92      $89,322     $1.39
   ========   =====      =======     =====
   
   
   
   Three Months Ended March 31,
   -------------------------------
   Segment Operating
   Income (Loss)
   Excluding                  2009                         2008
   Restructuring              ----                         ----
   Charges:         As    Restructuring           As   Restructuring
   Reported    Charges    Total  Reported   Charges    Total
   -------- ------------- -----  -------- -----------  -----
   
   Healthcare    $38,267    $1,606    $39,873  $34,574   $13,831  $48,405
   Life Sciences  $3,987      $172     $4,159   $5,560    $1,531   $7,091
   STERIS
   Isomedix
   Services      $7,912        $-     $7,912   $7,137      $389   $7,526
   ------    ------     ------   ------    ------   ------
   Total
   Reportable
   Segments     $50,166    $1,778     $51,944  $47,271   $15,751 $63,022
   Corporate and
   Other        $(2,547)       $-    $(2,547) $(5,203)     $753  $(4,450)
   ------    ------    -------  -------   -------  -------
   Total Segment
   Operating
   Income         $47,619    $1,778    $49,397  $42,068   $16,504  $58,572
   =======    ======    =======  =======   =======  =======
   
   

SOURCE STERIS Corporation

http://www.steris.com
   

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