<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the Twelve-Month Period Ended December 31, 1998
Commission File No. 0-20165
A. Full title of the plan and the address of the plan if different from that of
the issuer named below:
STERIS Corporation 401(k) Plan and Trust
B. Name of issuer of securities held pursuant to the plan and the address of its
principal executive office:
STERIS Corporation
5960 Heisley Road
Mentor, Ohio 44060
<PAGE> 2
Audited Financial Statements and
Supplemental Schedules
STERIS CORPORATION 401(k) PLAN
AND TRUST
December 31, 1998 and 1997
Plan Sponsor
STERIS CORPORATION
5960 Heisley Road
Mentor, Ohio 44060
Plan Administrator
STERIS CORPORATION
5960 Heisley Road
Mentor, Ohio 44060
<PAGE> 3
STERIS Corporation 401(k) Plan and Trust
Audited Financial Statements and Supplemental Schedules
December 31, 1998 and 1997
CONTENTS
REQUIRED INFORMATION
Report of Independent Auditors............................................. 1
FINANCIAL STATEMENTS PROVIDED
Statements of Net Assets Available for Benefits, with Fund
Information as of December 31, 1998 and 1997........................... 2
Statement of Changes in Net Assets Available for Benefits,
with Fund Information for the year ended December 31, 1998............. 4
Notes to Financial Statements--December 31, 1998 and 1997.................. 5
SUPPLEMENTAL SCHEDULES
Line 27(a)--Schedule of Assets Held for Investment Purposes................ 10
Line 27(d)--Schedule of Reportable Transactions............................ 11
EXHIBITS
Exhibit 23--Consent of Independent Auditors................................ 12
<PAGE> 4
Report of Independent Auditors
Board of Directors
STERIS Corporation
Mentor, Ohio
We have audited the accompanying financial statements of STERIS Corporation
401(k) Plan and Trust (the "Plan") as of December 31, 1998 and 1997, and for the
year ended December 31, 1998, as listed in the table of contents. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1998 and 1997, and the changes in its net assets available for
benefits for the year ended December 31, 1998, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1998, and reportable
transactions for the year then ended, are presented for purpose of additional
analysis and are not a required part of the financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The Fund Information in the statements of net assets
available for benefits and the statement of changes in net assets available for
benefits is presented for purposes of additional analysis rather than to present
the net assets available for benefits and changes in net assets available for
benefits of each fund. The supplemental schedules and Fund Information have been
subjected to auditing procedures applied in our audits of the financial
statements and, in our opinion, are fairly stated, in all material respects in
relation to the financial statements taken as a whole.
June 23, 1999
1
<PAGE> 5
STERIS Corporation
401(k) Plan and Trust
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1998
<TABLE>
<CAPTION>
Victory
Victory Victory Investment
Stock Balanced Quality EB Magic
Index Fund Fund Bond Fund Fund
------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at contract value $ 4,357,220
Investments, at fair value:
STERIS Corporation common shares
Mutual funds $ 49,467,063 $ 43,263,854 $ 3,170,901
Common/collective trusts 7,941,067
Participant loans receivable
Other investments
------------------------------------------------------------------
Total investments 49,467,063 43,263,854 3,170,901 12,298,287
Receivables:
Employer contributions 293,554 141,040 28,850 110,653
Accrued income 28,995
Other 27,139
------------------------------------------------------------------
Total receivables 320,693 141,040 28,850 139,648
------------------------------------------------------------------
Total assets 49,787,756 43,404,894 3,199,751 12,437,935
LIABILITIES
Accrued purchase of investments 21,996 20,419 18,466
------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 49,787,756 $ 43,382,898 $ 3,179,332 $ 12,419,469
==================================================================
</TABLE>
<TABLE>
<CAPTION>
STERIS
Stock Participant
Fund Loans Total
------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments, at contract value $ 4,357,220
Investments, at fair value:
STERIS Corporation common shares $ 40,551,792 40,551,792
Mutual funds 95,901,818
Common/collective trusts 7,941,067
Participant loans receivable $ 3,460,489 3,460,489
Other investments 32,027 32,027
------------------------------------------------
Total investments 40,583,819 3,460,489 152,244,413
Receivables:
Employer contributions 174,297 748,394
Accrued income 450 227 29,672
Other 81,647 108,786
------------------------------------------------
Total receivables 256,394 227 886,852
------------------------------------------------
Total assets 40,840,213 3,460,716 153,131,265
LIABILITIES
Accrued purchase of investments 60,881
------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 40,840,213 $ 3,460,716 $ 153,070,384
================================================
</TABLE>
See notes to financial statements.
2
<PAGE> 6
STERIS Corporation
401(k) Plan and Trust
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1997
<TABLE>
<CAPTION>
Victory
Victory Victory Investment STERIS
Stock Balanced Quality EB Magic Stock Participant
Index Fund Fund Bond Fund Fund Fund Loans Total
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments at contract value $ 4,005,365 $ 4,005,365
Investments at fair value:
STERIS Corporation common shares $ 8,507,199 8,507,199
Mutual funds $ 30,567,888 $ 11,791,413 $ 875,750 43,235,051
Common/collective trusts 4,260,448 4,260,448
Participant loans receivable $ 1,787,987 1,787,987
Other investments 5,246 5,246
-----------------------------------------------------------------------------------------------
Total investments 30,567,888 11,791,413 875,750 8,265,813 8,512,445 1,787,987 61,801,296
Receivables:
Employer contributions 266,355 114,551 26,069 123,834 149,141 679,950
Participant contributions 116,912 48,290 10,158 47,941 56,358 279,659
Accrued income 4 2 38,377 338 38,721
Other 10,202 10,202
-----------------------------------------------------------------------------------------------
Total receivables 383,271 162,843 36,227 220,354 205,837 1,008,532
-----------------------------------------------------------------------------------------------
Total assets 30,951,159 11,954,256 911,977 8,486,167 8,718,282 1,787,987 62,809,828
LIABILITIES
Accrued purchase of investments 154,271 88,979 10,736 253,986
NET TRANSFERS PENDING (37,360) (40,689) (578) 58,143 (2,033) 22,517 0
-----------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 30,834,248 $ 11,905,966 $ 901,819 $ 8,428,024 $ 8,720,315 $ 1,765,470 $ 62,555,842
===============================================================================================
</TABLE>
See notes to financial statements.
3
<PAGE> 7
STERIS Corporation
401(k) Plan and Trust
Statement of Changes in Net Assets Available for Benefits, with Fund Information
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Victory
Victory Victory Investment STERIS
Stock Balanced Quality EB Magic Stock Participant
Index Fund Fund Bond Fund Fund Fund Loans Total
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS
Investment income:
Net appreciation in fair value
of investments $ 4,421,152 $ 2,002,431 $ 31,652 $ 325,711 $ 8,031,908 $ 14,812,854
Interest and dividends 4,848,006 3,348,803 107,827 331,255 21,716 $ 198,718 8,856,325
Other receipts 314,743 314,743
---------------------------------------------------------------------------------------------
9,269,158 5,351,234 139,479 656,966 8,053,624 513,461 23,983,922
Contributions:
Participants 3,805,384 1,641,108 374,065 1,282,025 1,961,785 9,064,367
Employer 1,212,391 545,297 121,292 456,862 678,218 3,014,060
---------------------------------------------------------------------------------------------
5,017,775 2,186,405 495,357 1,738,887 2,640,003 12,078,427
---------------------------------------------------------------------------------------------
Total additions 14,286,933 7,537,639 634,836 2,395,853 10,693,627 513,461 36,062,349
DEDUCTIONS
Benefits paid to participants (3,122,252) (4,300,439) (148,452) (1,573,821) (3,789,555) (208,434) (13,142,953)
Administrative expenses (34,634) (7,364) (208) (411) (81,397) (124,014)
---------------------------------------------------------------------------------------------
Total deductions (3,156,886) (4,307,803) (148,660) (1,574,232) (3,870,952) (208,434) (13,266,967)
---------------------------------------------------------------------------------------------
Net increase prior to transfers 11,130,047 3,229,836 486,176 821,621 6,822,675 305,027 22,795,382
Transfers from ERA Plan 32,508,318 32,080,317 64,588,635
Transfers from Isomedix 401(k) Plan 1,957,407 311,112 65,308 367,698 429,000 3,130,525
Transfers from (to) other funds 5,866,054 (4,572,334) 1,726,029 2,802,126 (7,212,094) 1,390,219
---------------------------------------------------------------------------------------------
Net increase 18,953,508 31,476,932 2,277,513 3,991,445 32,119,898 1,695,246 90,514,542
Net assets available for benefits at
beginning of year 30,834,248 11,905,966 901,819 8,428,024 8,720,315 1,765,470 62,555,842
---------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS AT
END OF YEAR $ 49,787,756 $ 43,382,898 $ 3,179,332 $ 12,419,469 $ 40,840,213 $ 3,460,716 $ 153,070,384
==============================================================================================
</TABLE>
See notes to financial statements.
4
<PAGE> 8
STERIS Corporation
401(k) Plan and Trust
Notes to Financial Statements
December 31, 1998 and 1997
A. DESCRIPTION OF THE PLAN
The following brief description of the STERIS Corporation 401(k) Plan and Trust
(the "Plan") is provided for general information purposes only. Participants
should refer to the Plan document for complete information regarding the Plan's
definitions, benefits, eligibility, and other matters.
GENERAL
The Plan, which became effective April 1, 1992, is a contributory plan available
to all domestic employees of STERIS Corporation (the "Company" or "STERIS") who
have completed three months of service and have attained the age of 18 (21 prior
to June 30, 1996). Employee participation in the Plan is voluntary and
enrollment in the Plan is permitted on the first day of each January, April,
July, and October (an "Entry Date"). The Plan is subject to certain provisions
of the Employee Retirement Income Security Act of 1974 ("ERISA") and the
Internal Revenue Code.
Effective January 1, 1998, the Isomedix Inc. Employee Savings and Protection
Plan (the "Isomedix Plan") and the AMSCO Employees' Retirement Account (the "ERA
Plan") were merged into the Plan. Also on January 1, 1998, or shortly
thereafter, the equity of all participants and beneficiaries in the Isomedix
Plan and the ERA Plan as of the date of the merger were transferred to the Plan.
CONTRIBUTIONS
A participant is permitted to contribute not less than 1 percent and not more
than 10 percent of his/her compensation received during a calendar year. All
contributions made by a participant must be "before-tax" deferred compensation
contributions.
5
<PAGE> 9
STERIS Corporation
401(k) Plan and Trust
Notes to Financial Statements--Continued
A. DESCRIPTION OF THE PLAN--CONTINUED
The Company may make matching discretionary contributions to a participant's
account. The level of matching contributions is determined quarterly by the
Company. Employer contributions are allocated to each participant's account in
accordance with the investment election choices made by the participant. For the
year ended December 31, 1998, the Company made a 50% matching contribution in
cash on employee contributions on the first 6% of eligible participant
compensation.
Participants are fully vested in Company matching contributions at such time as
the contribution is made.
PARTICIPANT ACCOUNTS
Each participant may direct their contributions to be invested in 5 percent
increments in any combination of the following investment options:
EB Magic Fund, Victory Stock Index Fund, Victory Balanced Fund, Victory
Investment Quality Bond Fund or STERIS Corporation common stock.
The allocation of a participant's contributions to these investment funds is
selected by the participant and may be changed at any time. A participant may
elect to have a portion or all of the balance of his prior contributions (in
increments of 5 percent) transferred from any fund in which it is invested to
any other fund.
Separate accounts are maintained for each participant showing each type of
contribution and the interest of each participant in the various funds. The fund
provides participants the opportunity to apply for a loan up to 50% of that
participants balance, not to exceed $50,000.
At December 31, 1998 and 1997, no amounts had been allocated to participants who
have withdrawn from the Plan.
VESTING AND PAYMENT OF BENEFITS
Participant contributions, with all earnings and appreciation thereon, are fully
vested at all times. A participant whose employment terminates due to death or
retirement (including retirement on account of total and permanent disability)
or for reasons other than death or retirement will be eligible for a
distribution equal to the full amount of the separate accounts attributable to
their participant contributions.
6
<PAGE> 10
STERIS Corporation
401(k) Plan and Trust
Notes to Financial Statements--Continued
A. DESCRIPTION OF THE PLAN--CONTINUED
The Company, by action of its Board of Directors and without approval of its
shareholders, has the right to amend, suspend, or terminate the Plan in its
entirety. If the Plan is terminated, all amounts credited to a participant's
account will be paid to such participant as directed by the Company.
PLAN EXPENSES
Costs incident to the purchase and sale of securities, such as brokerage
commissions and stock transfer taxes, are paid by the respective funds. All
other general and administrative expenses incurred in the administration of the
Plan are charged against the respective funds, unless the employer elects to pay
such amounts. The employer has elected to pay audit fees only.
B. SIGNIFICANT ACCOUNTING POLICIES
Investments in the EB Magic Fund are stated at fair value as determined by the
trustee based on the underlying investments held in the fund. Also, included in
the EB Magic Fund at December 31, 1998 are two fully benefit responsive
guaranteed investment contracts. These contracts are carried at contract value
which approximates fair value. The average yield and crediting interest rate for
the year ended December 31, 1998 was 8.15%. Interest rates are fixed. All
contracts mature in 1999. All other investments are stated at fair value as
measured by quoted prices in active markets.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Certain prior year amounts have been reclassified to conform with current year
reporting.
C. TRANSACTIONS WITH PARTIES-IN-INTEREST
Party-in-interest transactions include the investment in the special funds of
the trustee and the payment of administrative expenses.
The Plan purchased shares of common stock of the Company for $6,082,916 and sold
shares of common stock of the Company for $12,994,790 during the year ended
December 31, 1998.
7
<PAGE> 11
STERIS Corporation
401(k) Plan and Trust
Notes to Financial Statements--Continued
D. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated November 23, 1992, stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (the "Code") and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Sponsor has
indicated that it will take the necessary steps, if any, to maintain the Plan's
qualified status.
E. INVESTMENTS
The Plan's investments are held by a bank administered trust fund and are
presented in the following table:
<TABLE>
<CAPTION>
Cost Fair Value
------------------------------
<S> <C> <C>
December 31, 1998:
Collective Investment Trusts of KeyBank
National Association:
*Employee Benefits Money Market Fund $ 32,027 $ 32,027
*EB Magic Fund 7,585,348 **7,941,067
Mutual Funds:
*Victory Stock Index Fund 40,094,467 **49,467,063
*Victory Balanced Fund 40,699,295 **43,263,854
*Victory Investment Quality Bond Fund 3,130,764 **3,170,901
*STERIS Corporation common stock 32,651,084 **40,551,792
Guaranteed investment contracts 4,357,220 **4,357,220
Participant loans **3,460,489
------------------------------
$ 128,550,205 $ 152,244,413
==============================
December 31, 1997:
Collective Investment Trusts of KeyBank
National Association:
*Employee Benefits Money Market Fund $ 5,246 $ 5,246
*EB Magic Fund 4,103,332 **4,260,448
Mutual Funds:
*Victory Stock Index Fund 24,642,217 **30,567,888
*Victory Balanced Fund 10,658,814 **11,791,413
*Victory Investment Quality Bond Fund 859,272 875,750
*STERIS Corporation common stock 5,086,037 **8,507,199
Guaranteed investment contracts 4,005,365 **4,005,365
Participant loans **1,787,987
------------------------------
$ 49,360,283 $ 61,801,296
==============================
</TABLE>
* Party-in-interest
** Investment representing five percent or more of the Plan's net assets
available for benefits at December 31, 1998 and 1997, respectively.
8
<PAGE> 12
STERIS Corporation
401(k) Plan and Trust
Notes to Financial Statements--Continued
F. YEAR 2000 ISSUE (UNAUDITED)
STERIS Corporation has developed a plan to modify its internal information
technology to be ready for the year 2000 and has begun converting critical data
processing systems. The project also includes determining whether third party
service providers have reasonable plans in place to become year 2000 compliant.
STERIS Corporation currently expects the project to be substantially complete by
mid-year 1999. STERIS Corporation does not expect this project to have a
significant effect on plan operations.
9
<PAGE> 13
STERIS Corporation
401(k) Plan and Trust
Line 27(a)--Schedule of Assets Held for Investment Purposes
Employee Identification Number--34-1482024 Plan Number--001
December 31, 1998
<TABLE>
<CAPTION>
Cost Fair Value
--------------------------------
<S> <C> <C>
Collective Investment Trusts of KeyBank National Association:
*Employee Benefits Money Market Fund $ 32,027 $ 32,027
*EB Magic Fund 7,585,348 7,941,067
Mutual Funds of KeyBank National Association:
*Victory Stock Index Fund 40,094,467 49,467,063
*Victory Balanced Fund 40,699,295 43,263,854
*Victory Investment Quality Bond Fund 3,130,764 3,170,901
*STERIS Corporation common stock 32,651,084 40,551,792
Guaranteed investment contracts 4,357,220 4,357,220
Participant loans (interest rates ranging from 8.75% to 10.75%) 3,460,489
-------------------------------
$ 128,550,205 $ 152,244,413
===============================
</TABLE>
* Party-in-interest
10
<PAGE> 14
STERIS Corporation
401(k) Plan and Trust
Line 27(d)--Schedule of Reportable Transactions
Employee Identification Number--34-1482024 Plan Number--001
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Current
Value of
Asset on Net
Number of Purchase Selling Cost of Transaction Gain or
Transactions Description of Asset Price Price Asset Date (Loss)
- -------------------------------------------------------------------------------------------------------------------------
CATEGORY (I) INDIVIDUAL TRANSACTION IN EXCESS OF 5% OR PLAN ASSETS
<S> <C> <C> <C> <C> <C> <C>
1 *Victory Stock Index $ 3,896,323 $ 3,896,323 $ 3,896,323
CATEGORY (III) SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
122 *EB Magic fund $ 6,381,991 $ 6,381,991 $ 6,381,991
100 $ 3,027,083 2,899,980 3,027,083 $ 127,103
180 *EB Money Market Fund 11,659,313 11,659,313 11,659,313
178 11,632,532 11,632,532 11,632,532
142 *STERIS Corporation Common 6,082,916 6,082,916 6,082,916
128 Stock 12,994,790 9,701,685 12,994,790 3,293,105
147 *Victory Investment 2,787,358 2,787,358 2,787,358
55 Quality Bond Fund 523,859 515,868 523,859 7,991
158 *Victory Stock Index 19,770,854 19,770,854 19,770,854
87 Fund 5,292,832 4,315,909 5,292,832 976,923
105 *Victory Balance 6,566,617 6,566,617 6,566,617
138 Fund 9,604,925 9,052,181 9,604,925 552,744
32 Participant Loans 2,392,595 2,392,595 2,392,595
128 806,360 806,360 806,360
</TABLE>
There were no category (ii) or (iv) reportable transactions during the year
ended December 31, 1998.
*Party-in-interest
11
<PAGE> 15
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Plan has duly caused this annual report to be signed on their
behalf by the undersigned hereunto duly authorized.
STERIS Corporation 401(k) Plan and
Trust
Dated: June 28, 1999 By: /s/ Laura L. Weien
-----------------------------
Laura L. Weien
Treasurer
<PAGE> 1
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-55976) pertaining to the STERIS Corporation 401(k) Plan and Trust of
our report dated June 23, 1999, with respect to the financial statements and
schedules of the STERIS Corporation 401(k) Plan and Trust included in this
Annual Report (Form 11-K) for the year ended December 31, 1998.
/s/ Ernst & Young LLP
June 23, 1999
Cleveland, Ohio
