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): July 30, 2014

 

 

STERIS Corporation

(Exact Name of Registrant as Specified in 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))

 

 

 

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ITEM 2.02. Results of Operations and Financial Condition.

On August 5, 2014, STERIS Corporation (“STERIS” or “Company”) issued a press release announcing financial results for its fiscal 2015 first quarter ended June 30, 2014. A copy of this press release is attached hereto as Exhibit 99.1.

The information contained in this 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 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 this 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 5.07. Submission of Matters to a Vote of Security Holders.

At the STERIS 2014 Annual Meeting of Shareholders (“Meeting”), held on July 30, 2014, shareholders voted on the matters specified below, with the final voting results as specified. According to the certified list of shareholders, there were 59,243,482 Common Shares of the Company outstanding and entitled to vote at the Meeting. There were present at the Meeting, in person or by proxy, the holders of 54,226,854 Common Shares or 91.53% of the outstanding Common Shares of the Company, constituting a quorum.

 

1.	The nominees named below were elected to the Board of Directors, each for a one-year term, and the results of the vote were as follows:

 

Nominee		Votes For				Votes Withheld				Broker Non-Votes
Richard C. Breeden			51,065,119				99,191				3,062,544
Cynthia L. Feldmann			51,084,461				79,849				3,062,544
Jacqueline B. Kosecoff			50,846,219				318,091				3,062,544
David B. Lewis			51,084,343				79,967				3,062,544
Kevin M. McMullen			50,814,668				349,642				3,062,544
Walter M Rosebrough, Jr.			51,063,011				101,299				3,062,544
Mohsen M. Sohi			51,081,945				82,365				3,062,544
John P. Wareham			50,874,044				290,266				3,062,544
Loyal W. Wilson			50,811,023				353,287				3,062,544
Michael B. Wood			51,075,172				89,138				3,062,544

 

2.	The non-binding advisory proposal to approve the compensation of our named executive officers was approved, and the results of the vote were as follows:

 

Votes for			49,825,554
Votes against			967,842
Abstentions			370,914
Broker non-votes			3,062,544

 

3.	The proposal to ratify the appointment of Ernst & Young LLP as the Company’s Independent Registered Public Accounting Firm for the fiscal year ended March 31, 2015 was approved, and the results of the vote were as follows:

 

Votes for			53,973,477
Votes against			189,887
Abstentions			63,490

 

2

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Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.		Description
99.1		Press Release issued by STERIS Corporation on August 5, 2014 announcing financial results for its fiscal 2015 first quarter ended June 30, 2014.

 

3

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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.

 

Date: August 5, 2014

 

4

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EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Press Release issued by STERIS Corporation on August 5, 2014 announcing financial results for its fiscal 2015 first quarter ended June 30, 2014.

 

5

Exhibit 99.1

 

STERIS CORPORATION

NEWS ANNOUNCEMENT

FOR IMMEDIATE RELEASE

STERIS CORPORATION ANNOUNCES FISCAL 2015 FIRST QUARTER RESULTS

• Double digit growth in-line with expectations

• The Company affirms its outlook for fiscal 2015

• Board of Directors increases quarterly dividend by two cents to $0.23 per share

Mentor, Ohio (August 5, 2014)—STERIS Corporation (NYSE: STE) today announced financial results for its fiscal 2015 first quarter ended June 30, 2014. Fiscal 2015 first quarter revenue increased 12% to $412.6 million compared with $367.7 million in the first quarter of fiscal 2014, driven by growth in the Company’s Healthcare and Isomedix segments. Organic revenue growth in the first quarter of fiscal 2015 was 3%.

As reported, fiscal 2015 first quarter net income was $24.5 million, or $0.41 per diluted share, compared with net income of $32.3 million, or $0.54 per diluted share in the first quarter of fiscal 2014, which includes a $0.15 tax benefit associated with the Company’s prior European restructuring effort. Adjusted earnings in the first quarter of fiscal 2015 increased to $0.54 per diluted share compared with $0.44 per diluted share in the first quarter of fiscal 2014. Please refer to the attached schedules for additional information, including reconciliations of adjusted “non-GAAP financial measures” to reported results.

“We are pleased to have a strong start to our fiscal year,” said Walt Rosebrough, President and Chief Executive Officer of STERIS. “Revenue growth was in-line with our expectations as our consumables business exceeded forecast and offset a little softness in our capital equipment shipments. We believe both of these trends are a matter of timing. As a result, we anticipate that we will achieve our full year outlook of double digit revenue and adjusted earnings growth.”

Segment Results

Healthcare revenue in the quarter was $302.8 million, an increase of 17% compared with $258.9 million in the first quarter of fiscal 2014. This growth was across the business, with service revenue growth of 43%, consumable revenue increases of 12% and capital equipment revenue was up 1%. Healthcare revenue grew 4% organically excluding the IMS and Eschmann acquisitions. As reported,

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STERIS Corporation

News Announcement

Page 2

 

operating income for the first quarter of fiscal 2015 was $18.0 million compared with operating income of $14.9 million in last year’s first quarter. Adjusted operating income was $29.7 million compared with $19.7 million in the prior year first quarter, driven by organic volume growth, product mix and acquisitions.

Life Sciences first quarter revenue declined 2% to $58.6 million compared with $59.9 million in the first quarter of fiscal 2014. While consumable revenue increased 6% and service revenue grew 9%, it was not enough to offset an 18% decline in capital equipment revenue, which tends to vary by quarter. Life Sciences first quarter fiscal 2015 operating income was $11.9 million compared with $12.5 million in last year’s first quarter, primarily reflecting the decline in volume.

Fiscal 2015 first quarter revenue for Isomedix Services was $51.2 million compared with $48.2 million in the same period last year, an increase of 6%. Operating income for the first quarter of fiscal 2015 increased to $16.2 million compared with $14.7 million in the first quarter of last year, as Isomedix continues to fill the recently expanded capacity.

Cash Flow

Net cash provided by operations for the first quarter of fiscal 2015 was $46.4 million, compared with $32.7 million last year. Free cash flow (see note 1) for the first quarter of fiscal 2015 was $23.1 million, compared with $11.0 million in the prior year. The improvement in free cash flow is primarily due to working capital improvements.

Outlook

Based upon current trends, the Company is affirming its original outlook for fiscal 2015, which includes revenue growth in the range of 15-17% and adjusted earnings per diluted share in the range of $2.78 to $2.91 for the full fiscal year. Please see the Company’s earnings release dated May 8, 2014 for a more detailed outlook.

Dividend Announcement

The Company also announced today that STERIS’s Board of Directors has authorized a two cent increase in its quarterly dividend to $0.23 per common share, representing the ninth consecutive year of dividend increases. The dividend is payable September 23, 2014 to shareholders of record at the close of business on August 26, 2014.

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STERIS Corporation

News Announcement

Page 3

 

Conference Call

In conjunction with this 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 beginning at 12:00 p.m. Eastern time either over the Internet at www.steris-ir.com or via phone by calling 1-800-685-6364 in the United States and Canada, and 1-402-998-0553 internationally.

About STERIS

The mission of STERIS Corporation is to help our Customers create a healthier and safer world by providing innovative healthcare and life science product and service solutions around the globe. 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 debt principal repayments, growth outside of core operations, 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.

The press release and referenced conference call may contain statements concerning certain trends, expectations, forecasts, estimates, or other forward-looking information affecting or relating to the Company or its industry, products or activities 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 press release and the referenced conference call, and may be identified by the use of forward-looking terms such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” “outlook,” “impact,” “potential,” “confidence,” “improve,” “optimistic,” “deliver,” “comfortable,” “trend”, 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 laws, government regulations, labeling or product approvals or the application or

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STERIS Corporation

News Announcement

Page 4

 

interpretation thereof. Other risk factors are described herein and 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 result or the timing of any outcome regarding matters described in the press release, or the referenced conference call or otherwise with respect to any regulatory action, administrative proceedings, government investigations, litigation, warning letters, consent decree, cost reductions, business strategies, earnings or revenue trends or future financial results. References to products and the consent decree are summaries only and should not be considered the specific terms of the decree or product clearance or literature. 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 or costs that leads to erosion of profit margins, (b) the possibility that market demand will not develop for new technologies, products or applications or 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, certifications, regulations, regulatory actions, including without limitation those relating to FDA warning notices or letters, government investigations, the outcome of any pending FDA requests, inspections or submissions, or other requirements or standards may delay, limit or prevent new product introductions, affect the production and marketing of existing products or services or otherwise affect Company performance, results, prospects or value, (d) the potential of international unrest, economic downturn or effects of currencies, tax assessments, adjustments, or anticipated rates, raw material costs or availability, 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 growth, cost savings, new product acceptance, performance or approvals, or other results may not be achieved, or that transition, labor, competition, timing, execution, regulatory, governmental, or other issues or risks associated with our business, industry or initiatives including, without limitation, the consent decree, or those matters described in our Form 10-K for the year ended March 31, 2014 and other securities filings, may adversely impact Company performance, results, prospects or value, (g) the possibility that anticipated financial results or benefits of recent acquisitions or of our restructuring efforts will not be realized or will be other than anticipated, (h) the effects of contractions in credit availability, as well as the ability of our Customers and suppliers to adequately access the credit markets when needed, and (i) those risks described in our securities filings including our Annual Report on Form 10-K for the year ended March 31, 2014, and other securities filings.

Contact: Julie Winter, Director, Investor Relations at 440-392-7245.

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STERIS Corporation

Consolidated Condensed Statements of Operations

(In thousands, except per share data)

 

		Three Months Ended
		June 30,
		2014				2013
		(Unaudited)				(Unaudited)
Revenues		$	412,643			$	367,652
Cost of revenues			242,664				220,806
Cost of revenues—Restructuring			(114	)			—
Cost of revenues, net			242,550				220,806
Gross profit			170,093				146,846
Operating expenses:
Selling, general, and administrative			113,688				93,929
Research and development			12,409				11,853
Restructuring expense			(172	)			52
Total operating expenses			125,925				105,834
Income from operations			44,168				41,012
Non-operating expense, net			4,462				4,739
Income tax expense			15,169				3,956
Net income		$	24,537			$	32,317
Earnings per common share (EPS) data:
Basic		$	0.41			$	0.55
Diluted		$	0.41			$	0.54
Cash dividends declared per common share outstanding		$	0.21			$	0.19
Weighted average number of common shares outstanding used in EPS computation:
Basic number of common shares outstanding			59,169				59,005
Diluted number of common shares outstanding			59,814				59,790

STERIS Corporation

Consolidated Condensed Balance Sheets

(In thousands)

 

		June 30,				March 31,
		2014				2014
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	157,936			$	152,802
Accounts receivable, net			284,194				313,686
Inventories, net			179,593				155,146
Other current assets			55,174				53,111
Total Current Assets			676,897				674,745
Property, plant, and equipment, net			475,222				454,410
Goodwill and intangible assets, net			890,089				747,715
Other assets			10,258				10,292
Total Assets		$	2,052,466			$	1,887,162
Liabilities and Equity
Current liabilities:
Accounts payable		$	88,046			$	102,430
Other current liabilities			143,304				152,076
Total Current Liabilities			231,350				254,506
Long-term debt			658,740				493,480
Other liabilities			96,372				97,930
Equity			1,066,004				1,041,246
Total Liabilities and Equity		$	2,052,466			$	1,887,162

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STERIS Corporation

Segment Data

(In thousands)

 

		Three Months Ended
		June 30,
		2014				2013
		(Unaudited)				(Unaudited)
Segment Revenues:
Healthcare		$	302,810			$	258,888
Life Sciences			58,614				59,915
STERIS Isomedix Services			51,193				48,224
Total Reportable Segments			412,617				367,027
Corporate and Other			26				625
Total Segment Revenues		$	412,643			$	367,652
		Three Months Ended
		June 30,
		2014				2013
		(Unaudited)				(Unaudited)
Segment Operating Income:
Healthcare		$	17,966			$	14,947
Life Sciences			11,945				12,539
STERIS Isomedix Services			16,191				14,718
Total Reportable Segments			46,102				42,204
Corporate and Other			(1,934	)			(1,192	)
Total Operating Income		$	44,168			$	41,012

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STERIS Corporation

Consolidated Condensed Statements of Cash Flows

(In thousands)

 

		Three Months Ended
		June 30,
		2014				2013
		(Unaudited)				(Unaudited)
Operating Activities:
Net income		$	24,537			$	32,317
Non-cash items			21,940				23,321
Changes in operating assets and liabilities			(124	)			(22,941	)
Net cash provided by operating activities			46,353				32,697
Investing Activities:
Purchases of property, plant, equipment, and intangibles, net			(23,331	)			(21,741	)
Proceeds from sale of property, plant, equipment and intangibles			71				8
Investments in businesses, net of cash acquired			(179,012	)			(115	)
Net cash used in investing activities			(202,272	)			(21,848	)
Financing Activities:
Proceeds under credit facilities, net			165,260				21,410
Deferred financing fees and debt issuance costs			—				(43	)
Repurchases of common shares			(5,319	)			(4,775	)
Cash dividends paid to common shareholders			(12,459	)			(11,244	)
Stock option and other equity transactions, net			7,150				8,482
Tax benefit from share-based compensation			3,835				718
Net cash used in and provided by financing activities			158,467				14,548
Effect of exchange rate changes on cash and cash equivalents			2,586				(1,567	)
Decrease in cash and cash equivalents			5,134				23,830
Cash and cash equivalents at beginning of period			152,802				142,008
Cash and cash equivalents at end of period		$	157,936			$	165,838

The following table presents a financial measure which is considered to be “non-GAAP financial measures” under Securities Exchange Commission rules. 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 principal debt repayments and growth outside of core operations, repurchase common shares, and pay cash dividends. STERIS’s calculation of free cash flow may vary from other companies.

 

		Three Months Ended
		June 30,
		2014				2013
		(Unaudited)				(Unaudited)
Calculation of Free Cash Flow:
Cash flows from operating activities		$	46,353			$	32,697
Purchases of property, plant, equipment, and intangibles, net			(23,331	)			(21,741	)
Proceeds from the sale of property, plant, equipment, and intangibles			71				8
Free Cash Flow		$	23,093			$	10,964

 

		Twelve Months Ended
		March 31,
		2015
		(Outlook)*
Calculation of free cash flow for outlook:
Cash flows from operating activities		$	230,000
Purchases of property, plant, equipment, and intangibles, net			(95,000	)
Free Cash Flow		$	135,000

 

*	All amounts are estimates.

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STERIS Corporation

Non-GAAP Earnings Per Share and Outlook

Non-GAAP financial measures are presented with the intent of providing greater transparency to supplemental financial information used by management and the Board of Directors in their financial analysis and operational decision making. These amounts are disclosed so that the reader has the same financial data that management uses with the belief that it will assist investors and other readers in making comparisons to our historical operating results and analyzing the underlying performance of our operations for the periods presented.

We believe that the presentation of these non-GAAP financial measures, when considered along with our GAAP financial measures and the reconciliation to the corresponding GAAP financial measures, provide the reader with a more complete understanding of the factors and trends affecting our business than could be obtained absent this disclosure. It is important for the reader to note that the non-GAAP financial measure used may be calculated differently from, and therefore may not be comparable to, a similarly titled measure used by other companies.

 

		Three months ended
		June 30,
		2014				2013
		(Unaudited)				(Unaudited)
Net Income per diluted share		$	0.41			$	0.54
Loss (gain) from fair value adjustment of acquistion related contingent consideration			0.02				—
Tax benefit, European restructuring			—				(0.15	)
Inventory and property “step up” to fair value, net of tax			0.02				—
Amortization and impairment of purchased intangible assets, net of tax			0.05				0.04
Acquisition related transaction and integration expenses, net of tax			0.04				0.01
Adjusted net income per diluted share		$	0.54			$	0.44

 

		Twelve months ended
		March 31,
		2015
		(Outlook)*
Net Income per diluted share		$	2.40 — $2.53
Inventory “step up” to fair value, net of tax			0.02
Amortization and impairment of purchased intangible assets, net of tax			0.02
Acquisition related transaction and integration expenses, net of tax			0.12
Adjusted net income per diluted share		$	2.78 — $2.91

 

*	All amounts are estimates.

 

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STERIS Corporation

Non-GAAP Financial Measures

(In thousands, except per share data)

Non-GAAP financial measures are presented with the intent of providing greater transparency to supplemental financial information used by management and the Board of Directors in their financial analysis and operational decision making. These amounts are disclosed so that the reader has the same financial data that management uses with the belief that it will assist investors and other readers in making comparisons to our historical operating results and analyzing the underlying performance of our operations for the periods presented.

We believe that the presentation of these non-GAAP financial measures, when considered along with our GAAP financial measures and the reconciliation to the corresponding GAAP financial measures, provide the reader with a more complete understanding of the factors and trends affecting our business than could be obtained absent this disclosure. It is important for the reader to note that the non-GAAP financial measure used may be calculated differently from, and therefore may not be comparable to, a similarly titled measure used by other companies.

 

		Three months ended
		June 30,
		2014				2013
		(Unaudited)				(Unaudited)
Gross Profit		$	170,093			$	146,846
Amortization of inventory “step up” to fair value			1,234				—
Restructuring			(114	)			—
Adjusted gross profit		$	171,213			$	146,846
Selling, general and administrative expenses		$	113,688			$	93,929
Amortization and impairment of purchased intangible assets			(5,200	)			(4,290	)
Amortization of property “step up” to fair value			(23	)			—
Acquisition related transaction and integration costs			(3,634	)			(708	)
(Loss) gain from fair value adjustment of acquistion related contingent consideration			(1,998	)			—
Adjusted selling, general and administrative expenses		$	102,833			$	88,931
Operating income		$	44,168			$	41,012
Amortization of inventory and property “step up” to fair value			1,257				—
Amortization and impairment of purchased intangible assets			5,200				4,290
Acquisition related transaction and integration costs			3,634				708
Loss (gain) from fair value adjustment of acquistion related contingent consideration			1,998				—
Restructuring			(286	)			52
Adjusted operating income		$	55,971			$	46,062
Net income		$	24,537			$	32,317
Amortization of inventory and property “step up” to fair value			1,006				—
Amortization and impairment of purchased intangible assets, net of tax			3,244				2,617
Acquisition related transaction and integration costs			2,217				432
Loss (gain) from fair value adjustment of acquistion related contingent consideration			1,219				—
Tax Benefit, European Restructuring			—				(9,245	)
Restructuring, net of tax			(174	)			32
Adjusted net income		$	32,049			$	26,153
Healthcare operating income		$	17,966			$	14,947
Amortization of inventory and property “step up” to fair value			1,257				—
Amortization and impairment of purchased intangible assets			5,098				3,947
Acquisition related transaction and integration costs			3,634				708
Loss (gain) from fair value adjustment of acquistion related contingent consideration			1,998				—
Restructuring			(247	)			52
Adjusted Healthcare operating income		$	29,706			$	19,654
Life Sciences operating income		$	11,945			$	12,539
Amortization and impairment of purchased intangible assets			18				26
Restructuring			(14	)			—
Adjusted Life Sciences operating income		$	11,949			$	12,565
Isomedix operating income		$	16,191			$	14,718
Amortization and impairment of purchased intangible assets			84				317
Restructuring			(25	)			—
Adjusted Isomedix operating income		$	16,250			$	15,035

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STERIS Corporation

Unaudited Supplemental Financial Data

First Quarter Fiscal 2015

As of June 30, 2014

 

		FY 2015				FY 2014
Total Company Revenues
Capital Equipment		$	120,395			$	123,894
Consumables			110,045				99,034
Service			182,203				144,724
Total Recurring			292,248				243,758
Total Revenues, net		$	412,643			$	367,652
United States Revenues		$	317,351			$	288,353
United States Revenues as a % of Total			77	%			78	%
International Revenues		$	95,292			$	79,299
International Revenues as a % of Total			23	%			22	%
Segment Data		Q1				Q1
Healthcare
Revenues
Capital Equipment		$	102,271			$	101,674
Consumables			88,270				78,563
Service			112,269				78,651
Total Recurring			200,539				157,214
Total Healthcare Revenues, net		$	302,810			$	258,888
Operating Income			17,966				14,947
Adjusted Operating Income (1)			29,706				19,654
Life Sciences
Revenues
Capital Equipment		$	18,124			$	22,220
Consumables			21,775				20,471
Service			18,715				17,224
Total Recurring			40,490				37,695
Total Life Sciences Revenues		$	58,614			$	59,915
Operating Income			11,945				12,539
Adjusted Operating Income (1)			11,949				12,565
Isomedix Services
Revenues		$	51,193			$	48,224
Operating Income			16,191				14,718
Adjusted Operating Income (1)			16,250				15,035
Corporate and Other
Revenues		$	26			$	625
Operating Income (Loss)			(1,934	)			(1,192	)
Other Data		Q1				Q1
Product
Total product revenues			230,440				222,928
Total product cost of revenues			129,975				129,538
Restructuring expense			(114	)			—
Amortization of inventory “step up” to fair value			1,234				—
Total product cost of revenues, adjusted (1)			128,855				129,538
Total product gross profit, adjusted (1)			101,585				93,390
As a percentage, adjusted (1)			44.1	%			41.9	%
Service
Total service revenues			182,203				144,724
Total service cost of revenues			112,575				91,268
Total service gross profit			69,628				53,456
As a percentage			38.2	%			36.9	%
Total Company gross profit margin, adjusted (1)			171,213				146,846
As a percentage, adjusted (1)			41.5	%			39.9	%
Healthcare Backlog		$	125,032			$	120,170
Life Sciences Backlog			45,969				44,562
Total Backlog		$	171,001			$	164,732
Free Cash Flow		$	23,093			$	10,964
Net Debt		$	500,804			$	347,862

 

(1)

Non-GAAP financial measures are presented with the intent of providing greater transparency to supplemental financial information used by management and the Board of Directors in their financial analysis and operational decision making. These amounts are disclosed so that the reader has the same financial data that management uses with the belief that it will assist investors and other readers in making comparisons to our historical operating results and analyzing the underlying performance of our operations for the periods presented.

We believe that the presentation of these non-GAAP financial measures, when considered along with our GAAP financial measures and the reconciliation to the corresponding GAAP financial measures, provide the reader with a more complete understanding of the factors and trends affecting our business than could be obtained absent this disclosure. It is important for the reader to note that the non-GAAP financial measure used may be calculated differently from, and therefore may not be comparable to, a similarly titled measure used by other companies.

This supplemental data is consistent with publicly disclosed information provided in quarterly conference calls, earnings releases and SEC filings, and is subject to all definitions, precautions and limitations contained in those disclosures. Please see the Company’s most recent 10-K for definitions (and reconciliation where appropriate) of adjusted measures, backlog, free cash flow and net debt.