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, 1997
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
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Annual Report
STERIS CORPORATION 401(K) PLAN
AND TRUST
December 31, 1997 and 1996
Plan Sponsor
STERIS CORPORATION
5960 Heisley Road
Mentor, Ohio 44060
Plan Administrator
STERIS CORPORATION
5960 Heisley Road
Mentor, Ohio 44060
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STERIS Corporation 401(k) Plan and Trust
Audited Financial Statements
December 31, 1997 and 1996
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, 1997 and 1996............................ 2
Statement of Changes in Net Assets Available for Plan Benefits,
with Fund Information as of December 31, 1997............................ 4
Notes to Financial Statements................................................ 5
SCHEDULES
Item 27(a)--Schedule of Assets Held for Investment Purposes.................. 10
Item 27(d)--Schedule of Reportable Transactions.............................. 11
EXHIBITS
Exhibit 23--Consent of Independent Auditors.................................. 12
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Report of Independent Auditors
Board of Directors
STERIS Corporation
Mentor, Ohio
We have audited the accompanying statements of net assets available for benefits
of STERIS Corporation 401(k) Plan and Trust (the "Plan") as of December 31, 1997
and 1996, and the related statement of changes in net assets available for
benefits for the year ended December 31, 1997. 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, 1997 and 1996, and the changes in its net assets available for
benefits for the year ended December 31, 1997, 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, 1997 and reportable transactions
for the year then ended, are presented for purposes of complying with the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974, and are not a required part
of the financial statements. The fund information in the statements of net
assets available for benefits at December 31, 1997 and 1996 and changes in net
assets available for benefits for the year ended December 31, 1997 is presented
for purposes of additional analysis rather than to present the changes in net
assets available for benefits of each fund. The supplemental schedules and fund
information have been subjected to the 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.
Ernst & Young LLP
Cleveland, Ohio
July 19, 1998
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STERIS Corporation
401(k) Plan and Trust
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1997
Victory
Victory Victory Investment STERIS
Stock Balanced Quality EB Magic Stock Participant
Index Fund Fund Bond Fund Fund Fund Loans Total
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments:
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 $8,265,813 8,265,813
Participant loans
receivable $1,787,987 1,787,987
Other investments 5,246 5,246
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Total investments 30,567,888 11,791,413 875,750 8,265,813 8,512,445 1,787,987 61,801,296
Accrued income 4 2 38,377 338 38,721
Employee contributions
receivable 116,912 48,290 10,158 47,941 56,358 279,659
Employer contributions
receivable 266,355 114,551 26,069 123,834 149,141 679,950
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets 30,951,159 11,954,256 911,977 8,475,965 8,718,282 1,787,987 62,799,626
LIABILITIES
Accrued purchase of
investments 154,271 88,979 10,736 (10,202) 243,784
Net transfers pending (37,360) (40,689) (578) 58,143 (2,033) 22,517
- ----------------------------------------------------------------------------------------------------------------------------------
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
==================================================================================================================================
See notes to financial statements.
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STERIS Corporation
401(k) Plan and Trust
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1996
Victory
Victory Victory Investment STERIS
Stock Balanced Quality EB Magic Stock Participant
Index Fund Fund Bond Fund Fund Fund Loans Total
- ----------------------------------------------------------------------------------------------------------------------
ASSETS
Investments:
STERIS Corporation
common shares $6,141,069 $ 6,141,069
Mutual funds $22,004,849 $9,008,960 $457,373 31,471,182
Common/collective trusts $6,642,459 6,642,459
Participant loans
receivable $1,713,003 1,713,003
Other investments 9,934 20,903 348 381 59,311 90,877
- -----------------------------------------------------------------------------------------------------------------------
Total investments 22,014,783 9,029,863 457,721 6,642,840 6,200,380 1,713,003 46,058,590
Employee contributions
receivable 110 25 98,163 360 98,658
Employer contribution
receivable 200,569 91,264 19,500 133,066 72,695 517,094
- -----------------------------------------------------------------------------------------------------------------------
Total assets 22,215,462 9,121,152 477,221 6,874,069 6,273,435 1,713,003 46,674,342
LIABILITIES
Accrued purchase of
investments 122 381 503
Accrued expenses 17,716 19,321 549 2,173 3,401 43,160
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS $22,197,746 $9,101,831 $476,550 $6,871,515 $6,270,034 $1,713,003 $46,630,679
=======================================================================================================================
See notes to financial statements.
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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, 1997
Victory
Victory Victory Investment STERIS
Stock Balanced Quality EB Magic Stock Participant
Index Fund Fund Bond Fund Fund Fund Loans Total
- -----------------------------------------------------------------------------------------------------------------------------
ADDITIONS
Employee contributions $ 3,250,112 $ 1,389,316 $297,849 $1,516,332 $1,725,352 $ 8,178,961
Employer contributions 1,025,626 451,898 98,790 520,019 540,813 2,637,146
Investment income 2,124,451 899,354 37,564 306,301 4,005 $ 150,024 3,521,699
Transfer from other plan 429,486 429,486
- -----------------------------------------------------------------------------------------------------------------------------
Total additions 6,400,189 2,740,568 434,203 2,772,138 2,270,170 150,024 14,767,292
DEDUCTIONS
Distributions to participants 2,695,952 985,502 187,831 1,564,947 661,012 170,660 6,265,904
Expenses 49,096 22,374 868 3,859 15,727 91,924
- -----------------------------------------------------------------------------------------------------------------------------
Total deductions 2,745,048 1,007,876 188,699 1,568,806 676,739 170,660 6,357,828
Net realized and unrealized
appreciation in fair value
of investments 5,034,461 916,484 18,320 193,935 1,352,499 7,515,699
Net investment transfers (53,100) 154,959 161,445 159,242 (495,649) 73,103
- -----------------------------------------------------------------------------------------------------------------------------
Net additions 8,636,502 2,804,135 425,269 1,556,509 2,450,281 52,467 15,925,163
Net assets available for
benefits at beginning
of year 22,197,746 9,101,831 476,550 6,871,515 6,270,034 1,713,003 46,630,679
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR
BENEFITS AT END OF YEAR $30,834,248 $11,905,966 $901,819 $8,428,024 $8,720,315 $1,765,470 $62,555,842
=============================================================================================================================
See notes to financial statements.
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STERIS Corporation
401(k) Plan and Trust
Notes to Financial Statements
December 31, 1997 and 1996
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 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.
On May 1, 1996, STERIS and Amsco International, Inc. (Amsco) shareholders
approved the Restated Agreement and Plan of Merger, dated as of December 16,
1995 and restated as of March 28, 1996, pursuant to which a newly-formed,
wholly-owned subsidiary of STERIS was merged with and into Amsco, with Amsco
becoming a wholly-owned subsidiary of STERIS, via the issuance of 0.46 STERIS
Common Share for each outstanding share of Amsco Common Stock.
Effective as of June 30, 1996, the Plan was amended and the Amsco 401(k) Tax
Deferred Savings Plan (the "Amsco Plan") was merged into the Plan. Also on June
30, 1996, the equity of all participants and beneficiaries in the Amsco Plan as
of the date of the merger was transferred to the Plan.
Effective July 1, 1997, the Surgicot Profit Sharing and 401(k) Plan (the
"Surgicot Plan") was merged into the Plan. Also on July 1, 1997, the equity of
all participants and beneficiaries in the Surgicot Plan as of the date of the
merger was 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.
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STERIS Corporation
401(k) Plan and Trust
Notes to Financial Statements--Continued
A. DESCRIPTION OF THE PLAN--CONTINUED
Effective as of October 1, 1996, 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, 1997, 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 on each entry date. 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, 1997 and 1996, $0 and $29,442 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.
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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, 1997 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 ending December 31, 1997 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.
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 $2,228,312 and sold
shares of common stock of the Company for $1,017,410 for the year ended December
31, 1997.
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STERIS Corporation
401(k) Plan and Trust
Notes to Financial Statements--Continued
D. INCOME TAX STATUS
The Plan Administrator believes the Plan is in operational compliance with
Internal Revenue Code (IRC) Section 401(a) and is, therefore, not subject to tax
under IRC Section 501(a). The Plan Administrator has indicated that the Plan has
been modeled after a prototype plan that has been accepted by the Internal
Revenue Service. However, due to recent Plan amendments, the Plan Administrator
intends to request in a timely manner a determination letter from the Internal
Revenue Service. The tax exempt status of the Plan does not affect the
taxability of distributions to participants.
E. INVESTMENTS
The Plan's investments are as follows:
Cost Fair Value
---------------------------
December 31, 1997:
Collective Investment Trusts of KeyBank
National Association:
*Employee Benefits Money Market Fund $ 5,246 $ 5,246
*EB Magic Fund 8,108,697 **8,265,813
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
Participant loans 1,787,987 1,787,987
December 31, 1996:
Collective Investment Trusts of KeyBank
National Association:
*Employee Benefits Money Market Fund 90,877 90,877
*EB Magic Fund 6,621,735 **6,642,459
Mutual Funds:
Victory Stock Index Fund 20,429,677 **22,004,849
Victory Balanced Fund 8,629,253 **9,008,960
Victory Investment Quality Bond Fund 457,606 457,373
*STERIS Corporation common stock 3,692,619 **6,141,069
Participant loans 1,713,003 1,713,003
* Party-in-interest
** Investment representing five percent or more of the Plan's net assets
available for benefits
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STERIS Corporation
401(k) Plan and Trust
Notes to Financial Statements--Continued
G. SUBSEQUENT EVENTS
Effective January 1, 1998, the Plan was amended and the Amsco Employees'
Retirement Account (the "ERA Plan") was merged into the Plan. Also on January 1,
1998, the equity of all participants and beneficiaries in the ERA Plan as of the
date of the merger was transferred to the Plan.
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
early 1999. STERIS Corporation does not expect this project to have a
significant effect on plan operations.
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STERIS Corporation
401(k) Plan and Trust
Form 5500, Item 27(a)--Schedule of Assets Held for Investment Purposes
December 31, 1997
Cost Fair Value
----------------------------
Collective Investment Trusts of
KeyBank National Association:
*Employee Benefits
Money Market Fund $ 5,246 $ 5,246
*EB Magic Fund 8,108,697 8,265,813
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
Participant loans 1,787,987 1,787,987
* Party-in-interest
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STERIS Corporation
401(k) Plan and Trust
Form 5500, Item 27(d)--Schedule of Reportable Transactions
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 (III) SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
239 Employee Benefit Money $8,834,466 $8,834,466 $8,834,466
284 Market Fund $8,820,097 8,820,097 8,820,097 $ 0
93 STERIS Corporation Common 2,228,312 2,228,312 2,228,312
32 Stock 1,017,410 693,369 1,017,410 324,041
137 Victory Balanced Fund 3,466,582 3,466,582 3,466,582
91 1,600,613 1,437,021 1,600,613 163,592
132 Victory Stock Index Fund 7,433,291 7,433,291 7,433,291
103 3,904,713 3,220,751 3,904,713 683,962
125 EB Magic Fund 5,887,984 5,887,984 5,887,984
120 4,458,565 4,401,022 4,458,565 57,543
There were no category (i), (ii) or (iv) reportable transactions during the year
ended December 31, 1997.
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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 25, 1998 By: /s/ Laura L. Weien
------------------------------
Laura L. Weien
Treasurer
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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 19, 1998, 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, 1997.
Ernst & Young LLP
Cleveland, Ohio
July 19, 1998
