On the Surface

STERIS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
During fiscal 2008, current income tax expense includes $377 for interest and a benefit of $378 for penalties related to
unrecognized tax benefits, and in total, as of March 31, 2008, we have recognized a liability for interest of $2,184 and penalties of $2,485.
We operate in numerous taxing jurisdictions and are subject to regular examinations by various United States federal, state, and
local, as well as foreign, jurisdictions. We are no longer subject to United States federal examinations for years before fiscal 2002 and, with
limited exceptions, we are no longer subject to United States state and local, or non-United States, income tax examinations by tax
authorities for years before fiscal 2003. We remain subject to tax authority audits in various jurisdictions wherever we do business. We do
not expect the results of these examinations to have a material adverse affect on our consolidated financial statements.
Deferred Taxes. The significant components of the deferred tax assets and liabilities recorded in our accompanying balance sheets at
March 31, 2008 and 2007 were as follows:
March 31, 2008 2007
Deferred tax assets:
Post-retirement benefit accrual $ 36,262 $ 35,769
Compensation 15,753 8,642
Net operating loss carryforwards 11,011 9,661
Accrued expenses 8,278 6,340
Insurance 6,303 2,129
Deferred income 5,897 2,927
Bad debt 4,732 4,991
Pension 4,372 2,969
Other 1,809 55
Deferred tax assets 94,417 73,483
Less: Valuation allowance 8,998 6,308
Total deferred tax assets 85,419 67,175
Deferred tax liabilities:
Depreciation and depletion 39,789 48,254
Intangibles 18,817 17,206
Inventory 1,813 4,534
Other 1,869 447
Total deferred tax liabilities 62,288 70,441
Net deferred tax assets (liabilities) $ 23,131 $ (3,266)
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