On the Surface

STERIS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
At March 31, 2008, we had federal operating loss carryforwards of $851, which can be utilized subject to certain limitations, and
foreign operating loss carry forwards of $37,375. Substantially all of the carryforwards are available for at least three years or have an
indefinite carryforward period. In addition, we have recorded tax benefits of $767 related to state operating loss carryforwards. At
March 31, 2008, we had $952 of tax credit carryforwards. These credit carryforwards expire between fiscal 2015 and fiscal 2023.
We periodically review the need for a valuation allowance against our deferred tax assets. A valuation allowance of $8,998 has
been applied to a portion of the net deferred tax assets because we do not believe it is more-likely-than-not that we will receive future
benefit. The valuation allowance increased during fiscal 2008 by $2,690.
At March 31, 2008, cumulative undistributed earnings of international operations amounted to approximately $129,799. These
earnings are indefinitely reinvested in international operations. Accordingly, no provision has been made for deferred taxes related to the
future repatriation of such earnings, nor is it practicable to determine the amount of this liability.
10. BENEFIT PLANS
We provide defined benefit pension plans for certain current and former manufacturing and plant administrative personnel
throughout the world as determined by collective bargaining agreements or employee benefit standards set at the time of acquisition of
certain businesses. In addition to providing pension benefits to certain employees, we sponsor an unfunded post-retirement medical benefit
plan for two groups of United States employees, including the same employees who receive pension benefits under the Unites States
defined benefit pension plans. Benefits under this plan include retiree life insurance and retiree medical insurance, including prescription drug
coverage and Medicare supplemental coverage.
On March 31, 2007, we adopted the provisions of SFAS No. 158. SFAS No. 158 required us to recognize the funded status of
our defined benefit pension and post-retirement benefit plans in our Consolidated Balance Sheets, with a corresponding adjustment to
accumulated other comprehensive income, net of tax. The funded status is measured as the difference between the fair value of plan assets
and the benefit obligation (which is the projected benefit obligation for pension plans and the accumulated post-retirement benefit
obligation for post-retirement benefit plans). The adjustment to accumulated comprehensive income at adoption represents the net
unrecognized actuarial losses and unrecognized transition obligation remaining from the initial adoption of SFAS No. 87 and SFAS No. 106,
which were previously netted against the plans’ funded status. These amounts will be recognized in net periodic benefit cost as they are
amortized. We will recognize future changes to the funded status of these plans in the year the change occurs, through other
comprehensive income. In accordance with SFAS No. 158, the consolidated financial statements for prior periods have not been restated to
reflect, and do not include, the impact of SFAS No. 158.
SFAS No. 158 also required plan assets and obligations to be measured as of the employer’s balance sheet date. This provision is
effective for fiscal years beginning after December 15, 2008. We already use a March 31 measurement date for all plans, so this provision
had no affect on our consolidated financial statements.
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