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What changed in Steris's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Steris's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+398 added−375 removedSource: 10-K (2023-05-26) vs 10-K (2022-05-31)

Top changes in Steris's 2023 10-K

398 paragraphs added · 375 removed · 311 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

88 edited+9 added−15 removed61 unchanged
Biggest changeWe are committed to supporting the development of our people. Employees benefit from hands-on continuous improvement ("Lean") training, a web-based learning management system and STERIS University. In addition, we provide bi-annual Code of Conduct training and other key required training at all levels of the Company.
Biggest changeThe results indicate that the majority of our people are committed to serving our Customers, are proud to work for STERIS, and have confidence in the stability of our business. We are committed to supporting the development of our people. Employees benefit from hands-on continuous improvement ("Lean") training, a web-based learning management system and STERIS University.
APPLIED STERILIZATION TECHNOLOGIES SEGMENT Description of Business. Our Applied Sterilization Technologies ("AST") segment is a third-party service provider for contract sterilization, as well as testing services needed to validate sterility services for medical device and pharmaceutical manufacturers. Our technology-neutral offering supports Customers every step of the way, from testing through sterilization. Services Offered.
APPLIED STERILIZATION TECHNOLOGIES SEGMENT Description of Business. Our Applied Sterilization Technologies ("AST") segment is a third-party service provider for contract sterilization, as well as testing services needed to validate sterility for medical device and pharmaceutical manufacturers. Our technology-neutral offering supports Customers every step of the way, from testing through sterilization. Services Offered.
In addition, we have developed a plan to expand our irradiation processing capacity with accelerator-based technologies, which may reduce the potential supply risk. In response to the active conflict between Russian and Ukraine, we have stopped purchasing cobalt-60 from our Russian supplier.
In addition, we have developed a plan to expand our irradiation processing capacity with accelerator-based technologies, which may reduce the potential supply risk. In response to the active conflict between Russian and Ukraine, we stopped purchasing cobalt-60 from our Russian supplier.
The markets in which we operate are highly competitive and generally highly regulated. Competition is intense in all of our business segments and includes many large and small competitors. Brand, design, quality, safety, ease of use, serviceability, price, product features, warranty, delivery, service, and technical support are important competitive factors to us.
Competition. The markets in which we operate are highly competitive and generally highly regulated. Competition is intense in all of our business segments and includes many large and small competitors. Brand, design, quality, safety, ease of use, serviceability, price, product features, warranty, delivery, service, and technical support are important competitive factors to us.
To put it simply, we believe a diverse and inclusive workforce is essential to a thriving organization. We strive to recruit the best available people who are aligned with and embody our core values. We are committed to equality, assessing candidates based on qualifications.
To put it simply, we believe a diverse and inclusive workforce is essential to a thriving organization. We strive to recruit the best available people who are aligned with and embody our core values. We are committed to equality and assessing candidates based on qualifications.
We realize the importance of Health, Safety & Environment ("HSE") to the well-being of our Customers, employees, community, the environment, and ultimately our shareholders. To that end, our HSE teams and management are committed to supporting HSE programs with ongoing involvement through our continuous improvement process. Our ultimate goal is to be an incident-free company.
Health, Safety & Environment. We realize the importance of Health, Safety & Environment ("HSE") to the well-being of our Customers, employees, community, the environment, and ultimately our shareholders. To that end, our HSE teams and management are committed to supporting HSE programs with ongoing involvement through our continuous improvement process. Our ultimate goal is to be an incident-free company.
Compensation and Benefits. Our total rewards offerings include an array of programs to support our employees' financial, physical, and mental well-being, including providing competitive salaries, variable performance pay, healthcare benefits, tuition assistance, paid time off, annual merit increases, and incentive plans based on the national norms of employees' employment.
Our total rewards offerings include an array of programs to support our employees' financial, physical, and mental well-being, including providing competitive salaries, variable performance pay, healthcare benefits, tuition assistance, paid time off, annual merit increases, and incentive plans based on the national norms of employees' employment.
However, there can be no assurance that future or current regulatory, governmental, or private action will not have a material adverse affect on our performance, results, or financial condition. Please refer to Note 10 of our consolidated financial statements titled, "Commitments and Contingencies" for further information.
However, there can be no assurance that future or current regulatory, governmental, or private action will not have a material adverse affect on our performance, results, or financial condition. Please refer to Note 10 to our consolidated financial statements titled, "Commitments and Contingencies" for further information.
The cornerstone of this initiative is the belief that incidents result from unsafe acts or conditions, both of which are preventable. We apply the U.S. Occupational Safety and Health Administration recordkeeping practices worldwide.
The cornerstone of this initiative is the belief that incidents result from unsafe acts or conditions, both of which are preventable. We apply the U.S. Occupational Safety and Health Administration (OSHA) recordkeeping practices worldwide.
He assumed this role in August 2017. From February 2014 to July 2017, he served as the Senior Vice President, Chief Financial Officer and Treasurer. Andrew Xilas serves as Senior Vice President and General Manager, Dental. He assumed this role in June 2021.
Tokich serves as Senior Vice President and Chief Financial Officer. He assumed this role in August 2017. From February 2014 to July 2017, he served as the Senior Vice President, Chief Financial Officer and Treasurer. Andrew Xilas serves as Senior Vice President and General Manager, Dental. He assumed this role in June 2021.
We offer various preventive maintenance programs and repair services to support the effective operation of capital equipment over its lifetime. Customer Concentration. Our Life Sciences segment sells consumables, services and capital equipment, to Customers in many countries throughout the world. For the year ended March 31, 2022, no Customer represented more than 10% of the Life Sciences segment’s total revenues.
We offer various preventive maintenance programs and repair services to support the effective operation of capital equipment over its lifetime. Customer Concentration. Our Life Sciences segment sells consumables, services and capital equipment, to Customers in many countries throughout the world. For the year ended March 31, 2023, no Customer represented more than 10% of the Life Sciences segment’s total revenues.
FDA conducts inspections of our manufacturing and contract sterilization facilities on a periodic basis to confirm compliance. In connection with an inspection, the FDA may initiate warning letters and/or consent decrees, which list conditions or practices that may indicate a violation of the FDA’s requirements. In fiscal 2022, STERIS did not receive any warning letters, seizures, or consent decrees.
FDA conducts inspections of our manufacturing and contract sterilization facilities on a periodic basis to confirm compliance. In connection with an inspection, the FDA may initiate warning letters and/or consent decrees, which list conditions or practices that may indicate a violation of the FDA’s requirements. In fiscal 2023, STERIS did not receive any warning letters, seizures, or consent decrees.
However during fiscal 2022, we experienced a rise in supply chain and labor costs and anticipate continued supply chain and inflation pressure in fiscal 2023. We monitor the prices we charge for our products and services on an ongoing basis and plan to adjust those prices to take into account future changes in the rate of inflation. Intellectual Property.
However during fiscal 2022 and 2023, we experienced a rise in supply chain and labor costs and anticipate continued inflationary pressure in fiscal 2024 . We monitor the prices we charge for our products and services on an ongoing basis and plan to adjust those prices to take into account future changes in the rate of inflation. Intellectual Property.
DAWF includes work-related injuries or illnesses that cause an employee to be away from work at least one full day after the date of the incident. (2) Our external benchmarks include the OSHA average and 1st Quartile injury/illness rates which are derived from the Bureau of Labor Statistics.
LTIR includes work-related injuries or illnesses that cause an employee to be away from work at least one full day after the date of the incident. (2) Our external benchmarks include the OSHA average and 1st Quartile injury/illness rates which are derived from the Bureau of Labor Statistics.
That means 5 and 10-liter containers of concentrate replace 114-liter drums, creating benefits from safer lifting, elimination of packaging waste, and less frequent deliveries with smaller trucks. We also work to utilize containers that can be recycled and build products with materials that can be recycled at the end of their life. Risks and Prevention.
That means 5 and 10-liter containers of concentrate replace 114-liter drums, creating benefits from safer lifting, elimination of packaging waste, and less frequent deliveries with smaller trucks. We also work to utilize containers that can be recycled and build products with materials that can be recycled at the end of their life.
Occupational Safety and Health Administration ("OSHA") recordkeeping practices worldwide. All rates are based on 100 full-time employees ("FTE") working one year. 100 FTEs equals 200,000 work hours. TRC includes work-related injuries or illnesses requiring medical attention beyond first-aid.
Occupational Safety and Health Administration ("OSHA") recordkeeping practices worldwide. All rates are based on 100 full-time employees ("FTE") working one year. 100 FTEs equals 200,000 work hours. TRIR includes work-related injuries or illnesses requiring medical attention beyond first-aid.
In 2022, STERIS incurred no monetary losses as a result of legal proceedings associated with bribery or corruption. Supplier Code of Conduct. Our expectations for ethical behavior extend beyond STERIS to our Suppliers as well. Our Supplier Code of Conduct defines the minimum requirements and expectations for all Suppliers and their subcontractors.
In 2023, STERIS incurred no monetary losses as a result of legal proceedings associated with bribery or corruption. Supplier Code of Conduct. Our expectations for ethical behavior extend beyond STERIS to our Suppliers as well. Our Supplier Code of Conduct defines the minimum requirements and expectations for all Suppliers and their subcontractors.
He joined HuFriedyGroup (now part of STERIS) in 1987, holding roles of increasing responsibility, which included a promotion to President, HuFriedyGroup in January 2021. J. Adam Zangerle serves as Senior Vice President, General Counsel, and Corporate Secretary. He assumed this role in July 2018.
He joined HuFriedyGroup (now part of STERIS) in 1987, holding roles of increasing responsibility, which included a promotion to President, HuFriedyGroup in January 2021. J. Adam Zangerle serves as Senior Vice President, General Counsel, and Company Secretary. He assumed this role in July 2018.
The MedTech Europe Code of Ethical Business Practice regulates all aspects of the industry’s relationship with Healthcare Professionals (HCPs) and Healthcare Organisations (HCOs), to ensure that all interactions are ethical and professional at all times and to maintain the trust of regulators, and patients. STERIS has adopted and requires compliance with the MedTech Europe Code of Ethical Business Practice.
The MedTech Europe Code of Ethical Business Practice regulates all aspects of the industry’s relationship with Healthcare Professionals (HCPs) and Healthcare Organizations (HCOs), to ensure that all interactions are ethical and professional at all times and to maintain the trust of regulators, and patients. STERIS has adopted and requires compliance with the MedTech Europe Code of Ethical Business Practice.
That can include anything from reformulating chemistries to eliminate metals-based ingredients or reducing the effluence produced as a result of the use of our products to creating ultra-concentrate chemistries such as Prolystica® Ultra Concentrate Cleaning Chemistries, which offer 10x the uses per container.
That can include anything from reformulating chemistries to eliminating metals-based ingredients or reducing the effluence produced as a result of the use of our products, to creating ultra-concentrate chemistries such as Prolystica® Ultra Concentrate Cleaning Chemistries, which offer 10x the uses per container.
We offer our Customers a unique mix of innovative consumable products, such as detergents, gastrointestinal (“GI”) endoscopy accessories, barrier product solutions, and other products and services, including: equipment installation and maintenance, microbial reduction of medical devices, dental instruments and tools, instrument and scope repair, laboratory testing services, outsourced reprocessing, and capital equipment products, such as sterilizers and surgical tables, automated endoscope reprocessors, and connectivity solutions such as operating room (“OR”) integrati on.
We offer our Customers a unique mix of innovative consumable products, such as detergents, endoscopy accessories, barrier products, and other products and services, including: equipment installation and maintenance, microbial reduction of medical devices, dental instruments and tools, instrument and scope repair, laboratory testing services, outsourced reprocessing, and capital equipment products, such as sterilizers and surgical tables, automated endoscope reprocessors, and connectivity solutions such as operating room (“OR”) integrati on.
On a product basis, competitors include 3M, Amcor, ASP, Braun/Aesculap, Danaher/Sybron, Dentsply/Sultan Healthcare, J&J/Ethicon, Halyard Health, LM Dental, Medicom, Porter Instrument, ProEdge, Sterisil, Young Dental, and less expensive products from Asia and other lower cost manufacturing locations. INFORMATION WITH RESPECT TO OUR BUSINESS IN GENERAL Sources and Availability of Raw Materials.
On a product basis, competitors include 3M, Braun/Aesculap, Danaher/Sybron, Dentsply/Sultan Healthcare , J&J/Ethicon, Halyard Health, LM Dental, Medicom, Porter Instrument, Sterisil, Young Dental, and less expensive products from Asia and other lower cost manufacturing locations. INFORMATION WITH RESPECT TO OUR BUSINESS IN GENERAL Sources and Availability of Raw Materials.
We currently have 12 locations that hold the OSHA VPP Star Award. We utilize internal HSE management systems and compliance audits that will identify percent compliance of our global operations against our standards. Employee Engagement and Development. We believe that engaged employees are more productive, innovative, and satisfied in their work.
We currently have 12 locations that hold the OSHA VPP Star Award. We utilize internal HSE management systems and compliance audits designed to identify percent compliance of our global operations against our standards. Employee Engagement and Development. We believe that engaged employees are more productive, innovative, and satisfied in their work.
We have mechanisms in place to identify when suppliers do not meet our Supplier Code of Conduct requirements. Suspicions of supplier non-compliance are promptly investigated and addressed. We believe in conducting business with integrity and honesty and in accordance with all applicable laws and regulations of the countries in which we operate.
We have mechanisms in place to identify when suppliers do not meet our Supplier Code of Conduct requirements. Suspicions of 7 Table of Contents supplier non-compliance are promptly investigated and addressed. We believe in conducting business with integrity and honesty and in accordance with all applicable laws and regulations of the countries in which we operate.
To STERIS, this means we will make a difference by providing world-class products and service solutions for our Customers, safe and rewarding work for our People, and superior returns for our Shareholders. We have an Enterprise Risk Management process ("ERM") to manage risk, which is led by our Chief Compliance Officer.
To STERIS, this means we will make a difference by providing world-class products and services for our Customers, safe and rewarding work for our People, and superior returns for our Shareholders. We have an Enterprise Risk Management process ("ERM") to manage risk, which is led by our Chief Compliance Officer.
We are dedicated to creating and sustaining a diverse, equitable and inclusive work environment. W e believe that the different ideas, experiences, perspectives and backgrounds of our global employees create a stronger organization that allows us to fulfill our ultimate goal of serving our Customers.
We are dedicated to creating and sustaining a diverse, equitable and inclusive work environment. W e believe that the different ideas, experiences, perspectives and backgrounds of our global employees create a 9 Table of Contents stronger organization that allows us to fulfill our ultimate goal of serving our Customers.
The investigation and remediation of environmental obligations generally occur over an extended period of time, and therefore we do not know if these events would have a material adverse affect on our financial condition, liquidity, or cash flow, nor can there be any assurance that such liabilities would not have a material adverse affect on our performance, results, or financial condition. 6 Table of Contents Competition.
The investigation and remediation of environmental obligations generally occur over an extended period of time, and therefore we do not know if these events would have a material adverse affect on our financial condition, liquidity, or cash flow, nor can there be any assurance that such liabilities would not have a material adverse affect on our performance, results, or financial condition.
The training covers the various forms that corruption can take, red flags, and individuals’ roles in our anti-bribery and anti-corruption efforts. 8 Table of Contents In accordance with our policy, we engage a third-party due diligence firm to perform background checks, including bribery and corruption, before entering into commercial relationships with sales and marketing intermediaries, and other service providers.
The training covers the various forms that corruption can take, red flags, and individuals’ roles in our anti-bribery and anti-corruption efforts. In accordance with our policy, we engage a third-party due diligence firm to perform background checks, including bribery and corruption, before entering into commercial relationships with sales and marketing intermediaries, and other service providers.
We cannot predict the effect on our operations resulting from current or future governmental regulation or the interpretation or application of these regulations. If we fail to comply with any applicable regulatory requirements, penalties could be imposed on us.
We cannot predict the effect on our operations resulting from current or future governmental regulation or the interpretation or application of these regulations. 5 Table of Contents If we fail to comply with any applicable regulatory requirements, penalties could be imposed on us.
On a product basis, competitors include 3M, Baxter, Boston Scientific, Belimed, Ecolab, ERBE, Fortive, Getinge, Karl Storz, Metrex, Olympus, Ruhof, SteelCo, Stryker, Skytron and Wassenburg. On a service line basis, competitors include Agiliti, BBraun, Berendsen plc, CleanLease (Clean Lease Fortex), Mobile, Northfield, Olympus, Owens & Minor, Pentax, Rentex Awé and Rentex Floren and Sterilog Limited.
On a product basis, competitors include 3M, Baxter, Boston Scientific, Belimed, Ecolab, ERBE, Fortive, Getinge, Karl Storz, Metrex, Olympus, Ruhof, SteelCo, Stryker, Skytron and Wassenburg. On a service line basis, competitors include Agiliti, BBraun, Berendsen plc, CleanLease (Clean Lease Fortex), Parts Source, Olympus, Owens & Minor, Pentax, Rentex Awé and Rentex Floren and Sterilog Limited.
It is the policy of the Company to make all decisions regarding employment, including hiring, compensation, training, promotions, transfers, or lay-offs, based on the job requirements and skills of the individuals and utilizing the principle of equal employment opportunity without discrimination. STERIS has biennial training on anti-harassment, except where required annually.
It is the policy of the Company to make all decisions regarding employment, including hiring, compensation, training, promotions, transfers, or lay-offs, based on the job requirements and skills of the individuals and utilizing the principle of equal employment opportunity without discrimination. We have biennial training on anti-harassment, except where required annually.
We consider our brand names and trademarks to be valuable in the marketing of our products. As of March 31, 2022, we had a total of approximately 2,463 trademark registrations worldwide. Quality Assurance. We manufacture, assemble, and package products in several countries. Each of our production facilities are dedicated to particular processes and products.
We consider our brand names and trademarks to be valuable in the marketing of our products. As of March 31, 2023, we had a total of approximately 2,482 trademark registrations worldwide. Quality Assurance. We manufacture, assemble, and package products in several countries. Each of our production facilities are dedicated to particular processes and products.
From February 2003 to July 2020 she held various positions with Parker-Hannifin Corporation, a global motion control technologies company, serving most recently from September 2019 to July 2020, as Vice President Human Resources of its Aerospace Group, from March 2017 to September 2019 as its Corporate Director of Human Resources. 13 Table of Contents Julia K.
From February 2003 to July 2020 she held various positions with Parker-Hannifin Corporation, a global motion control technologies company, serving most recently from September 2019 to July 2020, as Vice President Human Resources of its Aerospace Group and from March 2017 to September 2019 as its Corporate Director of Human Resources. Julia K.
The pharmaceutical industry has been impacted by increased regulatory scrutiny of cleaning and validation processes, mandating that manufacturers improve their processes.
The pharmaceutical industry has been impacted by increased regulatory scrutiny over cleaning and validation processes, mandating that manufacturers improve their processes.
From August 2015 to February 2018, he served as Senior Vice President, STERIS Applied Sterilization Technologies and Life Sciences. Mary Clare Fraser serves as Vice President and Chief Human Resources Officer. She assumed this role when she joined STERIS in July 2020.
From August 2015 to February 2018, he served as Senior Vice President, STERIS Applied Sterilization Technologies and Life Sciences. Mary Clare Fraser serves as Senior Vice President and Chief Human Resources Officer. She assumed this role in May 2022. She joined STERIS in July 2020 as the Vice President and Chief Human Resources Officer.
From July 2013 to July 2018 he served as Vice President, General Counsel, and Secretary. 14 Table of Contents
From July 2013 to July 2018 he served as Vice President, General Counsel, and Secretary. 12 Table of Contents
Our employee turnover rate was 17% and 11% for fiscal 2022 and 2021, respectively, and we are continuously working towards a goal of achieving 10% or under, excluding retirements and reductions in force. Although reductions in force are sometimes necessary, we work to avoid them and they must always be approved by executive management.
Our employee turnover rate was 15% and 17% for fiscal 2023 and 2022, respectively, and we are continuously working towards a goal of achieving a rate of 10% or less, excluding retirements and reductions in force. Although reductions in force are sometimes necessary, we work to avoid them and they must always be approved by executive management.
Key management sponsors are responsible for participating in the risk 7 Table of Contents assessment process, including a periodic review with the Board of Directors.
Key management sponsors are responsible for participating in the risk assessment process, including a periodic review with the Board of Directors.
We protect our technology and products by, among other means, obtaining United States and foreign patents. There can be no assurance, however, that any patent will provide adequate protection for the technology, system, product, service, or process it covers.
We protect our technology and products by, among other means, obtaining United States and foreign patents. There can be no assurance, however, that any patent will provide adequate protection for the technology, system, product, service, or process it covers. In addition, the process of obtaining and protecting patents can be long and expensive.
From April 2014 to August 2019 he served as Vice President, North America Commercial Operations. Renato G. Tamaro serves as Vice President and Corporate Treasurer. He assumed this role in August 2017. From March 2006 to July 2017, he served as Assistant Treasurer. Michael J. Tokich serves as Senior Vice President and Chief Financial Officer.
From August 2019 to August 2022, he served as Senior Vice President, Americas Commercial Operations. From April 2014 to August 2019 he served as Vice President, North America Commercial Operations. Renato G. Tamaro serves as Vice President and Corporate Treasurer. He assumed this role in August 2017. From March 2006 to July 2017, he served as Assistant Treasurer. Michael J.
Products Offered. Our products include cleaning chemistries and sterility assurance products, automated endoscope reprocessing systems and tracking products, accessories for GI procedures, washers, sterilizers and other pieces of capital equipment essential to the operations of a sterile processing department ("SPD") and equipment used directly in the operating room, including surgical tables, lights, equipment management services, and connectivity solutions. Services Offered.
Our products include cleaning chemistries and sterility assurance products, automated endoscope reprocessing systems and tracking products, endoscopy accessories, washers, sterilizers and other pieces of capital equipment essential to the operations of a sterile processing department ("SPD") and equipment used directly in the procedure rooms, including surgical tables, lights, equipment management services, and connectivity solutions. Services Offered.
However, in fiscal 2022 we have experienced delays in receiving materials and significant cost increases that we expect will continue in fiscal 2023. We do not currently expect any significant disruption to our operations due to sourcing problems in fiscal 2023.
However, in fiscal 2022 and 2023 we experienced delays in receiving materials and significant cost increases. We do not currently expect any significant disruption to our operations due to sourcing problems in fiscal 2024.
The Global Sustainability Steering Committee is a cross-functional team of senior leadership, subcommittee chairs, and subject matter experts spanning our businesses and Legal, Investor Relations, Human Resources, Continuous Improvement, Compliance, Facilities, and Health, Safety and Environment functions. The ESG team regularly updates the Nominating and Governance Committee of our Board of Directors.
The Global Sustainability Steering Committee is a cross-functional team of senior leadership, subcommittee chairs, and subject matter experts spanning our businesses and Legal, Investor Relations, Human Resources, Continuous Improvement, Compliance, Facilities, and Health, Safety and Environment functions.
Madsen serves as Senior Vice President, Life Sciences. She assumed this role in July 2020. From August 2015 to July 2020 she served as Vice President and General Manager Life Sciences, Consumables. Cary L. Majors serves as Senior Vice President, Americas Commercial Operations. He assumed this role in August 2019.
Madsen serves as Senior Vice President, Life Sciences. She assumed this role in July 2020. From August 2015 to July 2020 she served as Vice President and General Manager Life Sciences, Consumables. Cary L. Majors serves as Senior Vice President and President, Healthcare. He assumed this role in August 2022.
We cannot assure you that these patterns will not continue. Backlog. We define backlog as the amount of unfilled capital equipment purchase orders at a point in time. At March 31, 2022, we had a backlog, excluding Cantel, of $528.3 million. Of this amount, $423.6 million and $104.7 million related to our Healthcare and Life Sciences segments, respectively.
We cannot assure you that these patterns will not continue. Backlog. We define backlog as the amount of unfilled capital equipment purchase orders at a point in time. At March 31, 2023, we had a backlog of $599.6 million. Of this amount, $494.7 million and $104.9 million related to our Healthcare and Life Sciences segments, respectively.
Tokich 53 Senior Vice President and Chief Financial Officer Andrew Xilas 57 Senior Vice President and General Manager, Dental J. Adam Zangerle 55 Senior Vice President, General Counsel, and Corporate Secretary The following discussion provides a summary of each executive officer's recent business experience through March 31, 2022: Karen L. Burton serves as Vice President, Controller and Chief Accounting Officer.
Tokich 54 Senior Vice President and Chief Financial Officer Andrew Xilas 58 Senior Vice President and General Manager, Dental J. Adam Zangerle 56 Senior Vice President, General Counsel, and Company Secretary The following discussion provides a summary of each executive officer's recent business experience through March 31, 2023: Karen L. Burton serves as Vice President, Controller and Chief Accounting Officer.
The objective of ERM is to identify key risks, the potential impacts of compliance failure, identify key mitigating activities, develop potential improvements for managing the risks, and to ensure execution of oversight activities on a monthly, annual or as needed basis.
The objective of ERM is to identify key risks, the potential impacts of compliance failure, identify key mitigating activities, develop potential improvements for managing the risks, and to ensure execution of oversight activities on a monthly, annual or as needed basis. Our Environmental, Social, and Governance ("ESG") function is led by the Vice President of ESG.
Total directors and employee’s distribution by gender is shown in the table below: March 31, 2022 March 31, 2021 Male Female Male Female Non-Executive Directors 6 2 6 2 Senior Managers 663 236 507 179 Other employees of the Company 10,294 5,629 8,420 3,970 Directors and United States employees by race is shown in the table below: March 31, 2022 March 31, 2021 White Minority (1) White Minority (1) Non-Executive Directors 75% 25% 75% 25% Senior Managers 88% 12% 90% 10% Other employees of the Company 63% 37% 68% 32% (1) A minority person is defined as a person who identifies as American Indian/Alaskan Native, Asian, Black or African American, Hispanic or Latino, Native Hawaiian or Other Pacific Island, or two or more races. 10 Table of Contents Health, Safety & Environment.
Total directors and employee’s distribution by gender is shown in the table below: March 31, 2023 March 31, 2022 Male Female Male Female Non-Executive Directors 6 2 6 2 Senior Managers 739 297 663 236 Other employees of the Company 10,774 5,846 10,294 5,629 Directors and United States employees by race is shown in the table below: March 31, 2023 March 31, 2022 White Minority (1) White Minority (1) Non-Executive Directors 75% 25% 75% 25% Senior Managers 86% 14% 88% 12% Other employees of the Company 61% 39% 63% 37% (1) A minority person is defined as a person who identifies as American Indian/Alaskan Native, Asian, Black or African American, Hispanic or Latino, Native Hawaiian or Other Pacific Island, or two or more races.
These products include formulated cleaning chemistries, barrier products, sterility assurance products, steam and vaporized hydrogen peroxide sterilizers and washer disinfectors. 4 Table of Contents Services Offered. Our Life Sciences segment service employees install, maintain, upgrade, repair, and troubleshoot equipment throughout the world.
Our portfolio includes a full suite of consumable products, equipment maintenance and specialty services, and capital equipment. Products Offered. These products include formulated cleaning chemistries, barrier products, sterility assurance products, steam and vaporized hydrogen peroxide sterilizers and washer disinfectors. Services Offered. Our Life Sciences segment service employees install, maintain, upgrade, repair, and troubleshoot equipment throughout the world.
We take prompt action whenever we are alerted to regulatory or field-safety issues with a STERIS product. Following immediate assessment, we take corrective action, including voluntary product recalls, when needed. We examine underlying issues and root cause and work to resolve these to avoid recurrence. STERIS had no Class I recalls in fiscal 2022, 2021 and 2020.
We take prompt action whenever we are alerted to regulatory or field-safety issues with a STERIS product. Following immediate assessment, we take corrective action, including voluntary product recalls, when 11 Table of Contents needed. We examine underlying issues and root cause and work to resolve these to avoid recurrence.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table presents certain information regarding our executive officers at March 31, 2022. All executive officers serve at the pleasure of the Board of Directors. Name Age Position Karen L. Burton 54 Vice President, Controller and Chief Accounting Officer Daniel A.
STERIS had no Class I recalls in fiscal 2023, 2022 or 2021. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table presents certain information regarding our executive officers at March 31, 2023. All executive officers serve at the pleasure of the Board of Directors. Name Age Position Karen L. Burton 55 Vice President, Controller and Chief Accounting Officer Daniel A.
The average number of persons employed by STERIS plc and its subsidiaries during each of the following fiscal years was as follows: Fiscal 2022 Fiscal 2021 Healthcare 10,546 8,529 Applied Sterilization Technologies 2,961 2,686 Life Sciences 1,111 868 Dental 1,020 — Corporate 784 687 Total employees 16,422 12,770 Diversity, Equity & Inclusion (DE&I).
The average number of persons employed by STERIS plc and its subsidiaries during each of the following fiscal years was as follows: Fiscal 2023 Fiscal 2022 Healthcare 10,629 10,546 Applied Sterilization Technologies 3,163 2,961 Life Sciences 965 1,111 Dental 1,451 1,020 Corporate 892 784 Total employees 17,100 16,422 Diversity, Equity & Inclusion (DE&I).
Our Continuous Improvement objectives include efforts to improve energy and water efficiency and reduce or eliminate certain chemicals used in, and wastes generated from, our operations thereby reducing the impact of our operations on the environment.
We have made, and continue to make, significant investments to comply with these laws and regulations. Our Continuous Improvement objectives include efforts to improve energy and water efficiency and reduce or eliminate certain chemicals used in, and wastes generated from, our operations thereby reducing the impact of our operations on the environment.
Our ideal business team is engaged, diverse, inclusive and talented, and we create programs and policies in support of these goals. 9 Table of Contents We believe unity of purpose and teamwork enables us to do far more than we could individually. We draw strength from each other and encourage communication with fairness, candor, respect and courage.
We expect our people to treat each other with mutual respect. Our ideal business team is engaged, diverse, inclusive and talented, and we create programs and policies in support of these goals. We believe unity of purpose and teamwork enables us to do far more than we could individually.
Key metrics for purposes of benchmarking performance include Total Recordable Cases ("TRC") and Days Away From Work ("DAFW") injury and illness incident rates, both of which are presented in the table below: STERIS Industry Benchmarks (2) Fiscal 2022 Fiscal 2021 Average Best in Class Total Recordable Cases Rate (1) 0.85 0.91 2.50 1.28 Days Away From Work Rate (1) 0.24 0.37 1.25 0.42 (1 ) We apply the U.S.
Key metrics for purposes of benchmarking performance include Total Recordable Incident Rate ("TRIR") and Lost-time Incident Rate ("LTIR") injury and illness incident rates, both of which are presented in the table below: STERIS Industry Benchmarks (2) Fiscal 2023 Fiscal 2022 Average Best in Class Total Recordable Incident Rate (1) 1.05 0.85 2.50 1.43 Lost-time Incident Rate (1) 0.36 0.24 1.25 0.32 (1 ) We apply the U.S.
Carestio 49 President and Chief Executive Officer Mary Clare Fraser 51 Vice President and Chief Human Resources Officer Julia K. Madsen 57 Senior Vice President, Life Sciences Cary L. Majors 47 Senior Vice President, Americas Commercial Operations Renato G. Tamaro 53 Vice President and Corporate Treasurer Michael J.
Carestio 50 President and Chief Executive Officer Mary Clare Fraser 52 Senior Vice President and Chief Human Resources Officer Julia K. Madsen 58 Senior Vice President, Life Sciences Cary L. Majors 48 Senior Vice President and President, Healthcare Renato G. Tamaro 54 Vice President and Corporate Treasurer Michael J.
As a Lean focused organization, we have created standard work instructions for many processes and refresher courses are offered regularly for existing employees. Where possible, we look to provide cross-training for employees looking to expand their knowledge or grow into new roles. We encourage all employees to create individual development plans and provide the support to assist in that effort.
Our focus is on safety, quality and consistency in approach and outcome. As a Lean focused organization, we have created standard work instructions for many processes and refresher courses are offered regularly for existing employees. Where possible, we look to provide cross-training for employees looking to expand their knowledge or grow into new roles.
We describe below how we continuously monitor and track our policies and activities in the areas of ethical business practices, energy and environmental conservation, employees and human capital management, and quality. ETHICAL BUSINESS PRACTICES Code of Business Conduct.
We seek to provide investors with useful, relevant and meaningful sustainability information and have selected metrics under the SASB Standards. We describe below how we continuously monitor and track our policies and activities in the areas of ethical business practices, energy and environmental conservation, employees and human capital management, and quality. ETHICAL BUSINESS PRACTICES Code of Business Conduct.
The ISO 14001 and 45001 sets out the criteria that a company can follow to establish an effective HSE management system. Designed for any type of organization, regardless of its activity or sector, it can provide assurance that environmental impact is being measured, controlled and improved in a holistic manner.
Designed for any type of organization, regardless of its activity or sector, it can provide assurance that environmental impact is being measured, controlled and improved in a holistic manner.
We currently have 1 facility and 13 reprocessing locations that hold ISO 14001, and 4 facilities and 13 reprocessing locations are 45001 accredited locations. The OSHA Voluntary Protection Program ("VPP") Star Award recognizes employers who have implemented effective safety and health management systems and maintain injury and illness rates below national Bureau of Labor Statistics averages for their industry.
To date, one facility and 14 reprocessing locations have undergone the formal process to receive ISO 14001. 10 Table of Contents The OSHA Voluntary Protection Program ("VPP") Star Award recognizes employers who have implemented effective safety and health management systems and maintain injury and illness rates below national Bureau of Labor Statistics averages for their industry.
The CEO regularly receives discrete financial information about each reportable segment and uses this information to assess performance and allocate resources. The accounting policies of the reportable segments are the same as those described in Note 1 to the Consolidated Financial Statements titled, “Nature of Operations and Summary of Significant Accounting Policies,” of this Annual Report.
The accounting policies of the reportable segments are the same as those described in Note 1 to our consolidated financial statements titled, “Nature of Operations and Summary of Significant Accounting Policies,” of this Annual Report. HEALTHCARE SEGMENT Description of Busi ness.
With respect to financial matters, reports are provided to the Board of Director’s Audit Committee. The STERIS Code of Business Conduct covers ethical marketing and off-label promotion. In fiscal 2022, STERIS incurred no monetary losses as a result of legal proceedings associated with false marketing claims.
With respect to financial matters, reports are provided to the Board of Director’s Audit Committee. The STERIS Code of Business Conduct covers ethical marketing and off-label promotion.
We offer a wide range of sterilization modalities as well as an array of testing services that complements the manufacturing of sterile products. Our locations are in major population centers and core distribution corridors throughout the Americas, Europe and Asia. Our technical services group supports Customers in all phases of product development, materials testing, and process validation. Customer Concentration.
We offer a wide range of sterilization modalities and an array of testing services that complement the manufacturing of single use, sterile products. Our facilities are located in regions with a concentration of medical device manufacturing throughout the Americas, Europe, and Asia. Our technical professionals supports Customers in all phases of product development, materials testing, and process validation.
At March 31, 2021, we had backlog orders of $286.2 million. Of this amount, $206.3 million and $79.9 million related to our Healthcare and Life Sciences segments, respectively. Availability of Securities and Exchange Commission Filings.
At March 31, 2022, excluding Cantel, we had backlog orders of $528.3 million. Of this amount, $423.6 million and $104.7 million related to our Healthcare and Life Sciences segments, respectively. 6 Table of Contents Availability of Securities and Exchange Commission Filings.
The ESG function works closely with our Global Sustainability Steering Committee to build ESG values and implement strategies, programs, and policies across the Company.
The ESG function, with support from our Chief Executive Officer, General Counsel and other senior executives, works to actively develop and refine our ESG strategies, programs, and policies. The ESG function works closely with our Global Sustainability Steering Committee to build ESG values and implement strategies, programs, and policies across the Company.
In our manufacturing and service organizations, we provide training for employees who do not have the appropriate experience or background. This training is conducted through a combination of hands-on and module-based training. Our focus is on safety, quality and consistency in approach and outcome.
In addition, we provide biennial Code of Conduct training and other key required training at all levels of the Company. In our manufacturing and service organizations, we provide training for employees who do not have the necessary experience or background. This training is conducted through a combination of hands-on and module-based training.
Our wholesale Customers primarily include major healthcare distributors, with some group purchasing organizations and buying co-operatives that sell our products to dental practices, medical facilities, veterinary clinics, and government and educational institutions. The majority of our dental products are sold under our brand names, but we also supply private label products for several of our Customers.
Our dental products are sold globally to wholesale Customers and directly to end users in many countries. Our wholesale Customers primarily include major healthcare distributors, with some group purchasing organizations and buying co-operatives that sell our products to dental practices, medical facilities, government & educational institutions, and veterinary clinics.
For the year ended March 31, 2022, no Customer represented more than 10% of the Healthcare Product segment's total revenues. Competition. We compete with a number of large companies that have significant product portfolios and global reach, as well as a number of small companies with very limited product offerings and operations in one or a limited number of countries.
We compete with a number of large companies that have significant product portfolios and global reach, as well as a number of small companies with very limited product offerings and operations in one or a limited number of countries.
Total employee compensation is presented in the table below: 11 Table of Contents 12 Table of Contents (in thousands) Fiscal 2022 Fiscal 2021 Wages and salaries $ 1,326,220 $ 943,503 Social security costs 65,525 58,695 Share based compensation expense 57,660 25,966 Pension and post-retirement benefits expense 32,423 26,944 Other, primarily employee benefits 130,217 79,927 Total employee costs $ 1,612,045 $ 1,135,035 QUALITY We are subject to strict regulatory compliance and quality standards to ensure the safety and supply of our products and services.
Total employee compensation is presented in the table below: (in thousands) Fiscal 2023 Fiscal 2022 Wages and salaries $ 1,172,234 $ 1,100,357 Commission and incentive plans 154,840 225,863 Social security costs 91,653 65,525 Share-based compensation expense 38,951 57,660 Pension and post-retirement benefits expense 37,936 32,423 Other, primarily employee benefits 139,133 130,217 Total employee costs $ 1,634,747 $ 1,612,045 QUALITY We are subject to strict regulatory compliance and quality standards to ensure the safety and supply of our products and services.
In our most recent survey, we measured fifteen principal factors and overall employee engagement was 75%, in-line with our results for the past five years.The results indicate that the majority of our people are committed to serving our Customers, are proud to work for STERIS, and have confidence in the stability of our business.
We are pleased to report that 85% of our employees completed our 2023 survey. In our most recent survey, we measured fifteen principal factors and overall employee engagement was 74%, in-line with our results for the past five years.
Three Customers collectively and consistently account for more than 40.0% of our Dental segment revenue. The percentage associated with these three Customers collectively in any one period may vary due to the buying patterns of these three Customers as well as other Dental Customers.
The percentage associated with these three Customers collectively in any one period may vary due to the buying patterns of these three Customers as well as other Dental Customers. These three Customers collectively accounted for approximatel y 47.4% of our Dental segment revenues for the year ended March 31, 2023. 4 Table of Contents Competition.
We devote significant resources to research and development efforts and we believe STERIS is positioned as a global competitor in the search for technological innovations. In addition to research and development, we invest in quality control, Customer training programs, distribution systems, technical services, and other information services.
In addition to research and development, we invest in quality control, Customer training programs, distribution systems, technical services, and other information services.
These three Customers collectively accounted for approximately 45.1% of our Dental segment revenues for the year ended March 31, 2022. Competition. We compete with a number of large companies that have significant product portfolios and global reach, as well as a number of small companies with very limited product offerings.
We compete with a number of large companies that have significant product portfolios and global reach, as well as a number of small companies with very limited product offerings.
We are committed to the safety and success of our people. We expect the performance of every person to continually improve with personal initiative and proper support. We expect our people to treat each other with mutual respect.
EMPLOYEES AND HUMAN CAPITAL MANAGEMENT Strategy and Overview. People are the key to our success, which is reflected in our two core values of people and teamwork. We are committed to the safety and success of our people. We expect the performance of every person to continually improve with personal initiative and proper support.
We have a broad and comprehensive portfolio of sterilization and disinfection products that support the procedural spaces within hospitals and surgery centers as well as pharmaceutical, medical device and dental Customers. When we think about new products or next generation products, part of our effort is to reduce the environmental impact of what we do.
More recently, we initiated a comprehensive review to establish the baseline for our Scope 3 carbon emissions. We have a broad and comprehensive portfolio of sterilization and disinfection products that support the procedural spaces within hospitals, endoscopy and surgery centers as well as pharmaceutical, medical device and dental Customers.
HEALTHCARE SEGMENT Description of Busi ness. Our Healthcare segment provides a comprehensive offering for healthcare providers worldwide, focused on sterile processing departments and procedural centers, such as operating rooms and endoscopy suites.
Our Healthcare segment provides a comprehensive offering for healthcare providers worldwide, focused on sterile processing departments and procedural centers, such as operating rooms and endoscopy suites. Our products and services range from infection prevention consumables and capital equipment, as well as services to maintain that equipment; to the repair of re-usable procedural instruments; to outsourced instrument reprocessing services.
Key performance indicators and metrics have been established for those areas we believe to be relevant and potentially significant to our business. Certain of these disclosures relate to Sustainability Accounting Standards Board (SASB) Standards for Medical Equipment & Supplies that we have identified to be closely aligned with our business.
Certain of these disclosures relate to Sustainability Accounting Standards Board (SASB) Standards for Medical Equipment & Supplies that we have identified to be closely aligned with our business. Our reporting against the SASB Standards is a voluntary disclosure aligned with our focus on financial materiality.
Our collaboration turns interesting ideas into great products and services for our Customers. Our senior management team and Board receive regular updates on our people, including data and metrics on retention, engagement and safety which are used to determine our human resources priorities, programs and training.
Our senior management team and Board receive regular updates on our people, including data and metrics on retention, engagement and safety which are used to determine our human resources priorities, programs and training. We are committed to upholding human rights in all our operations globally and respect human rights as recognized by the principles of the United Nations Global Compact.
Our products and services range from infection prevention consumables and capital equipment, as well as services to maintain that equipment; to the repair of re-usable procedural instruments; to outsourced instrument reprocessing services. In addition, our procedural solutions also include single-use devices and capital equipment infrastructure used primarily in operating rooms, ambulatory surgery centers, endoscopy suites, and other procedural areas.
In addition, our procedural solutions also include endoscopy accessories and capital equipment infrastructure used primarily in operating rooms, ambulatory surgery centers, endoscopy suites, and other procedural areas. Products Offered.
Our Applied Sterilization Technologies segment’s services are offered to Customers throughout the world. For the year ended March 31, 2022, no Customer represented more than 10% of the segment’s revenues. Competition. Applied Sterilization Technologies operates in a highly regulated industry and competes with Sterigenics International, Inc., other smaller contract sterilization companies and manufacturers that sterilize products in-house.
In addition, we manufacture and supply integrated sterilization equipment and control systems to medical device manufacturers and research institutions. Customer Concentration. Our Applied Sterilization Technologies segment’s services are offered to Customers throughout the world. For the year ended March 31, 2023, no Customer represented more than 10% of the segment’s revenues. Competition.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changePotential difficulties that may be encountered in the integration process include, among other factors: • the inability to successfully integrate the business of Cantel into STERIS in a manner that permits STERIS to achieve the full revenue and cost savings anticipated from the acquisition; • complexities associated with managing the larger, more complex, integrated business; • not realizing anticipated operating synergies or incurring unexpected costs to realize such synergies; • integrating personnel from the two companies while maintaining focus on providing consistent, high-quality products and services; • potential unknown liabilities and unforeseen expenses associated with the acquisition; • loss of key employees; • integrating relationships with Customers, vendors and business partners; • performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by integrating Cantel’s operations into STERIS; and • the disruption of, or the loss of momentum in, each company’s ongoing business or inconsistencies in standards, controls, procedures and policies.
Biggest changePotential difficulties that may be encountered in the integration process include, among other factors: • the inability to successfully integrate the business of an acquired business into STERIS in a manner that permits STERIS to achieve the full revenue and cost savings anticipated from the acquisition; • complexities associated with managing the larger, more complex, integrated business; • not realizing anticipated operating synergies or incurring unexpected costs to realize such synergies; • integrating personnel from acquired businesses into STERIS while maintaining focus on providing consistent, high-quality products and services; • potential unknown liabilities and unforeseen expenses associated with the acquisition; • loss of key employees; • integrating relationships with Customers, vendors and business partners; • performance shortfalls as a result of the diversion of management’s attention caused by integration activities; and • the disruption of, or the loss of momentum in, an acquired business and STERIS’ ongoing business or inconsistencies in standards, controls, procedures and policies. 22 Table of Contents Past and future business acquisitions may not be as accretive to STERIS’s earnings per share and cash flow from operations per share, which may negatively affect the market price of STERIS Shares.
In response to the military conflict between Russia and Ukraine that began in February 2022, the United States, other North Atlantic Treaty Organization member states, as well as non-member states, announced targeted economic sanctions on Russia.
In response to the military conflict between Russia and Ukraine that began in February 2022, the United States and other North Atlantic Treaty Organization member states, as well as non-member states, announced targeted economic sanctions on Russia.
The COVID-19 pandemic disrupted our operations and could have a material adverse effect on our business and financial condition if further significant disruptions occur. The COVID-19 pandemic, along with the response to the pandemic by governmental and other actors, disrupted our operations. We experienced temporary mandatory and voluntary facility closures in certain jurisdictions in which we operate.
The COVID-19 pandemic disrupted our operations and could have a material adverse effect on our business and financial condition if further significant disruptions occur. The COVID-19 pandemic, along with the response to the pandemic by governmental and other actors, disrupted our operations. We have experienced temporary mandatory and voluntary facility closures in certain jurisdictions in which we operate.
Any of these risks might have a materially adverse impact on our business operations, our cash flows and our financial position or results of operations. Current economic and political conditions make tax rules in any jurisdiction subject to significant change. The U.S. Tax Cuts and Jobs Act (“TCJA”) was signed into law on December 22, 2017.
Any of these risks might have a materially adverse impact on our business operations, our cash flows and our financial position or results of operations. Current economic and political conditions make tax rules in any jurisdiction subject to significant change. The U.S. Tax Cuts and Jobs Act (the “TCJA”) was signed into law on December 22, 2017.
The anticipated benefits and cost savings of the acquisition may not be realized fully or at all, may take longer to realize than expected, may require more non-recurring costs and expenditures to realize than expected or could have other adverse effects that we do not currently foresee.
The anticipated benefits and cost savings of an acquisition may not be realized fully or at all, may take longer to realize than expected, may require more non-recurring costs and expenditures to realize than expected or could have other adverse effects that we do not currently foresee.
Our increased indebtedness could have important consequences to our shareholders, including increasing STERIS’s vulnerability to general adverse economic and industry conditions, limiting our ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements, requiring the use of a substantial portion of our cash flow from operations for the payment of principal and interest on indebtedness, thereby reducing our ability to use our cash flow to fund working capital, acquisitions, capital expenditures and general corporate matters, including dividend payments and stock repurchases, limiting our flexibility in planning for, or reacting to, changes in its business and our industry and creating a disadvantage compared to our competitors with less indebtedness.
Our increased indebtedness could have important consequences to our shareholders, including increasing STERIS’s interest obligations, general adverse economic and industry conditions, limiting our ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements, requiring the use of a substantial portion of our cash flow from operations for the payment of principal and interest on indebtedness, thereby reducing our ability to use our cash flow to fund working capital, acquisitions, capital expenditures and general corporate matters, including dividend payments and stock repurchases, limiting our flexibility in planning for, or reacting to, changes in its business and our industry and creating a disadvantage compared to our competitors with less indebtedness.
In Europe, our products are regulated primarily by country and community regulations of those countries within the European Economic Area and must conform to the requirements of those authorities. 16 Table of Contents Government regulation applies to nearly all aspects of testing, manufacturing, safety, labeling, storing, recordkeeping, reporting, promoting, distributing, and importing or exporting of medical devices, products, and services.
In Europe, our products are regulated primarily by country and community regulations of those countries within the European Economic Area and must conform to the requirements of those authorities. 14 Table of Contents Government regulation applies to nearly all aspects of testing, manufacturing, safety, labeling, storing, recordkeeping, reporting, promoting, distributing, and importing or exporting of medical devices, products, and services.
We bear losses incurred as a result of, for example, physical damage to or destruction of our facilities (such as distribution or fulfillment centers), loss or spoilage of inventory, and business interruption due to weather events that may be attributable to climate change could materially adversely affect our business operations, financial position or results of operation.
We may bear losses as a result of, for example, physical damage to or destruction of our facilities (such as distribution or fulfillment centers), loss or spoilage of inventory, and business interruption due to weather events that may be attributable to climate change, which could materially and adversely affect our business operations, financial position or results of operation.
The potential impacts include supply chain and logistics disruptions, financial impacts including volatility in foreign exchange and interest rates, increased inflationary pressure on raw materials and energy, and other risks including an elevated risk of 15 Table of Contents cybersecurity threats and the potential for further sanctions.
The potential impacts include supply chain and logistics disruptions, financial impacts including volatility in foreign exchange and interest rates, increased inflationary pressure on raw materials and energy, and other risks, including an elevated risk of 13 Table of Contents cybersecurity threats and the potential for further sanctions.
Any such claims, proceedings, investigations or litigation, regardless of the merits, might result in substantial costs, restrictions on product use or sales, or otherwise injure our business. 17 Table of Contents Administratively or judicially imposed or agreed sanctions might include warning letters, fines, civil penalties, criminal penalties, loss of tax benefits, injunctions, product seizure, recalls, suspensions or restrictions, re-labeling, detention, and/or debarment.
Any such claims, proceedings, investigations or litigation, regardless of the merits, might result in substantial costs, restrictions on product use or sales, or otherwise injure our business. Administratively or judicially imposed or agreed sanctions might include warning letters, fines, civil penalties, criminal penalties, loss of tax benefits, injunctions, product seizure, recalls, suspensions or restrictions, re-labeling, detention, and/or debarment.
If we are unable to obtain any required approvals, approval supplements or clearances for any modification to a previously cleared or approved device, we may be required to cease manufacturing and sale, or recall or restrict the use of such modified device, pay fines, or take other action until such time as appropriate clearance or approval is obtained.
If there are delays in and/or we are unable to obtain any required approvals, approval supplements or clearances for any modification to a previously cleared or approved device, we may be required to cease manufacturing and sale, or recall or restrict the use of such modified device, pay fines, or take other action until such time as appropriate clearance or approval is obtained.
We may be adversely affected by global climate change or by legal, regulatory or market responses to such change. The long-term effects of climate change are difficult to assess and predict.
We may be adversely affected by global climate change or by existing and future legal, regulatory or market responses to such change. The long-term effects of climate change are difficult to assess and predict.
However, no assurance can be given that current or future legislative or regulatory action, or current or future litigation to which we are or may become a party, will not significantly increase the costs of conducting our EO contract sterilization operations or curtail or eliminate the use of EO in our contract sterilization operations.
However, no assurance can be given that current or future legislative or regulatory action, or current or future litigation to which we are or may become a 19 Table of Contents party, will not significantly increase the costs of conducting our EO contract sterilization operations or curtail or eliminate the use of EO in our contract sterilization operations.
Some product replacements or substitutions may not be possible or may be prohibitively costly or time consuming. The impact of any legal, regulatory, or compliance claims, proceeding, investigation, or litigation, is difficult to predict. We maintain product liability and other insurance with coverages believed to be adequate.
Some product replacements or substitutions may not be possible or may be prohibitively costly or time consuming. The impact of any legal, regulatory, or compliance claims, proceeding, investigation, or litigation, is difficult to predict. 15 Table of Contents We maintain product liability and other insurance with coverages believed to be adequate.
Although STERIS expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the STERIS and Cantel businesses, should allow STERIS to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.
Although STERIS expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of acquired businesses, should allow STERIS to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.
Some of the assumptions that we made such as with respect to anticipated operating synergies or the costs associated with realizing such synergies, significant long-term cash flow generation, and the continuation of our investment grade credit profile, may not be realized.
Assumptions that we have made with respect to acquisitions, such as with respect to anticipated operating synergies or the costs associated with realizing such synergies, significant long-term cash flow generation, and the continuation of our investment grade credit profile, may not be realized.
Government or other third-party payors may deny or change coverage, reduce their current levels of reimbursement for healthcare services, or otherwise implement measures to regulate pricing or contain costs. In addition, our costs may increase more rapidly than reimbursement levels or permissible pricing increases or we may not satisfy the standards or requirements for reimbursement. Among other provisions, the U.S.
Government or other third-party payors may deny or change coverage, reduce their current levels of reimbursement for healthcare services, or otherwise implement measures to regulate pricing or contain costs. In addition, our costs may increase more rapidly than reimbursement levels or permissible pricing increases or we may not satisfy the standards or requirements for reimbursement.
In addition, further changes in the tax laws of other jurisdictions could arise, including as a result of the base erosion and profit shifting (B EPS) project undertaken by the Organization for Economic Cooperation and Development (OECD).
In addition, further changes in the tax laws of other jurisdictions will likely arise, including as a result of the base erosion and profit shifting (B EPS) project undertaken by the Organization for Economic Cooperation and Development (OECD).
The integration process may result in the loss of key employees, the disruption of ongoing business or inconsistencies in standards, controls, procedures, and policies. There could be potential unknown liabilities and unforeseen expenses associated with the acquisition that were not discovered while performing due diligence.
The post-acquisition integration process may result in the loss of key employees, the disruption of ongoing business, changes in strategy or inconsistencies in standards, controls, procedures, and policies. There could be potential unknown liabilities and unforeseen expenses associated with acquisitions that were not discovered while performing due diligence.
Internal Revenue Service (the “IRS”) may not agree that we are a foreign corporation for U.S. federal tax purposes.
Internal Revenue Service (the “IRS”) may not agree that we are a non-U.S. corporation for U.S. federal tax purposes.
Section 7874, however, provides an exception to this general rule under which a non-U.S. organized entity may be treated as a U.S. corporation for U.S. federal tax purposes. If we were to be treated as a U.S. corporation for U.S. federal tax purposes, we could be subject to substantial additional U.S. tax liability.
Section 7874, however, provides an exception to this general rule under which a non-U.S. organized entity may be treated as a U.S. corporation for U.S. federal tax purposes. 17 Table of Contents If we were to be treated as a U.S. corporation for U.S. federal tax purposes, we could be subject to substantial additional U.S. tax liability.
In addition, we rely on networks and services, including internet sites, data hosting and processing facilities and tools and other hardware, software and technical applications and platforms, some of which are managed, hosted, provided and/or used by third-parties or their vendors, to assist in conducting our busines s.
In addition, we rely on networks and services, including internet sites, cloud and software-as-a-service solutions, data hosting and processing facilities and tools and other hardware, software and technical applications and platforms, some of which are managed, hosted, provided and/or used by third-parties or their vendors, to assist in conducting our busines s.
In addition, the COVID-19 pandemic may increase the risk of such vulnerability and attacks, including unauthorized access or attacks exploiting the fact that a large number of employees are working remotely during government shutdowns and closures. Furthermore, their has also been an increase in cyber incidents that appears to be associated with the Ukraine-Russia military conflict.
In addition, the COVID-19 pandemic may increase the risk of such vulnerability and attacks, including unauthorized access or attacks exploiting the fact that a large number of employees are working remotely. Furthermore, there has also been an increase in cyber incidents that appears to be associated with the Ukraine-Russia military conflict.
Our success with respect to these recent and future acquisitions will depend on our ability to integrate the businesses acquired, retain key personnel, realize identified cost synergies and otherwise execute our strategies.
Our success with respect to these recent and future acquisitions will depend on our ability to integrate the businesses acquired, retain key personnel, realize identified cost synergies, manage the expanded business footprint and otherwise execute our strategies.
Although we are organized under the laws of Ireland and are a tax resident in Ireland for Irish tax purposes, the IRS may assert that we should be treated as a U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal tax purposes pursuant to Section 7874 of the Internal Revenue Code of 1986, as amended (the “Code” and such Section, “Section 7874”).
Although we are organized under the laws of Ireland and are a tax resident in Ireland for Irish tax purposes, the IRS may assert that we should be treated as a U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal tax purposes pursuant to Section 7874 of the Code (“Section 7874”).
Future acquisitions or other capital requirements will necessitate additional cash. To the extent our existing sources of cash are insufficient to fund these or other future activities, we have and may need to raise additional funds through new or expanded borrowing arrangements or equity.
To the extent our existing sources of cash are insufficient to fund these or other future activities, we have and may need to raise additional funds through new or expanded borrowing arrangements or equity.
Accordingly, our employees continued to work because of the importance of our operations to the health and well-being of citizens in the countries in which we operate. We implemented telework policies wherever possible for appropriate categories of employees.
During the COVID-19 pandemic, our employees continued to work because of the importance of our operations to the health and well-being of citizens in the countries in which we operate, and we implemented telework policies wherever possible for appropriate categories of employees.
These other risks include additional uncertainties not presently known to us or that we currently believe are immaterial, but may ultimately have a significant impact. In addition, the impact of the COVID-19 pandemic may also exacerbate any of these risks, which could have a material effect on us.
These other risks include additional uncertainties not presently known to us or that we currently believe are immaterial, but may ultimately have a significant impact. In addition, the impacts of the COVID-19 pandemic, Russia’s invasion of Ukraine and the ongoing inflationary environment may also exacerbate any of these risks, which could have a material effect on us.
One of the modalities offered by our AST operations is EO sterilization. In the United States, several regulators, including the EPA, FDA, and agencies at the state and local level, play a role in regulating the use of EO sterilization. In 2016, the EPA changed the cancer risk basis for EO and determined that EO is carcinogenic to humans.
In the United States, several regulators, including the EPA, FDA, and agencies at the state and local level, play a role in regulating the use of EO sterilization. In 2016, the EPA changed the cancer risk basis for EO and determined that EO is carcinogenic to humans.
Our debt level may limit our financial and business flexibility. 23 Table of Contents We funded the cash portion of the acquisition consideration, as well as the refinancing, prepayment, replacement, redemption, repurchase, settlement upon conversion, discharge or defeasance of certain existing indebtedness of Cantel and its subsidiaries, transaction expenses, general corporate expenses and working capital needs, through the incurrence of approximately $2.1 billion of new indebtedness, which includes $1.350 billion of senior notes issued April 1, 2021 and a new delayed draw term loan agreement in the amount of $750 million.
We funded the cash portion of the Cantel Medical acquisition consideration, as well as the refinancing, prepayment, replacement, redemption, repurchase, settlement upon conversion, discharge or defeasance of certain existing indebtedness of Cantel and its subsidiaries, transaction expenses, general corporate expenses and working capital needs, through the incurrence of approximately $2.1 billion of new indebtedness, which includes $1.350 billion of senior notes issued April 1, 2021 and a new delayed draw term loan agreement in the amount of $750 million.
While we believe that we have developed appropriate measures to ensure the health and well-being of our employees, there can be no assurances that our measures will be sufficient to protect our employees in our workplace or that they may not otherwise be exposed to COVID-19 or similar illness outside of our workplace.
While based on our response to the current COVID-19 pandemic, we believe that we have developed appropriate measures to ensure the health and well-being of our employees for similar or future health crises, there can be no assurances that our measures will be sufficient to protect our employees in our workplace or that they may not otherwise be exposed to an illness outside of our workplace.
Difficulties in integrating Cantel into STERIS may result in Cantel performing differently than expected, in operational challenges or in the failure to realize anticipated expense-related efficiencies. STERIS’s and Cantel’s existing businesses could also be negatively impacted by the actions.
Difficulties in integrating acquired businesses into STERIS may result in the business performing differently than expected, in operational challenges, in strategic changes or in the failure to realize anticipated expense-related efficiencies. STERIS’s existing businesses could also be negatively impacted by the integration actions.
A number of our Customers have consolidated. These consolidations are due in part to healthcare cost reduction measures initiated by competitive pressures as well as legislators, regulators and third-party payors. This may result in greater pricing pressures on us and in some cases loss of Customers. Additional consolidations could result in a loss of Customers or more significant pricing pressures.
Consolidations among our healthcare and pharmaceutical Customers may result in a loss of Customers or more significant pricing pressures . A number of our Customers have consolidated. These consolidations are due in part to healthcare cost reduction measures initiated by competitive pressures as well as legislators, regulators and third-party payors.
Our continued success depends, in large part, on our ability to hire and retain highly qualified people and if we are unable to do so, our business and operations may be impaired or disrupted.
Our continued success depends, in large part, on our ability to hire and retain highly qualified people and if we are unable to do so, our business and operations may be impaired or disrupted. Labor market conditions, particularly in the United States, are challenging.
This strategy depends upon our ability to identify, appropriately price, and complete these types of business development transactions or arrangements and to obtain any necessary financing. In the last several fiscal years we have made a number of acquisitions. We also completed several divestitures of non-strategic businesses or product lines during the last several years.
This strategy depends upon our ability to identify, appropriately price, and complete these types of business development transactions or arrangements and to obtain any necessary financing. In the last several fiscal years we have made a number of acquisitions and dispositions.
Some jurisdictions have raised tax rates and it is reasonable to expect that other global taxing authorities will be reviewing current legislation for potential modifications in reaction to the implementation of the TCJA, current economic conditions, and COVID-19 response costs.
We cannot predict the overall impact that the additional guidance and recent changes may have on our business. Some jurisdictions have raised tax rates and it is reasonable to expect that other global taxing authorities will be reviewing current legislation for potential modifications in reaction to the implementation of the TCJA, current economic conditions, and COVID-19 response costs.
There can be no assurance that we will be able to obtain additional funds beyond those available under existing bank credit facilities on terms favorable to us, or at all, or that such facilities can be replaced when they terminate.
There can be no assurance that we will be able to obtain additional funds beyond those available under existing bank credit facilities on terms favorable to us, or at all, or that such facilities can be replaced when they terminate. The integration of acquired businesses into STERIS may not be as successful as anticipated.
Our acquisition activity and ability to grow organically may be adversely affected if we are unable to continue to access the financial markets . Our recent acquisitions have been financed largely through cash on hand and borrowings under our bank credit facilities and through public note offerings in early April of fiscal 2022.
Our acquisition activity and ability to grow organically may be adversely affected if we are unable to continue to access the financial markets . Our recent acquisitions have been financed largely through cash on hand, borrowings under our bank credit facilities and through public note offerings. Future acquisitions or other capital requirements and investments will necessitate additional cash.
Regulatory agencies may also change policies, adopt additional regulations, or revise existing regulations, each of which could prevent or delay approval or clearance of devices, or could impact our ability to market a previously cleared, approved, or unregulated device.
Regulatory submissions may require the provision of additional data and may be time consuming and costly, and their outcome is uncertain. Regulatory agencies may also change policies, adopt additional regulations, or revise existing regulations, each of which could prevent or delay approval or clearance of devices, or could impact our ability to market a previously cleared, approved, or unregulated device.
Competition for highly qualified people is intense and there is no assurance that we will be successful in attracting or retaining replacements to fill vacant positions, successors to fill retirements or employees moving to new positions, or other highly qualified personnel.
The undersupply of highly qualified people has led to increased competition, which has led to higher costs and other labor-related difficulties. There is no assurance that we will be successful in attracting or retaining replacements to fill vacant positions, successors to fill retirements or employees moving to new positions, or other highly qualified personnel.
Long-term facility closures or other restrictions could materially adversely affect our ability to adequately staff, supply or otherwise maintain our operations. Such restrictions also may have a substantial impact on our Customers and our sales cycles.
Additionally, the COVID-19 outbreak has caused temporary disruptions and rising costs in our labor supply and supply chain and distribution network. Long-term facility closures or other restrictions could materially adversely affect our ability to adequately staff, supply or otherwise maintain our operations. Such restrictions also may have a substantial impact on our Customers and our sales cycles.
A decline in surgical procedures could result in a decline in demand for the products and services provided by our Healthcare business, which may have a material adverse effect on our financial condition and results of operations. We engage in acquisitions and affiliations, divestitures, and other business arrangements.
A decline in surgical procedures could result in a decline in demand for the products and services provided by our Healthcare business, which may have a material adverse effect on our financial condition and results of operations. Our EO sterilization operations subject us to claims of liability and associated adverse effects .
Our operations are subject to extensive regulation in the countries where we do business. In the United States, our products and services are regulated by the FDA and other regulatory authorities. In many foreign countries, sales of our products and services are subject to extensive regulations that may or may not be comparable to those of the FDA.
In many foreign countries, sales of our products and services are subject to extensive regulations that may or may not be comparable to those of the FDA.
Furthermore, we have experienced less demand for certain of our products and services as a result of deferrals of certain medical procedures, and other factors, which we believe was exacerbated by the impact of stay-at-home orders. Additionally, the COVID-19 outbreak has caused temporary disruptions and rising costs in our supply chain and distribution network.
Furthermore, we have experienced less demand for certain of our products and services as a result of reduced volume of medical procedures, and other factors, which we believe was exacerbated by the impact of stay-at-home orders and government responses to COVID-19.
We continue to look for opportunities to in-source production that is currently provided by third parties.These activities may not produce the full efficiencies and cost reduction benefits that we expect or efficiencies and benefits might be delayed. Implementation costs also might exceed expectations.
We have undertaken various activities to incorporate lean concepts and practices to more efficiently operate our business, including in-sourcing. We continue to look for opportunities to in-source production that is currently provided by third parties. These activities may not produce the full efficiencies and cost reduction benefits that we expect or efficiencies and benefits might be delayed.
Our growth may be adversely affected if we are unable to successfully identify, price, and integrate strategic business candidates or otherwise optimize our business portfolio. Our success depends, in part, on strategic acquisitions and joint ventures, which are intended to complement or expand our businesses, divestiture of non-strategic businesses, and other actions intended to optimize our portfolio of businesses.
Our success depends, in part, on strategic acquisitions and joint ventures, which are intended to complement or expand our businesses, divestiture of non-strategic businesses and other assets, and other actions intended to optimize our portfolio of businesses.
Our operations are subject to regulations and permitting, which may be changed or amended by the relevant authorities, and which may limit or eliminate our current operations or increase the complexity, burden, or expense of compliance and regulated materials or processes that we use in our operations may become the focus of litigation. 20 Table of Contents Our AST segment is a technology-neutral contract sterilization service that offers our Customers a wide range of sterilization modalities through a worldwide network of over 50 contract sterilization and laboratory facilities.
Our operations are subject to regulations and permitting, which may be changed or amended by the relevant authorities, and which may limit or eliminate our current operations or increase the complexity, burden, or expense of compliance and regulated materials or processes that we use in our operations may become the focus of litigation.
The COVID-19 pandemic or similar public health crises could have a material adverse impact on ability to staff our operations. 21 Table of Contents As supplier to Healthcare and Life Sciences Customers, we fall within a “critical infrastructure” sector, and are also considered an essential business and therefore were exempt under various stay at home/shelter in place orders associated with COVID-19.
As supplier to Healthcare and Life Sciences Customers, we fell within a “critical infrastructure” sector, and were also considered an essential business and therefore were exempt under various stay at home/shelter in place orders associated with COVID-19.
The integration involves numerous operational, strategic, financial, accounting, legal, tax and other risks; potential liabilities associated with the acquired businesses; and uncertainties related to design, operation and integration of Cantel’s internal control over financial reporting.
In recent years we have made several large acquisitions of business, including the acquisitions of Cantel Medical and Key Surgical. The integration of acquired businesses into STERIS involves numerous operational, strategic, financial, accounting, legal, tax and other risks; potential liabilities associated with the acquired businesses; and uncertainties related to design, operation and integration of internal controls over financial reporting.
Our operations, and those of our suppliers, are subject to a variety of business continuity hazards and risks, any of which could interrupt production or operations or otherwise adversely affect our performance, results, or value.
A long-term disruption in cobalt-60 sourced from Russia may negatively impact gamma processing capacity or increase costs in certain portions of our AST operations. Our operations, and those of our suppliers, are subject to a variety of business continuity hazards and risks, any of which could interrupt production or operations or otherwise adversely affect our performance, results, or value.
We face increased competition from new infection prevention, sterile processing, contamination control, surgical support, cleaning consumables, gastrointestinal endoscopy accessories, contract sterilization, and other products and services entering the market.
We face increased competition from new infection prevention, sterile processing, contamination control, surgical support, cleaning consumables, gastrointestinal endoscopy accessories, contract sterilization, and other products and services entering the market. Competitors and potential competitors also are attempting to develop alternate technologies and sterilizing agents, as well as disposable medical instruments and other devices designed to address the risk of contamination.
In addition, we cannot assure that revenues from Customers that have accounted for significant revenues in the past, either individually or as a group, will reach or exceed historical levels in any future period. 22 Table of Contents RISKS RELATED TO THE ACQUISITION OF CANTEL MEDICAL The integration of Cantel into STERIS may not be as successful as anticipated.
In addition, we cannot assure that revenues from Customers that have accounted for significant revenues in the past, either individually or as a group, will reach or exceed historical levels in any future period. RISKS RELATED TO BUSINESS DEVELOPMENT We engage in acquisitions and affiliations, divestitures, and other business arrangements.
If our continuing efforts to create a lean business and in-source production to reduce costs are not successful, our profitability may be hurt or our business otherwise might be adversely affected . We have undertaken various activities to create a lean business, including in-sourcing.
Furthermore, defense of litigation may result in diversion of management attention from other priorities, which could have a material adverse effect. If our continuing efforts to create a lean business and in-source production to reduce costs are not successful, our profitability may be hurt or our business otherwise might be adversely affected .
Numerous and evolving cybersecurity threats continue to pose potential risks to the security of our IT systems, networks and services, as well as the confidentiality, availability and integrity of our data.
Numerous and evolving cybersecurity threats continue to pose potential risks to the security of our IT systems, networks and services, as well as the confidentiality, availability and integrity of our data. Some of our products, services, and information technology systems contain or use open-source software, which poses additional risks, including potential security vulnerabilities, licensing compliance issues, and quality issues.
Guidance continues to be issued clarifying the application of this new legislation and new changes have been proposed in the U.S. that could increase our total tax expense. We cannot predict the overall impact that the additional guidance and proposed changes may have on our business.
Guidance continues to be issued clarifying the application of this new legislation and new changes have been proposed, and in many instances finalized, with respect to a number of income tax provisions (including foreign tax credit regulations) in the U.S. that could increase our total tax expense.
Decreased availability or increased costs of raw materials or energy supplies or other supplies might increase our production costs or limit our production capabilities or curtail our operations. We purchase raw materials, fabricated and other components, and energy supplies from a variety of suppliers. Key materials include stainless steel, organic and inorganic chemicals, fuel, cobalt-60, EO, and plastic components.
We purchase raw materials, fabricated and other components, and energy supplies from a variety of suppliers. Key raw materials include stainless steel, organic and inorganic chemicals, fuel, cobalt-60 and EO, and key components include plastic components, as well as various electronics including control boards and computer chips.
A long-term disruption in cobalt-60 sourced from Russia may negatively impact gamma processing capacity or increase costs in certain portions of our AST operations but these impacts are not expected to be material to our AST segment and its results of operations.
We have stopped commercial operations in Russia and Belarus, which includes shipments to Customers and purchases of cobalt-60 from our Russian supplier. A long-term disruption in cobalt-60 sourced from Russia may negatively impact gamma processing capacity or increase costs in certain portions of our AST operations.
In addition, legal, regulatory or compliance matters create significant distraction or diversion of significant or unanticipated resources or attention that could have a material adverse effect on the responsibilities and retention of qualified employees.
In addition, legal, regulatory or compliance matters create significant distraction or diversion of significant or unanticipated resources or attention that could have a material adverse effect on the responsibilities and retention of qualified employees. 20 Table of Contents We could experience a failure of a key information technology system, process or site or a breach of information security, including a cybersecurity breach or failure of one or more key information technology systems, networks, processes, associated sites or service providers.
STERIS’s ability to repay all the forgoing obligations will depend on, among other things, STERIS’s financial position and performance, as well as prevailing market conditions and other factors beyond our control.
We also refinanced or settled approximately $1.0 billion of Cantel's long-term indebtedness, including convertible debt, outstanding. As of March 31, 2023, STERIS had approximately $3.1 billion of indebtedness outstanding. STERIS’s ability to repay all the forgoing obligations will depend on, among other things, STERIS’s financial position and performance, as well as prevailing market conditions and other factors beyond our control.
Our failure to comply with the regulatory requirements of the FDA or other applicable regulatory requirements in the United States or elsewhere might subject us to administratively or judicially imposed sanctions.
Our failure to comply with the regulatory requirements of the FDA or other applicable regulatory requirements in the United States or elsewhere might subject us to administratively or judicially imposed sanctions. These sanctions include, among others, warning letters, fines, civil penalties, criminal penalties, loss of tax benefits, injunctions, product seizure, recalls, suspensions or restrictions, re-labeling, detention, and/or debarment.
Existing free trade laws and regulations provide certain beneficial duties and tariffs for qualifying imports and exports, subject to compliance with the applicable classification and other requirements.
As a result, our income may be taxed in jurisdictions where it is not currently taxed and at higher rates than it is currently taxed, which may increase our effective tax rate. Existing free trade laws and regulations provide certain beneficial duties and tariffs for qualifying imports and exports, subject to compliance with the applicable classification and other requirements.
We have developed a plan to expand our irradiation processing capacity with accelerator-based technologies which may reduce the potential supply risk. Shortages in supply, increased regulatory or security requirements, or increases in the price of raw materials, components and energy supplies may adversely affe ct us.
Shortages in supply, increased regulatory or security requirements, or increases in the price of raw materials, components and energy supplies may adversely affe ct us. In response to the active conflict between Russian and Ukraine, we have stopped purchasing cobalt-60 from our Russian supplier.
The acquisition of Cantel may not be as accretive to STERIS’s earnings per share and cash flow from operations per share, which may negatively affect the market price of STERIS Shares. The acquisition may not be as accretive to STERIS’s earnings per share and cash flow from operations per share.
Past and future acquisitions may not be as accretive to STERIS’s earnings per share and cash flow from operations per share as expected.
Increases in costs of doing business may have a material adverse effect on our financial condition and results of operations.
Implementation costs also might exceed expectations. Increases in costs of doing business may have a material adverse effect on our financial condition and results of operations. A pandemic or similar public health crises, such as COVID-19, could have a material adverse impact on ability to staff our operations.
In addition, we have been required to commit significant resources to “Sunshine Act” compliance. Various additional health care reform proposals have emerged at the federal and state level, and we are unable to predict which, if any, of those proposals will be enacted.
Various additional health care reform proposals have emerged at the federal and state level, and we are unable to predict which, if any, of those proposals will be enacted. Product and Service Related Regulations and Claims We are subject to extensive regulatory requirements and must receive and maintain regulatory clearance or approval for many products and operations.
Regulatory agencies may refuse to grant approval or clearance, or review and disagree with our interpretation of approvals or clearances, or with our decision that regulatory approval is not required or has been maintained. Regulatory submissions may require the provision of additional data and may be time consuming and costly, and their outcome is uncertain.
Any elongation or de-prioritization or delay in regulatory review could materially affect our ongoing device design, development, and commercialization plans. Regulatory agencies may refuse to grant approval or clearance, or review and disagree with our interpretation of approvals or clearances, or with our decision that regulatory approval is not required or has been maintained.
Product and Service Related Regulations and Claims We are subject to extensive regulatory requirements and must receive and maintain regulatory clearance or approval for many products and operations. Failure to receive or maintain, or delays in receiving, clearance or approvals may hurt our revenues, profitability, financial condition, or value.
Failure to receive or maintain, or delays in receiving, clearance or approvals may negatively impact our revenues, profitability, financial condition, or value. Our operations are subject to extensive regulation in the countries where we do business. In the United States, our products and services are regulated by the FDA and other regulatory authorities.
Any elongation or de-prioritization or delay in regulatory review resulting from such disruptions could materially affect our ongoing device design, development, and commercialization plans. Our products are subject to recalls and restrictions, even after receiving United States or foreign regulatory clearance or approval.
Our products are subject to recalls and restrictions, even after receiving United States or foreign regulatory clearance or approval.
The success of the acquisition will depend, in part, on our ability to realize the anticipated benefits and cost savings from combining the businesses, including the approximately $110 million in annualized pre-tax cost synergies that we expect to realize within the first four fiscal years after the completion of the acquisition.
The success of an acquisition depends, in part, on our ability to realize the anticipated benefits and cost savings from combining the businesses.
Changes in tax treaties and trade agreements could negatively impact our costs, results of operations and earnings per share.
In addition, the GloBE rules, which are expected to be implemented in most of the jurisdictions where we have operations, and the CAMT may adversely impact our effective corporate tax rate. Changes in tax treaties and trade agreements could negatively impact our costs, results of operations and earnings per share.
Any decrease or delay of any accretion to, STERIS’s earnings per share or cash flow from operations per share could cause the price of the STERIS's ordinary shares to decline. STERIS has incurred and will incur significant transaction and acquisition-related costs in connection with the acquisition, which may be in excess of those anticipated.
Any decrease or delay of any accretion to, STERIS’s earnings per share or cash flow from operations per share could cause the price of the STERIS's ordinary shares to decline. We incurred a substantial amount of additional debt to complete the Cantel Medical acquisition. Our debt level may limit our financial and business flexibility.
These contemplated changes, to the extent adopted by OECD members and/or other countries, could increase tax uncertainty and may adversely impact our provision for income taxes. 18 Table of Contents Our tax rate is uncertain and may vary from expectations, which could have a material impact on our results of operations and earnings per share.
These transition period provisions may have an adverse impact on our effective tax rate, and subject us to additional income tax, in some of the jurisdictions who adopt the GloBE rules. Our tax rate is uncertain and may vary from expectations, which could have a material impact on our results of operations and earnings per share.
See the risk factor titled “The integration of Cantel into STERIS may not be as successful as anticipated” below. The costs described above, as well as other unanticipated costs and expenses, could have a material adverse effect on the financial condition and operating results. We incurred a substantial amount of additional debt to complete the acquisition.
The costs described above, as well as other unanticipated costs and expenses, could have a material adverse effect on the financial condition and operating results. We may fail to realize all of the anticipated benefits of an acquired business, or those benefits may take longer to realize than expected.
To the extent the value of goodwill or intangible becomes impaired, we may be required to incur material non-cash charges relating to such impairment. Our operating results may be significantly impacted from both the impairment and the underlying trends in the business that triggered the impairment.
If the impairment evaluations for goodwill indicate the carrying amount exceeds the estimated fair value, an impairment loss is recognized in an amount equal to that excess. Our operating results may be significantly impacted from both the impairment and the underlying trends in the business that triggered the impairment.
The non-recurring expenses include, among others, employee retention costs, fees paid to financial, legal and accounting advisors, and severance and benefit costs. STERIS will also incur and has incurred costs related to implementing integration plans, costs to consolidate facilities and systems and employment-related costs. Additional unanticipated costs may be incurred in the integration of the two companies’ businesses.
STERIS expects to incur non-recurring costs associated with the integrations of recent acquisitions into STERIS and working towards achieving the desired synergies of such acquisitions. These fees and costs have been, and may continue to be, substantial. The non-recurring expenses include, among others, employee retention costs, fees paid to financial, legal and accounting advisors, and severance and benefit costs.
We have recorded goodwill and other intangible assets that could become impaired and result in material non-cash changes to our results of operation in the future. The acquisition has been accounted for as an acquisition by STERIS in accordance with accounting principles generally accepted in the U.S., which is referred to as U.S. GAAP.
We may not be able to ascertain actual value or understand potential liabilities until or after we actually assume operation control of these businesses, product or service lines, assets or technologies. We have recorded goodwill and other intangible assets that could become impaired and result in material non-cash changes to our results of operation in the future.
STERIS has incurred substantial expenses in connection with the negotiation and completion of the acquisition of Cantel and related transactions. STERIS expects to continue to incur a number of non-recurring costs associated with combining the operations of STERIS and Cantel achieving desired synergies. These fees and costs have been, and will continue to be, substantial.
STERIS has incurred substantial expenses in connection with the negotiation and completion of past business acquisitions and dispositions, including Cantel Medical and Key Surgical, and expects to incur similar costs for any future business acquisitions or dispositions.
Removed
The current military conflict between Russia and Ukraine and its implications on U.S., Canadian and European Union relations with Russia could cause long term geopolitical and economic instability that may impact our future operating results.
Added
The effects of geopolitical instability, including as a result of Russia’s invasion of Ukraine, may adversely affect us and create significant risks and uncertainties for our business, with the ultimate impact dependent on future developments, which are highly uncertain and unpredictable.
Removed
We have stopped operating in Russia and Belarus, which includes shipments to Customers and purchases of cobalt-60 from our Russian supplier. Our operations located in the region did not represent a material portion of our consolidated assets or revenues.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur locations are geographically spread to be in close proximity to our Customers to ensure timely delivery of products and services. The Company owns and leases several material manufacturing locations that support one or more of our segme nts, which are disclosed in the following table: Location U.S./INTL* Owned/Leased Montgomery, AL U.S. Owned/Leased St. Louis, MO U.S.
Biggest changeThe Company owns and leases several material manufacturing locations that support one or more of our segme nts, which are disclosed in the following table: 24 Table of Contents Location U.S./INTL* Owned/Leased Montgomery, AL U.S. Owned/Leased St. Louis, MO U.S. Owned/Leased Mentor, OH U.S. Owned/Leased Sharon Hill, PA U.S. Owned Franklin Park, IL U.S. Leased Point Richmond, CA U.S.
Leased Fidenza, Italy INTL Leased Pomezia, Italy INTL Owned Tuttlingen, Germany INTL Leased Ontario, Canada INTL Leased Quebec City, Canada INTL Owned Tuusula, Finland INTL Owned Bordeaux, France INTL Owned Leicester, England INTL Owned Shanghai, China INTL Leased Guadalupe, Mexico INTL Leased Bishop Stortford, England INTL Leased * International includes all countries other than Ireland and the U.S. 25 Table of Contents
Leased Fidenza, Italy INTL Leased Pomezia, Italy INTL Owned Tuttlingen, Germany INTL Leased Ontario, Canada INTL Leased Quebec City, Canada INTL Owned Tuusula, Finland INTL Owned Bordeaux, France INTL Owned Leicester, England INTL Owned Shanghai, China INTL Leased Guadalupe, Mexico INTL Leased Bishop Stortford, England INTL Leased * International includes all countries other than Ireland and the U.S.
ITEM 2. PROPERTIES The following discussion sets forth materially important properties of the Company and its subsidiaries as of March 31, 2022. The Company believes that its facilities are adequate for operations and are maintained in good condition.
ITEM 2. PROPERTIES The following discussion sets forth materially important properties of the Company and its subsidiaries as of March 31, 2023. The Company believes that its facilities are adequate for operations and are maintained in good condition. The Company is confident that, if needed, it will be able to acquire additional facilities at commercially reasonable rates.
The Company operates over 150 locations representing sales, administrative and operational locations in the U.S. and over 25 other countries, the majority of which are leased and support one or multiple business segments. Operational locations are primarily comprised of service centers and distribution warehouses.
These locations are strategically located near Customer manufacturing and distribution sites and core distribution corridors throughout the Americas, Europe and Asia. The Company operates over 150 locations representing sales, administrative and operational locations in the U.S. and over 25 other countries, the majority of which are leased and support one or multiple business segments.
Owned/Leased Mentor, OH U.S. Owned/Leased Sharon Hill, PA U.S. Owned Franklin Park, IL U.S. Leased Point Richmond, CA U.S. Leased Clemmons, NC U.S. Leased Des Plaines, IL U.S. Owned Rush, NY U.S. Owned Chicago, IL U.S. Leased Conroe, TX U.S. Owned Plymouth, MN U.S. Owned/Leased Sharon, PA U.S. Owned Lawrenceville, GA U.S. Leased West Chicago, IL U.S.
Leased Clemmons, NC U.S. Leased Des Plaines, IL U.S. Owned Rush, NY U.S. Owned Chicago, IL U.S. Leased Conroe, TX U.S. Owned Plymouth, MN U.S. Owned/Leased Sharon, PA U.S. Owned Lawrenceville, GA U.S. Leased West Chicago, IL U.S. Leased Santa Fe Springs, CA U.S. Leased Phoenix, AZ U.S. Leased Stratford, CT U.S.
The Company’s principal executive office is located in Dublin, Ireland and its primary administrative offices are located in Mentor, OH (U.S.). The Company owns 52 and leases 12 contact sterilization locations, utilized in the Applied Sterilization Technologies Segment that are located in major population centers and core distribution corridors throughout the Americas, Europe and Asia.
In the following discussion “International” is defined as all countries other than Ireland and the United States. The Company’s principal executive office is located in Dublin, Ireland and its primary administrative offices are located in Mentor, OH (U.S.). The Company owns 54 and leases 17 contract sterilization locations, utilized in the Applied Sterilization Technologies Segment.
Removed
The Company 24 Table of Contents is confident that, if needed, it will be able to acquire additional facilities at commercially reasonable rates. In the following discussion “International” is defined as all countries other than Ireland and the United States.
Added
Operational locations are primarily comprised of service centers and distribution warehouses. Our locations are geographically spread to be in close proximity to our Customers to ensure timely delivery of products and services.
Removed
Leased Santa Fe Springs, CA U.S. Leased Phoenix, AZ U.S. Leased Stratford, CT U.S.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS Information regarding our legal proceedings is included in Item 7 of Part II, Management's Discussion and Analysis ("MD&A"), and Note 10 of our consolidated financial statements titled, "Commitments and Contingencies," and is incorporated herein by reference thereto.
Biggest changeITEM 3. LEGAL PROCEEDINGS Information regarding our legal proceedings is included in Item 7 of Part II, Management's Discussion and Analysis ("MD&A"), and Note 10 to our consolidated financial statements titled, "Commitments and Contingencies," and is incorporated herein by reference thereto.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of March 31, 2022, there was approximately $308.9 million (net of taxes, fees and commissions) of remaining availability under the Board authorized share repurchase program. The share repurchase program has no specified expiration date. Under the authorization, the Company may repurchase its shares from time to time through open market purchases, including 10b5-1 plans.
Biggest changeThis share repurchases program was suspended on April 9, 2020 and the suspension was lifted effective February 10, 2022, enabling the Company to resume stock repurchases pursuant to prior authorizations. As of March 31, 2023, there was approximately $13.9 million (net of taxes, fees and commissions) of remaining availability under the Board authorized share repurchase program.
ITEM 5. MARKET FOR REGISTRANT’S ORDINARY EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information. Our ordinary shares are traded on the New York Stock Exchange under the symbol “STE.” Holders. As of March 31, 2022, there were approxim ately 403 h olders of record of our ordinary shares. Dividend Policy.
ITEM 5. MARKET FOR REGISTRANT’S ORDINARY EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information. Our ordinary shares are traded on the New York Stock Exchange under the symbol “STE.” Holders. As of March 31, 2023, there were approxim ately 403 h olders of record of our ordinary shares. Dividend Policy.
The following table presents information with respect to purchases STERIS made of its ordinary shares during the fourth quarter of fiscal year 2022: (a) Total Number of Shares Purchased (b) Average Price Paid Per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans (d) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans at Period End (dollars in thousands) January 1-31 — $ — — $ 333,932 February 1-28 50,000 229.59 50,000 322,452 March 1-31 58,368 231.64 58,368 308,932 Total 108,368 (1) $ 230.69 (1) 108,368 $ 308,932 (1) Does not include 5 shares purchased during the quarter at an average price of $235.63 per share by the STERIS Corporation 401(k) Plan on behalf of an executive officer of the Company who may be deemed to be an affiliated purchaser. 27 Table of Contents
The following table presents information with respect to purchases STERIS made of its ordinary shares during the fourth quarter of fiscal year 2023: Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans at Period End (dollars in thousands) January 1-31 122,400 $ 191.10 122,400 $ 137,236 February 1-28 230,200 $ 190.03 230,200 93,491 March 1-31 436,063 $ 182.45 436,063 13,932 Total 788,663 (1) $ 186.00 (1) 788,663 $ 13,932 (1) Does not include 8 shares purchased during the quarter at an average price of $194.76 per share by the STERIS Corporation 401(k) Plan on behalf of an executive officer of the Company who may be deemed to be an affiliated purchaser. 26 Table of Contents
From February 14, 2022, through March 31, 2022, we repurchased 108,368 of our ordinary shares for the aggregate amount of $25.0 million (net of taxes, fees and commissions) pursuant to the authorizations. During fiscal 2022, we obtained 244,395 of our ordinary shares in the aggregate amount of $30.8 million in connection with share based compensation award programs.
During fiscal 2023, we obtained 79,169 of our ordinary shares in the aggregate amount of $13.5 million in connection with share-based compensation award programs.
Removed
Any share repurchases may be activated, suspended or discontinued at any time. Due to the uncertainty surrounding the COVID-19 pandemic, share repurchases were suspended on April 9, 2020. The suspension was lifted effective February 10, 2022, enabling the Company to resume stock repurchases pursuant to the prior authorizations.
Added
The foregoing authorization was terminated May 3, 2023 and replaced with a new $500.0 million (net of taxes, fees and commissions) share repurchase program, which has no specified expiration date. We have not made any repurchases under the new share repurchase program to date.
Added
Under the authorization, the Company may repurchase its shares from time to time through open market purchases, including 10b5-1 plans. Any share repurchases may be activated, suspended or discontinued at any time. During fiscal 2023, we repurchased 1,563,983 of our ordinary shares for the aggregate amount of $295.0 million (net of taxes, fees and commissions) pursuant to the authorizations.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOther potential risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, (a) the impact of the COVID-19 pandemic or similar public health crises on STERIS’s operations, supply chain, material and labor costs, performance, results, prospects, or value, (b) STERIS's ability to achieve the expected benefits regarding the accounting and tax treatments of the redomiciliation to Ireland (“Redomiciliation”), (c) operating costs, Customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, Customers, clients or suppliers) being greater than expected, (d) STERIS’s ability to successfully integrate the businesses of Cantel Medical into our existing businesses, including unknown or inestimable liabilities, or increases in expected integration costs or difficulties in connection with the integration of Cantel Medical (e) STERIS’s ability to meet expectations regarding the accounting and tax treatment of the Tax Cuts and Jobs Act (“TCJA”) or the possibility that anticipated benefits resulting from the TCJA will be less than estimated, (f) changes in tax laws or interpretations that could increase our consolidated tax liabilities, including changes in tax laws that would result in STERIS being treated as a domestic corporation for United States federal tax purposes, (g) the potential for increased pressure on pricing or costs that leads to erosion of profit margins, (h) the possibility that market demand will not develop for new technologies, products or applications or services, or business initiatives will take longer, cost more or produce lower benefits than anticipated, (i) the possibility that application of or compliance with laws, court rulings, certifications, regulations, regulatory actions, including without limitation any of the same relating to FDA, EPA or other regulatory authorities, government investigations, the outcome of any pending or threatened FDA, EPA or other regulatory warning notices, actions, requests, inspections or submissions, or other requirements or standards may delay, limit or prevent new product or service introductions, affect the production, supply and/or marketing of existing products or services or otherwise affect STERIS’s performance, results, prospects or value, (j) the potential of international unrest, including the Russia-Ukraine military conflict, economic downturn or effects of currencies, tax assessments, tariffs and/or other trade barriers, adjustments or anticipated rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs, (k) the possibility of reduced demand, or reductions in the rate of growth in demand, for STERIS’s products and services, (l) the possibility of delays in receipt of orders, order cancellations, or delays in the manufacture or shipment of ordered products, due to supply chain issues or otherwise , or in the provision of services, (m) 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 STERIS’s businesses, industry or initiatives may adversely impact STERIS’s performance, results, prospects or value, (n) the impact on STERIS and its operations, or tax liabilities, of Brexit or the exit of other member countries from the EU, and the Company’s ability to respond to such impacts, (o) the impact on STERIS and its operations of any legislation, regulations or orders, including but not limited to any new trade or tax legislation, regulations or orders, that may be implemented by the U.S. administration or Congress, or of any responses thereto, (p) the possibility that anticipated financial results or benefits of recent acquisitions, including the acquisition of Cantel Medical and Key Surgical, or of STERIS’s restructuring efforts, or of recent divestitures, including anticipated revenue, productivity improvement, cost savings, growth synergies and other anticipated benefits, will not be realized or will be other than anticipated, (q) the increased level of STERIS’s indebtedness incurred in connection with the acquisition of Cantel Medical limiting financial flexibility or increasing future borrowing costs, (r) rating agency actions or other occurrences that could affect STERIS’s existing debt or future ability to borrow funds at rates favorable to STERIS or at all, (s) the potential impact of the acquisition of Cantel Medical on relationships, including with suppliers, Customers, employees and regulators, and (t) the effects of contractions in credit availability, as well as the ability of STERIS’s Customers and suppliers to adequately access the credit markets when needed. 51 Table of Contents
Biggest changeOther potential risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, (a) the impact of the COVID-19 pandemic or similar public health crises on STERIS’s operations, supply chain, material and labor costs, performance, results, prospects, or value, (b) STERIS's ability to achieve the expected benefits regarding the accounting and tax treatments of the redomiciliation to Ireland (“Redomiciliation”), (c) operating costs, Customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, Customers, clients or suppliers) being greater than expected, (d) STERIS’s ability to successfully integrate the businesses of Cantel Medical into our existing businesses, including unknown or inestimable liabilities, impairments, or increases in expected integration costs or difficulties in connection with the integration of Cantel Medical, (e) uncertainties related to tax treatments under the TCJA and the IRA, (f) the possibility that Pillar Two Model Rules could increase tax uncertainty and adversely impact STERIS's provision for income taxes and effective tax rate and subject STERIS to additional income tax in jurisdictions who adopt Pillar Two Model Rules, (g) STERIS's ability to continue to qualify for benefits under certain income tax treaties in light of ratification of more strict income tax treaty rules (through the MLI) in many jurisdictions where STERIS has operations, (h) changes in tax laws or interpretations that could increase our consolidated tax liabilities, including changes in tax laws that would result in STERIS being treated as a domestic corporation for United States federal tax purposes, (i) the potential for increased pressure on pricing or costs that leads to erosion of profit margins, including as a result of inflation, (j) the possibility that market demand will not develop for new technologies, products or applications or services, or business initiatives will take longer, cost more or produce lower benefits than anticipated, (k) the possibility that application of or compliance with laws, court rulings, certifications, regulations, or regulatory actions, including without limitation any of the same relating to FDA, EPA or other regulatory authorities, government investigations, the outcome of any pending or threatened FDA, EPA or other regulatory warning notices, actions, requests, inspections or submissions, the outcome of any pending or threatened litigation brought by private parties, or other requirements or standards may delay, limit or prevent new product or service introductions, affect the production, supply and/or marketing of existing products or services, result in costs to STERIS that may not be covered by insurance, or otherwise affect STERIS’s performance, results, prospects or value, (l) the potential of international unrest, including the Russia-Ukraine military conflict, economic downturn or effects of currencies, tax assessments, tariffs and/or other trade barriers, adjustments or anticipated rates, raw material costs or availability, benefit or retirement plan costs, or other regulatory compliance costs, (m) the possibility of reduced demand, or reductions in the rate of growth in demand, for STERIS’s products and services, (n) the possibility of delays in receipt of orders, order cancellations, or delays in the manufacture or shipment of ordered products, due to supply chain issues or otherwise , or in the provision of services, (o) 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, impairments, regulatory, governmental, or other issues or risks associated with STERIS’s businesses, industry or initiatives including, without limitation, those matters described in STERIS's various securities filings, may adversely impact STERIS’s performance, results, prospects or value, (p) the impact on STERIS and its operations, or tax liabilities, of Brexit or the exit of other member countries from the EU, and the Company’s ability to respond to such impacts, (q) the impact on STERIS and its operations of any legislation, regulations or orders, including but not limited to any new trade or tax legislation (including CAMT and excise tax on stock buybacks), regulations or orders, that may be implemented by the U.S. administration or Congress, or of any responses thereto, (r) the possibility that anticipated financial results or benefits of recent acquisitions, including the acquisition of Cantel Medical and Key Surgical, or of STERIS’s restructuring efforts, or of recent divestitures, including anticipated revenue, productivity improvement, cost savings, growth synergies and other anticipated benefits, will not be realized or will be other than anticipated, (s) the increased level of STERIS’s indebtedness incurred in connection with the acquisition of Cantel Medical limiting financial flexibility or 49 Table of Contents increasing future borrowing costs, (t) rating agency actions or other occurrences that could affect STERIS’s existing debt or future ability to borrow funds at rates favorable to STERIS or at all, and (u) the effects of changes in credit availability and pricing, as well as the ability of STERIS’s Customers and suppliers to adequately access the credit markets, on favorable terms or at all, when needed. 50 Table of Contents
As you read the MD&A, it may be helpful to refer to information in Item 1, "Business", Part I, Item 1A, "Risk Factors" and Note 10 of our consolidated financial statements titled, "Commitments and Contingencies" for a discussion of some of the matters that can adversely affect our business and results of operations.
As you read the MD&A, it may be helpful to refer to information in Item 1, "Business," Part I, Item 1A, "Risk Factors," and Note 10 to our consolidated financial statements titled, "Commitments and Contingencies" for a discussion of some of the matters that can adversely affect our business and results of operations.
The Senior Public Notes were issued pursuant to an Indenture, dated as of April 1, 2021 (the “Base Indenture”), among FinCo, and STERIS plc, STERIS Corporation and STERIS Limited (the “Guarantors”) and U.S.
The Senior Public Notes were issued pursuant to an Indenture, dated as of April 1, 2021 (the “Base Indenture”), among FinCo, STERIS plc, STERIS Corporation and STERIS Limited (the “Guarantors”) and U.S.
We cannot be sure that the tax authorities will agree with all of the tax positions taken by us. The actual income tax liability for each jurisdiction in any year can, in some instances, ultimately be determined be several years after the tax return is filed and the financial statements are published.
We cannot be sure that the tax authorities will agree with all of the tax positions taken by us. The actual income tax liability for each jurisdiction in any year can, in some instances, ultimately be determined several years after the tax return is filed and the financial statements are published.
We record expected recoveries under applicable insurance contracts when we are assured of recovery. Refer to Note 10 of our consolidated financial statements titled, "Commitments and Contingencies" for additional information. We are subject to taxation from federal, state and local, and foreign jurisdictions.
We record expected recoveries under applicable insurance contracts when we are assured of recovery. Refer to Note 10 to our consolidated financial statements titled, "Commitments and Contingencies" for additional information. We are subject to taxation from federal, state and local, and foreign jurisdictions.
These legal proceedings, investigations and claims generally involve a variety of legal theories and allegations, including, without limitation, personal injury (e.g., slip and falls, burns, vehicle accidents), product liability or regulation (e.g., based on product operation or claimed malfunction, failure to warn, failure to meet specification, or failure to comply with regulatory requirements), product exposure (e.g., claimed exposure to chemicals, asbestos, contaminants, radiation), property damage (e.g., claimed damage due to leaking equipment, fire, vehicles, chemicals), commercial claims (e.g., breach of contract, economic loss, warranty, misrepresentation), financial (e.g., taxes, reporting), employment (e.g., wrongful termination, discrimination, benefits matters), and other claims for damage and relief.
These legal proceedings, investigations and claims generally involve a variety of legal theories and allegations, including, without limitation, personal injury (e.g., slip and falls, burns, vehicle accidents), product liability or regulation (e.g., based on product operation or claimed malfunction, failure to warn, failure to meet specification, or failure to comply with regulatory requirements), product exposure (e.g., claimed exposure to chemicals, gases, asbestos, contaminants, radiation), property damage (e.g., claimed damage due to leaking equipment, fire, vehicles, chemicals), commercial claims (e.g., breach of contract, economic loss, warranty, misrepresentation), financial (e.g., taxes, reporting), employment (e.g., wrongful termination, discrimination, benefits matters), and other claims for damage and relief.
In addition to the acquisition of Cantel, we completed three other tuck-in acquisitions during fiscal 2022, which continued to expand our product and service offerings in the Healthcare segment. Total aggregate consideration for these transactions was approximately $3.1 million, net of cash acquired and including deferred consideration of $0.1 million.
In addition to the acquisition of Cantel, we completed three other tuck-in acquisitions during fiscal 2022, which continued to expand our product and service offerings in the Healthcare segment. Total aggregate consideration for these transactions was approximately $3.1 million, net of cash acquired and including deferred consideration of $0.1 million. Divestitures.
The Revolver may be increased in specified circumstances by up to $625.0 million in the discretion of the lenders. The Revolver matures on the date that is five years after March 19, 2021, and all unpaid borrowings, together with accrued and unpaid interest thereon, are repayable on that date.
The Revolver may be increased in specified circumstances by up to $625.0 million at the discretion of the lenders. The Revolver matures on the date that is five years after March 19, 2021, and all unpaid borrowings, together with accrued and unpaid interest thereon, are repayable on that date.
Our Applied Sterilization Technologies segment is a third-party service provider for contract sterilization, as well as testing services needed to validate sterility services for medical device and pharmaceutical manufacturers. Our technology-neutral offering supports Customers every step of the way, from testing through sterilization.
Our Applied Sterilization Technologies ("AST") segment is a third-party service provider for contract sterilization, as well as testing services needed to validate sterility services for medical device and pharmaceutical manufacturers. Our technology-neutral offering supports Customers every step of the way, from testing through sterilization.
Swingline borrowings bear interest at a rate to be agreed by the applicable swingline lender and the applicable borrower, subject to a cap in the case of swingline borrowings denominated in U.S. Dollars equal to the Base Rate plus the Applicable Margin for Base Rate Advances plus the Facility Fee. Advances may be extended in U.S.
Swingline borrowings bear interest at a rate to be agreed upon by the applicable swingline lender and the applicable borrower, subject to a cap in the case of swingline borrowings denominated in U.S. Dollars equal to the Base Rate plus the Applicable Margin for Base Rate Advances plus the Facility Fee. Advances may be extended in U.S.
Our sources of funding from credit as of March 31, 2022 are summarized below: • On March 19, 2021, STERIS plc ("the Company"), STERIS Corporation, STERIS Limited (“Limited”), and STERIS Irish FinCo Unlimited Company ("FinCo", "STERIS Irish FinCo"), each as a borrower and guarantor, entered into a credit agreement with various financial institutions as lenders, and JPMorgan Chase Bank, N.A., as administrative agent (the “Revolving Credit Agreement”) providing for a $1,250.0 million revolving credit facility (the “Revolver”), which replaced a prior revolving credit agreement. • The Revolver provides for revolving credit borrowings, swing line borrowings and letters of credit, with sublimits for swing line borrowings and letters of credit.
Our sources of funding from credit as of March 31, 2023 are summarized below: • On March 19, 2021, STERIS plc ("the Company"), STERIS Corporation, STERIS Limited (“Limited”), and STERIS Irish FinCo Unlimited Company ("FinCo", "STERIS Irish FinCo"), each as a borrower and guarantor, entered into a credit agreement with various financial institutions as lenders, and JPMorgan Chase Bank, N.A., as administrative agent (the “Revolving Credit Agreement”) providing for a $1,250.0 million revolving credit facility (the “Revolver”), which replaced a prior revolving credit agreement. • The Revolver provides for revolving credit borrowings, swing line borrowings and letters of credit, with sublimits for swing line borrowings and letters of credit.
Note 14 to our consolidated financial statements titled, “Share-Based Compensation,” contains additional information about our share-based compensation plans. 50 Table of Contents FORWARD-LOOKING STATEMENTS This Form 10-K may contain statements concerning certain trends, expectations, forecasts, estimates, or other forward-looking information affecting or relating to STERIS 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.
Note 14 to our consolidated financial statements titled, “Share-Based Compensation,” contains additional information about our share-based compensation plans. 48 Table of Contents FORWARD-LOOKING STATEMENTS This Form 10-K may contain statements concerning certain trends, expectations, forecasts, estimates, or other forward-looking information affecting or relating to STERIS 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.
Beginning September 1, 2021 and through March 31, 2022 the coupon rates on the 2012 private placement notes were increased by 0.50%. • On March 19, 2021, STERIS Corporation as issuer, and the Company, Limited and FinCo, as guarantors, entered into (1) a First Amendment to Amended and Restated Note Purchase Agreement dated March 5, 2019 (which had amended and restated certain note purchase agreements originally dated December 4, 2012) per the 2012 and 2013 senior notes (the “2012 Amendment”), and (2) a First Amendment to Amended and Restated Note Purchase Agreement dated March 5, 2019 (which had amended and restated certain note purchase agreements originally dated March 31, 2015) for the 2015 senior notes (the “2015 Amendment”).
Beginning September 1, 2021, and through March 31, 2023, the coupon rates on the 2012 private placement notes were increased by 0.50%. • On March 19, 2021, STERIS Corporation as issuer, and the Company, Limited and FinCo, as guarantors, entered into (1) a First Amendment to Amended and Restated Note Purchase Agreement dated March 5, 2019 (which had amended and restated certain note purchase agreements originally dated December 4, 2012) per the 2012 and 2013 senior notes (the “2012 Amendment”), and (2) a First Amendment to Amended and Restated Note Purchase Agreement dated March 5, 2019 (which had amended and restated certain note purchase agreements originally dated March 31, 2015) for the 2015 senior notes (the “2015 Amendment”).
We provide information about the interest component of our long-term debt in the subsection of MD&A titled, “Liquidity and Capital Resources,” and in Note 6 to our consolidated financial statements titled, “Debt.” Purchase obligations shown in the table above relate to minimum purchase commitments with suppliers for materials purchases and long term construction contracts. 43 Table of Contents The table above excludes contributions we make to our defined contribution plans.
We provide information about the interest component of our long-term debt in the subsection of MD&A titled, “Liquidity and Capital Resources,” and in Note 6 to our consolidated financial statements titled, “Debt.” Purchase obligations shown in the table above relate to minimum purchase commitments with suppliers for materials purchases and long-term construction contracts. 41 Table of Contents The table above excludes contributions we make to our defined contribution plans.
Additionally, the acquisition is expected to result in cost savings from optimizing global back-office infrastructure, leveraging best-demonstrated practices across locations and eliminating redundant public company costs. 30 Table of Contents The results of Cantel are only reflected in the results of operations and cash flows from June 2, 2021 forward, which will affect results of comparability to the prior period operations and cash flows.
Additionally, the acquisition is expected to result in cost savings from optimizing global back-office infrastructure, leveraging best-demonstrated practices across locations and eliminating redundant public company costs. 29 Table of Contents The results of Cantel are only reflected in the results of operations and cash flows from June 2, 2021 forward, which will affect results of comparability to the prior period operations and cash flows.
Additional information regarding these financial measures, including reconciliations of each non- GAAP financial measure, is available in the subsection of MD&A titled, "Non-GAAP Financial Measures." 29 Table of Contents REVENUES– DEFINED As required by Regulation S-X, we separately present revenues generated as either product revenues or service revenues on our Consolidated Statements of Income for each period presented.
Additional information regarding these financial measures, including reconciliations of each non-GAAP financial measure, is available in the subsection of MD&A titled, "Non-GAAP Financial Measures." 28 Table of Contents REVENUES– DEFINED As required by Regulation S-X, we separately present revenues generated as either product revenues or service revenues on our Consolidated Statements of Income for each period presented.
Each Guarantor that makes a payment under its guarantee will be entitled upon payment in full of all guaranteed obligations under the indenture to a contribution from each 44 Table of Contents Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.
Each Guarantor that makes a payment under its guarantee will be entitled upon payment in full of all guaranteed obligations under the indenture to a contribution from each 42 Table of Contents Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.
There can be no assurance that our financing arrangements will provide us with sufficient funds or that we will be able to obtain any additional funds on terms favorable to us or at all. Our material future cash obligations and commercial commitments as of March 31, 2022 are presented in the following tables.
There can be no assurance that our financing arrangements will provide us with sufficient funds or that we will be able to obtain any additional funds on terms favorable to us or at all. Our material future cash obligations and commercial commitments as of March 31, 2023 are presented in the following tables.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION In Management’s Discussion and Analysis (“MD&A”), we explain the general financial condition and the results of operations for STERIS and its subsidiaries including: • what factors affect our business; • what our earnings and costs were; • why those earnings and costs were different from the year before; • where our earnings came from; • how this affects our overall financial condition; • what our expenditures for capital projects were; and • where cash will come from to fund future debt principal repayments, growth outside of core operations, repurchase ordinary shares, pay cash dividends and fund future working capital needs.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION In Management’s Discussion and Analysis (“MD&A”), we explain the general financial condition and the results of operations for STERIS and its subsidiaries including: • what factors affect our business; • what our earnings and costs were; • why those earnings and costs were different from the year before; • where our earnings came from; • how this affects our overall financial condition; • what our expenditures for capital projects were; and • where cash is expected to come from to fund future debt principal repayments, growth outside of core operations, repurchase ordinary shares, pay cash dividends and fund future working capital needs.
Additional information regarding our commitments and contingencies is included in Note 10 to our consolidated financial statements titled, "Commitments and Contingencies." 48 Table of Contents Benefit Plans. We provide defined benefit pension plans for certain employees and retirees. In addition, we sponsor an unfunded post-retirement benefits plan for two groups of United States retirees.
Additional information regarding our commitments and contingencies is included in Note 10 to our consolidated financial statements titled, "Commitments and Contingencies." 46 Table of Contents Benefit Plans. We provide defined benefit pension plans for certain employees and retirees. In addition, we sponsor an unfunded post-retirement benefits plan for two groups of United States retirees.
We review and adjust our tax estimates periodically because of ongoing examinations by and settlements with the various taxing authorities, as well as changes in tax laws, regulations and precedent. 47 Table of Contents We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities.
We review and adjust our tax estimates periodically because of ongoing examinations by and settlements with the various taxing authorities, as well as changes in tax laws, regulations and precedent. 45 Table of Contents We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities.
The NPA Amendments provided, among other things, for the waiver of certain repurchase rights of the note holders and increased the size of certain baskets to more closely align with other current credit agreement baskets. At March 31, 2022, we were in compliance with all financial covenants associated with our indebtedness.
The NPA Amendments provided, among other things, for the waiver of certain repurchase rights of the note holders and increased the size of certain baskets to more closely align with other current credit agreement baskets. At March 31, 2023, we were in compliance with all financial covenants associated with our indebtedness.
Certain costs to fulfill a contract are capitalized and amortized over the term of the contract if they are recoverable, directly related to a contract and generate resources that we will use to fulfill the contract in the future. At March 31, 2022 assets related to costs to fulfill a contract were not material to our Consolidated Financial Statements.
Certain costs to fulfill a contract are capitalized and amortized over the term of the contract if they are recoverable, directly related to a contract and generate resources that we will use to fulfill the contract in the future. At March 31, 2023, assets related to costs to fulfill a contract were not material to our consolidated financial statements.
Holding all other assumptions constant, lowering the expected long-term rate of return on plan assets assumption for our funded defined benefit pension plans by 50 basis points would have increased the fiscal 2022 benefit costs by less than $0.1 million.
Holding all other assumptions constant, lowering the expected long-term rate of return on plan assets assumption for our funded defined benefit pension plans by 50 basis points would have increased the fiscal 2023 benefit costs by less than $0.1 million.
We have made assumptions regarding healthcare costs in computing our other post-retirement benefit obligation. The assumed rates of increase generally decline ratably over a five year-period from the assumed current year healthcare cost trend rate of 7.0% to the assumed long-term healthcare cost trend rate.
We have made assumptions regarding healthcare costs in computing our other post-retirement benefit obligation. The assumed rates of increase generally decline ratably over a five year-period from the assumed current year healthcare cost trend rate of 7.5% to the assumed long-term healthcare cost trend rate.
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.
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, provides the reader with a more complete understanding of the factors and trends affecting our business than could be obtained absent this disclosure.
Allowance for Doubtful Accounts Receivable. We maintain an allowance for uncollectible accounts receivable for estimated losses in the collection of amounts owed by Customers. We estimate the allowance based on analyzing a number of factors, including amounts written off historically, Customer payment practices, and general economic conditions.
Allowance for Credit Losses. We maintain an allowance for uncollectible accounts receivable for estimated losses in the collection of amounts owed by Customers. We estimate the allowance based on analyzing a number of factors, including amounts written off historically, Customer payment practices, and general economic conditions.
A summary of significant assumptions used to determine the March 31, 2022 projected benefit obligations and the fiscal 2022 net periodic benefit costs is as follows: Synergy Health plc Isotron BV Synergy Health Daniken AG Synergy Health Radeberg Synergy Health Allershausen Harwell Dosimeters Ltd U.S.
A summary of significant assumptions used to determine the March 31, 2023 projected benefit obligations and the fiscal 2023 net periodic benefit costs is as follows: Synergy Health plc Isotron BV Synergy Health Daniken AG Synergy Health Radeberg Synergy Health Allershausen Harwell Dosimeters Ltd U.S.
Cantel’s Dental business extends our business into a new Customer segment where there is an increasing focus on infection prevention protocols and processes. This business is reported as the Dental segment. The rest of Cantel was integrated into our existing Healthcare and Life Sciences segments.
Cantel’s Dental business extended our business into a new Customer segment where there is an increasing focus on infection prevention protocols and processes. This business is reported as the Dental segment. The rest of Cantel was integrated into our existing Healthcare and Life Sciences segments.
We begin with a general overview of our operating results and then separately discuss earnings for our operating segments. The discussion of and factors affecting our performance for the year ended March 31, 2021 compared to the fiscal year ended March 31, 2020 is included in Item 7.
We begin with a general overview of our operating results and then separately discuss earnings for our operating segments. The discussion of and factors affecting our performance for the year ended March 31, 2022 compared to the fiscal year ended March 31, 2021 is included in Item 7.
We offer our Customers a unique mix of innovative consumable products, such as detergents, gastrointestinal (“GI”) endoscopy accessories, barrier product solutions, and other products and services, including: equipment installation and maintenance, microbial reduction of medical devices, dental instruments and tools, instrument and scope repair, laboratory testing services, outsourced reprocessing, and capital equipment products, such as sterilizers and surgical tables, automated endoscope reprocessors, and connectivity solutions such as operating room (“OR”) integrati on.
We offer our Customers a unique mix of innovative consumable products, such as detergents, endoscopy accessories, barrier products, and other products and services, including: equipment installation and maintenance, microbial reduction of medical devices, dental instruments and tools, instrument and scope repair, laboratory testing services, outsourced reprocessing, and capital equipment products, such as sterilizers and surgical tables, automated endoscope reprocessors, and connectivity solutions such as operating room (“OR”) integrati on.
We define free cash flow as net cash provided by operating activities as presented in the Consolidated Statements of Cash Flows less purchases of property, plant, equipment, and intangibles plus proceeds from the sale of property, plant, equipment, and intangibles, which are also presented within investing activities in the Consolidated Statements of Cash Flows.
We define free cash flow as net cash provided by operating activities as presented in the Consolidated Statements of Cash Flows less purchases of property, plant, equipment, and intangibles (capital expenditures) plus proceeds from the sale of property, plant, equipment, and intangibles, which are also presented within investing activities in the Consolidated Statements of Cash Flows.
The following discussion summarizes the significant changes in our financing cash flows for the years ended March 31, 2022 and 2021: • Proceeds from issuance of senior notes – During fiscal 2022, we received $1,350.0 million in proceeds from the issuance of our Senior Public Notes.
The following discussion summarizes the significant changes in our financing cash flows for the years ended March 31, 2023 and 2022: • Proceeds from issuance of senior notes – During fiscal 2022, we received $1,350.0 million in proceeds from the issuance of our Senior Public Notes.
If future 46 Table of Contents market conditions vary from those projected, and our estimates prove to be inaccurate, we may be required to write-down inventory values and record an adjustment to cost of revenues. Asset Impairment Losses.
If future 44 Table of Contents market conditions vary from those projected, and our estimates prove to be inaccurate, we may be required to write-down inventory values and record an adjustment to Cost of revenues. Asset Impairment Losses.
In fiscal 2023, we plan to continue to invest in facility expansions, particularly within the Healthcare and Applied Sterilization Technologies segments and in ongoing maintenance for existing facilities. MATERIAL FUTURE CASH OBLIGATIONS AND COMMERCIAL COMMITMENTS Cash Requirements.
In fiscal 2024, we plan to continue to invest in facility expansions, particularly within the Healthcare and Applied Sterilization Technologies segments and in ongoing maintenance for existing facilities. MATERIAL FUTURE CASH OBLIGATIONS AND COMMERCIAL COMMITMENTS Cash Requirements.
The Revolver bears interest from time to time, at either the Base Rate, Eurocurrency Rate, or the Adjusted Daily Simple RFR, as defined in and calculated under and as in effect from time to time under the Revolving Credit Agreement, plus the Applicable Margin, as defined in the Revolving Credit Agreement.
The Revolver bears interest from time to time, at either the Base Rate, the applicable Relevant Rate, or the applicable Adjusted Daily Simple RFR, as defined in and calculated under and as in effect from time to time under the Revolving Credit Agreement, plus the Applicable Margin, as defined in the Revolving Credit Agreement.
We develop our expected long-term rate of return on plan assets a ssumptions by evaluating input from third-party professional advisors, taking into consideration the asset allocation of the portfolios, and the long-term asset class return expectations. Generally, net periodic benefit costs increase as the expected long-term rate of return on plan assets assumption decreases.
We develop our expected long-term rate of return on plan assets assumptions by evaluating input from third-party professional advisors, taking into consideration the asset allocation of the portfolios, and the long-term asset class return expectations. Generally, net periodic benefit costs increase as the expected long-term rate of return on plan assets assumption decreases.
The remaining unpaid principal is due and payable on the maturity date. • The Delayed Draw Term Loan bears interest from time to time, at either the Base Rate or the Eurocurrency Rate, as defined in and calculated under and as in effect from time to time under the Delayed Draw Term Loan Agreement, plus the Applicable Margin, as defined in the Delayed Draw Term Loan Agreement.
The remaining unpaid principal is due and payable on the maturity date. • The Delayed Draw Term Loan bears interest from time to time, at either the Base Rate or the Adjusted Term SOFR Rate, as defined in and calculated under and as in effect from time to time under the Delayed Draw Term Loan Agreement, plus the Applicable Margin, as defined in the Delayed Draw Term Loan Agreement.
We anticipate continued supply chain and inflation pressures in fiscal 2023. Please refer to "Information With Respect to Our Business In General" in Item 1."Business" to this Annual Report on Form 10-K. 32 Table of Contents NON-GAAP FINANCIAL MEASURES We, at times, refer to financial measures which are considered to be “non-GAAP financial measures” under SEC rules.
We anticipate continued supply chain and inflation pressures in fiscal 2024. Please refer to "Information With Respect to Our Business In General" in Item 1."Business" to this Annual Report on Form 10-K. 30 Table of Contents NON-GAAP FINANCIAL MEASURES We, at times, refer to financial measures which are considered to be “non-GAAP financial measures” under SEC rules.
Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II of our Annual Report on Form 10-K for the year ended March 31, 2021. 33 Table of Contents FISCAL 2022 AS COMPARED TO FISCAL 2021 Revenues.
Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II of our Annual Report on Form 10-K for the year ended March 31, 2022. 31 Table of Contents FISCAL 2023 AS COMPARED TO FISCAL 2022 Revenues.
For the period beginning from the thirteenth full fiscal quarter ended after the Term Loan Closing Date through the maturity of the loan, quarterly 40 Table of Contents principal payments, each in the amount of 1.875% of the original principal amount of the Term Loan, are due on the last business day of each fiscal quarter.
For the period beginning from the thirteenth full fiscal quarter ended after the Term Loan Closing Date through the maturity of the loan, quarterly principal payments, each in the amount of 1.875% of the original principal amount of the Term Loan, are due on the last business day of each fiscal quarter.
The remaining unpaid principal is due and payable on the maturity date. • The Term Loan bears interest from time to time, at either the Base Rate or the Eurocurrency Rate, as defined in and calculated under and as in effect from time to time under the Term Loan Agreement, plus the Applicable Margin, as defined in the Term Loan Agreement.
The remaining unpaid principal is due and payable on the maturity date. • The Term Loan bears interest from time to time, at either the Base Rate or the Adjusted Term SOFR Rate, as defined in and calculated under and as in effect from time to time under the Term Loan Agreement, plus the Applicable Margin, as defined in the Term Loan Agreement.
Our products and services range from infection prevention consumables and capital equipment, as well as services to maintain that equipment; to the repair of re-usable procedural instruments; to outsourced instrument reprocessing services. In addition, our procedural solutions also include single-use devices and capital equipment infrastructure used primarily in operating rooms, ambulatory surgery centers, endoscopy suites, and other procedural areas.
Our products and services range from infection prevention consumables and capital equipment, as well as services to maintain that equipment; to the repair of re-usable procedural instruments; to outsourced instrument reprocessing services. In addition, our procedural solutions also include endoscopy accessories and capital equipment infrastructure used primarily in operating rooms, ambulatory surgery centers, endoscopy suites, and other procedural areas.
Interest on Base Rate Advances is payable quarterly in arrears, and interest on Eurocurrency Rate Advances is payable at the end of the relevant interest period therefor, but in no event less frequently than every three months, and interest on RFR Advances is payable monthly after the date of borrowing.
Interest on Base Rate Advances is payable quarterly in arrears, interest on Term Benchmark Advances is payable at the end of the relevant interest period therefor, but in no event less frequently than every three months, and interest on RFR Advances is payable monthly after the date of borrowing.
For more information on our Senior Public Notes, refer to Note 6 of our Consolidated Financial Statements titled, "Debt." • Proceeds from term loan – During fiscal 2022, we received proceeds of $650.0 million under our Delayed Draw Term Loan.
For more information on our Senior Public Notes, refer to Note 6 to our consolidated financial statements titled, "Debt." • Proceeds from term loan – During fiscal 2022, we borrowed $650.0 million under our Delayed Draw Term Loan.
We provide additional information about our bank credit facility in Note 6 to our consolidated financial statements titled, "Debt." • Deferred financing fees and debt issuance costs – During fiscal 2022 and fiscal 2021, we paid $17.5 million and $12.8 million, respectively for financing fees and debt issuance costs primarily related to our Senior Public Notes and Delayed Draw Term Loan.
We provide additional information about our bank credit facility in Note 6 to our consolidated financial statements titled, "Debt." • Deferred financing fees and debt issuance costs – During fiscal 2022, we paid $17.5 million for financing fees and debt issuance costs primarily related to our Senior Public Notes and Delayed Draw Term Loan.
A 100 basis point change in the assumed healthcare cost trend rate (including medical, prescription drug, and long-term rates) would have had the following effect at March 31, 2022: 100 Basis Point (dollars in thousands) Increase Decrease Effect on total service and interest cost components $ — $ — Effect on postretirement benefit obligation 2 (2) 49 Table of Contents We recognize an asset for the overfunded status or a liability for the underfunded status of defined benefit pension and post-retirement benefit plans in our balance sheets.
A 100 basis point change in the assumed healthcare cost trend rate (including medical, prescription drug, and long-term rates) would have had the following effect at March 31, 2023: 100 Basis Point (dollars in thousands) Increase Decrease Effect on total service and interest cost components $ — $ — Effect on postretirement benefit obligation 1 (1) 47 Table of Contents We recognize an asset for the overfunded status or a liability for the underfunded status of defined benefit pension and post-retirement benefit plans in our balance sheets.
If the financial condition of our Customers worsens, or economic conditions change, we may be required to make changes to our allowance for doubtful accounts receivable. Inventories and Reserves. Inventories are stated at the lower of their cost and net realizable value determined by the first-in, first-out ("FIFO") cost method. Inventory costs include material, labor, and overhead.
If the financial condition of our Customers worsens, or economic conditions change, we may be required to make changes to our allowance for credit losses. Inventories and Reserves. Inventories are stated at the lower of their cost and net realizable value determined by the first-in, first-out ("FIFO") cost method. Inventory costs include material, labor, and overhead.
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.
It is important for the reader to note that the non-GAAP financial measures used may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
Base Rate Advances are payable quarterly in arrears and Eurocurrency Rate Advances are payable at the end of the relevant interest period therefore, but in no event less frequently than every three months. • Also on March 19, 2021, the Company, STERIS Corporation, Limited, and FinCo, each as a borrower and guarantor, entered into a delayed draw term loan agreement with various financial institutions as lenders, and JPMorgan Chase Bank, N.A., as administrative agent (the “Delayed Draw Term Loan Agreement”) providing for a delayed draw term loan facility of up to $750.0 million (the “Delayed Draw Term Loan”) in connection with STERIS’s acquisition of Cantel.
Interest on Base Rate Advances is payable quarterly in arrears and interest on Term 38 Table of Contents Benchmark Advances is payable in arrears at the end of the relevant interest period therefor, but in no event less frequently than every three months. • Also on March 19, 2021, the Company, STERIS Corporation, Limited, and FinCo, each as a borrower and guarantor, entered into a delayed draw term loan agreement with various financial institutions as lenders, and JPMorgan Chase Bank, N.A., as administrative agent (the “Delayed Draw Term Loan Agreement”) providing for a delayed draw term loan facility of up to $750.0 million (the “Delayed Draw Term Loan”) in connection with STERIS’s acquisition of Cantel.
Non-operating expense (income), net consists of interest expense on debt, offset by interest earned on cash, cash equivalents, short-term investment balances, a fair value adjustment related to convertible debt, and other 35 Table of Contents miscellaneous expense.
Non-operating expenses, net consists of interest expense on debt, offset by interest earned on cash, cash equivalents, short-term investment balances, a fair value adjustment related to convertible debt, and other miscellaneous expense (income).
This program includes, among other things, investments in new and existing facilities, business expansion projects, radioisotope (cobalt-60), and information technology enhancements and research and development advances. During fiscal 2022, our capital expenditures amounted to $287.6 million. We use cash provided by operating activities and our cash and cash equivalent balances to fund capital expenditures.
This program includes, among other things, investments in new and existing facilities, business expansion projects, radioisotope (cobalt-60), and information technology enhancements and research and development advances. During fiscal 2023, our capital expenditures amounted to $362.0 million. We use cash provided by operating activities and our cash and cash equivalent balances to fund capital expenditures.
For more information on our term loans, refer to Note 6 of our Consolidated Financial Statements titled, "Debt." • Payments on term loan – During fiscal 2022, we repaid $345.0 million of our Term Loan.
For more information on our term loans, refer to Note 6 to our consolidated financial statements titled, "Debt." • Payments on term loans – During fiscal 2023, we repaid $156.9 million of our Term Loans. During fiscal 2022, we repaid $345.0 million of our Term Loans.
Interest on the Senior Public Notes is payable on March 15 and September 15 of each year, beginning on September 15, 2021, until their respective maturities. • As of March 31, 2022, a total of $58.9 million was outstanding under the Revolving Credit Agreement, based on currency exchange rates as of March 31, 2022.
Interest on the Senior Public Notes is payable on March 15 and September 15 of each year, beginning on September 15, 2021, until their respective maturities. • As of March 31, 2023, a total of $301.7 million was outstanding under the Revolving Credit Agreement, based on currency exchange rates as of March 31, 2023.
The following tables present summarized results of operations for the twelve months ended March 31, 2022 and summarized balance sheet information at March 31, 2022 and 2021 for the obligor group of the Senior Public Notes. The obligor group consists of the Parent Company Guarantor, Subsidiary Issuer, and Subsidiary Guarantors for the Senior Public Notes.
The following tables present summarized results of operations for the year ended March 31, 2023 and summarized balance sheet information at March 31, 2023 and 2022 for the obligor group of the Senior Public Notes. The obligor group consists of the Parent Company Guarantor, Subsidiary Issuer, and Subsidiary Guarantors for the Senior Public Notes.
Our accrual for self-insured risk retention as of March 31, 2022 and 2021 was $26.1 million and $23.3 million, respectively. We are also self-insured for employee medical claims. We estimate a liability for incurred but not reported claims based upon recent claims experience.
Our accrual for self-insured risk retention as of March 31, 2023 and 2022 was $30.4 million and $26.1 million , respectively. We are also self-insured for employee medical claims. We estimate a liability for incurred but not reported claims based upon recent claims experience.
For more information on our debt, refer to Note 6 of our Consolidated Financial Statements titled, "Debt." • Payments on convertible debt obligations – During fiscal 2022, we paid $371.4 million to settle obligations associated with Cantel's convertible debt assumed at the time of acquisition.
For more information on Cantel's debt, refer to Note 2 to our consolidated financial statements titled, "Business Acquisitions and Divestitures." • Payments on convertible debt obligations – During fiscal 2022, we paid $371.4 million to settle obligations associated with Cantel's convertible debt assumed at the time of acquisition.
The following discussion summarizes the significant changes in our investing cash flows for the years ended March 31, 2022 and 2021: • Purchases of property, plant, equipment, and intangibles, net – Capital expenditures totaled $287.6 million and $239.3 million for fiscal 2022 and 2021, respectively.
The following discussion summarizes the significant changes in our investing cash flows for the years ended March 31, 2023 and 2022: • Purchases of property, plant, equipment, and intangibles, net – Capital expenditures totaled $362.0 million and $287.6 million for fiscal 2023 and 2022, respectively.
In December 2021, we entered into an Asset Purchase Agreement to sell our Renal Care business to Evoqua Water Technologies Corp., for cash consideration of approximately $196.0 million, subject to certain potential adjustments, including a customary working capital adjustment and contingent consideration of $12.3 million. We recognized a gain on the sale of $1.0 million.
The business generated annual revenues of approximately $12.0 million. In December 2021, we entered into an Asset Purchase Agreement to sell our Renal Care business to Evoqua Water Technologies Corp. for cash consideration of approximately $196.0 million, subject to certain potential adjustments, including a customary working capital adjustment and contingent consideration of $12.3 million.
This model involves assumptions that are judgmental and affect share-based compensation expense. Share-based compensation ex pense was $57.7 million in fiscal 2022, $26.0 million in fiscal 2021 and $23.8 million in fiscal 2020.
This model involves assumptions that are judgmental and affect share-based compensation expense. Share-based compensation ex pense was $39.0 million in fiscal 2023, $57.7 million in fiscal 2022 and $26.0 million million in fiscal 2021.
During fiscal 2022, our investments in research and development continued to be focused on, but were not limited to, enhancing capabilities of sterile processing combination technologies, procedural products and accessories, and devices and support accessories used in gastrointestinal endoscopy procedures. Restructuring Expenses.
During fiscal 2023, our investments in research and development have continued to be focused on, but were not limited to, enhancing capabilities of sterile processing combination technologies, procedural products and accessories, and devices and support accessories used in gastrointestinal endoscopy procedures. Non-Operating Expenses, Net.
During fiscal 2021, we received $2.3 million of contributions from noncontrolling interest holders and paid $4.1 million in distributions to noncontrolling interest holders. • Stock option and other equity transactions, net – We generally receive cash for issuing shares upon the exercise of options under our employee stock option program.
During fiscal 2022, we received contributions from noncontrolling interest hold ers of $3.7 million and paid $1.0 million in distributions to noncontrolling interest holders. • Stock option and other equity transactions, net – We generally receive cash for issuing shares upon the exercise of options under our employee stock option program.
At March 31, 2022, we had $1,175.7 million of unused funding available under the Revolving Credit Agreement. The Revolving Credit Agreement includes a sub-limit that reduces the maximum amount available to us by letters of credit outstanding. At March 31, 2022, there was $15.4 million in letters of credit outstanding under the Credit Agreement.
At March 31, 2023, we had $938.4 million of unused funding available under the Revolving Credit Agreement. The Revolving Credit Agreement includes a sub-limit that reduces the maximum amount available to us by letters of credit outstanding. At March 31, 2023, there was $9.9 million in letters of credit outstanding under the Credit Agreement.
During fiscal 2022, we recorded fair value adjustments of $27.8 million, based on appreciation in our share price related to premium liability associated with the convertible debt assumed in the acquisition of Cantel. Interest (income) and miscellaneous expense is not material.
During fiscal 2022, we recorded fair value adjustments of $27.8 million, based on appreciation in our share price related to premium liability associated with the convertible debt assumed in the acquisition of Cantel.
Holding all other assumptions constant, lowering the discount rate assumption for our defined benefit pensi on plans and for the other post-retirement benefits plan by 50 basis points would have decreased the fiscal 2022 net periodic benefit costs by less than $0.1 million and would have increased the projected benefit obligations by approximately $11.2 million a t March 31, 2022.
Holding all other assumptions constant, lowering the discount rate assumption for our defined benefit pension plans and for the other post-retirement benefits plan by 50 basis points would have decreased the fiscal 2023 net periodic benefit costs by less than $0.1 million and would have increased the projected benefit obligations by approximately $8.0 million at March 31, 2023.
Dollar Value at March 31, 2022 $91,000 Senior notes at 3.20% 2012 Private Placement December 2022 91,000 $80,000 Senior notes at 3.35% 2012 Private Placement December 2024 80,000 $25,000 Senior notes at 3.55% 2012 Private Placement December 2027 25,000 $125,000 Senior notes at 3.45% 2015 Private Placement May 2025 125,000 $125,000 Senior notes at 3.55% 2015 Private Placement May 2027 125,000 $100,000 Senior notes at 3.70% 2015 Private Placement May 2030 100,000 $50,000 Senior notes at 3.93% 2017 Private Placement February 2027 50,000 €60,000 Senior notes at 1.86% 2017 Private Placement February 2027 66,815 $45,000 Senior notes at 4.03% 2017 Private Placement February 2029 45,000 €20,000 Senior notes at 2.04% 2017 Private Placement February 2029 22,271 £45,000 Senior notes at 3.04% 2017 Private Placement February 2029 59,089 €19,000 Senior notes at 2.30% 2017 Private Placement February 2032 21,158 £30,000 Senior notes at 3.17% 2017 Private Placement February 2032 39,393 Total Senior Notes $ 849,726 The Private Placement Senior Notes were issued as follows: • On February 27, 2017, Limited issued and sold an aggregate principal amount of $95.0 million, €99.0 million, and £75.0 million, of senior notes in a private placement to certain institutional investors in an offering that was exempt from the registration requirements of the Securities Act of 1933.
Dollar Value at March 31, 2023 $80,000 Senior notes at 3.35% 2012 Private Placement December 2024 80,000 $25,000 Senior notes at 3.55% 2012 Private Placement December 2027 25,000 $125,000 Senior notes at 3.45% 2015 Private Placement May 2025 125,000 $125,000 Senior notes at 3.55% 2015 Private Placement May 2027 125,000 $100,000 Senior notes at 3.70% 2015 Private Placement May 2030 100,000 $50,000 Senior notes at 3.93% 2017 Private Placement February 2027 50,000 €60,000 Senior notes at 1.86% 2017 Private Placement February 2027 65,254 $45,000 Senior notes at 4.03% 2017 Private Placement February 2029 45,000 €20,000 Senior notes at 2.04% 2017 Private Placement February 2029 21,752 £45,000 Senior notes at 3.04% 2017 Private Placement February 2029 55,579 €19,000 Senior notes at 2.30% 2017 Private Placement February 2032 20,664 £30,000 Senior notes at 3.17% 2017 Private Placement February 2032 37,053 Total Senior Notes $ 750,302 The Private Placement Senior Notes were issued as follows: • On February 27, 2017, Limited issued and sold an aggregate principal amount of $95.0 million, €99.0 million, and £75.0 million of senior notes in a private placement to certain institutional investors in an offering that was exempt from the registration requirements of the Securities Act of 1933.
For more information on Cantel's debt refer to Note 6 of our Consolidated Financial Statements titled, "Debt." • Payments under credit facilities, net – Net payments under credit facilities totaled $190.2 million for fiscal 2022, compared to $30.5 million for fiscal 2021.
For more information on Cantel's debt, refer to Note 6 to our consolidated financial statements titled, "Debt." • Proceeds/Payments under credit facilities, net – Net proceeds received under credit facilities totaled $241.7 million for fiscal 2023, compared to net payments under credit facilities of $190.2 million for fiscal 2022.
For more information on our term loans, refer to Note 6 of our Consolidated Financial Statements titled, "Debt." • Payments on long-term obligations – During fiscal 2022, we repaid $721.3 million of Cantel's outstanding debt in connection with the acquisition.
For more information on our Private Placement Senior Notes, refer to Note 6 to our consolidated financial statements titled, "Debt." During fiscal 2022, we repaid $721.3 million of Cantel's outstanding debt in connection with the acquisition.
At the end of fiscal 2022, $58.9 million of debt was outstanding under our bank credit facility, compared to $247.4 million of debt outstanding under this facility at the end of fiscal 2021.
At the end of fiscal 2023, $301.7 million of debt was outstanding under our bank credit facility, compared to $58.9 million of debt outstanding under this facility at the end of fiscal 2022.
We provide additional information about our defined benefit pension plans, defined contribution plan, and other post-retirement benefits plan in Note 9 to our consolidated financial statements titled, "Benefit Plans." Amount of Commitment Expiring March 31, (dollars in thousands) 2023 2024 2025 2026 2027 and thereafter Totals Commercial Commitments: Letters of credit and surety bonds $ 77,496 $ 4,273 $ 1,851 $ 353 $ 802 $ 84,775 Letters of credit as security for self-insured risk retention policies 13,900 — — — — 13,900 Total Commercial Commitments $ 91,396 $ 4,273 $ 1,851 $ 353 $ 802 $ 98,675 SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION STERIS plc ("Parent") and its wholly-owned subsidiaries, STERIS Limited and STERIS Corporation (collectively "Guarantors" and each a "Guarantor"), each have provided guarantees of the obligations of STERIS Irish FinCo Unlimited Company ("FinCo", "STERIS Irish FinCo"), a wholly-owned subsidiary issuer, under Senior Public Notes issued by STERIS Irish FinCo on April 1, 2021 and of certain other obligations relating to the Senior Public Notes.
We provide additional information about our defined benefit pension plans, defined contribution plan, and other post-retirement benefits plan in Note 9 to our consolidated financial statements titled, "Benefit Plans." Amount of Commitment Expiring March 31, (dollars in thousands) 2024 2025 2026 2027 2028 and thereafter Totals Commercial Commitments: Letters of credit and surety bonds $ 98,411 $ 492 $ 358 $ 291 $ 782 $ 100,334 Letters of credit as security for self-insured risk retention policies 8,036 — — — — 8,036 Total Commercial Commitments $ 106,447 $ 492 $ 358 $ 291 $ 782 $ 108,370 SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION STERIS plc ("Parent") and its wholly-owned subsidiaries, STERIS Limited and STERIS Corporation (collectively "Guarantors" and each a "Guarantor"), each have provided guarantees of the obligations of STERIS Irish FinCo Unlimited Company ("FinCo", "STERIS Irish FinCo"), a wholly-owned subsidiary issuer, under Senior Public Notes issued by STERIS Irish FinCo on April 1, 2021 and of certain other obligations relating to the Senior Public Notes.
The following table summarizes the calculation of our free cash flow for the years ended March 31, 2022 and 2021: Years Ended March 31, (dollars in thousands) 2022 2021 Net cash flows provided by operating activities $ 684,811 $ 689,640 Purchases of property, plant, equipment and intangibles, net (287,563) (239,262) Proceeds from the sale of property, plant, equipment and intangibles 1,741 569 Free cash flow $ 398,989 $ 450,947 RESULTS OF OPERATIONS In the following subsections, we discuss our performance and the factors affecting it.
The following table summarizes the calculation of our free cash flow for the years ended March 31, 2023 and 2022: Years Ended March 31, (dollars in thousands) 2023 2022 Net cash provided by operating activities $ 756,947 $ 684,811 Purchases of property, plant, equipment and intangibles, net (361,969) (287,563) Proceeds from the sale of property, plant, equipment and intangibles 14,587 1,741 Free cash flow $ 409,565 $ 398,989 RESULTS OF OPERATIONS In the following subsections, we discuss our performance and the factors affecting it.
The total consideration for Cantel Common Stock and stock equivalents was $3.6 billion . We believe that the acquisition will strengthen STERIS’s leadership in infection prevention by bringing together two complementary businesse s able to offer a broader set of Customers a more diversified selection of infection prevention, endoscopy and sterilization products and services.
We believe that the acquisition will strengthen STERIS’s leadership in infection prevention by bringing together two complementary businesse s able to offer a broader set of Customers a more diversified selection of infection prevention, endoscopy and sterilization products and services.
As of March 31, 2022, $205.0 million and $650.0 million were outstanding under the Term Loan and Delayed Draw Term Loan, respectively. 41 Table of Contents Our outstanding Private Placement Senior Notes at March 31, 2022 were as follows: (dollars in thousands) Applicable Note Purchase Agreement Maturity Date U.S.
As of March 31, 2023, $72.5 million and $625.6 million were outstanding under the Term Loan and Delayed Draw Term Loan, respectively. 39 Table of Contents Our outstanding Private Placement Senior Notes at March 31, 2023 were as follows: (dollars in thousands) Applicable Note Purchase Agreement Maturity Date U.S.
For more information on these agreements refer to our Note 2 to our consolidated financial statements, titled "Business Acquisitions and Divestitures." 38 Table of Contents Net Cash Provided By Financing Activities – Net cash provided by financing activities was $115.8 million for the year ended March 31, 2022, compared to $345.6 million for the year ended March 31, 2021.
For more information on these acquisitions refer to Note 2 to our consolidated financial statements titled, "Business Acquisitions and Divestitures ." Net Cash Provided By/Used In Financing Activities – Net cash used in financing activities was $498.7 million for the year ended March 31, 2023, compared to net cash provided by financing activities of $115.8 million for the year ended March 31, 2022.
Net Cash Used In Investing Activities – The net cash used in our investing activities was $666.6 million for the year ended March 31, 2022, compared to $1,154.2 million for the year ended March 31, 2021.
Net Cash Used In Investing Activities – The net cash used in our investing activities was $383.3 million for the year ended March 31, 2023, compared to $666.6 million for the year ended March 31, 2022.
LIQUIDITY AND CAPITAL RESOURCES The following table summarizes significant components of our cash flows for the years ended March 31, 2022 and 2021: Years Ended March 31, (dollars in thousands) 2022 2021 Net cash provided by operating activities $ 684,811 $ 689,640 Net cash used in investing activities (666,559) (1,154,159) Net provided by financing activities 115,830 345,620 Debt-to-total capital ratio 32.1 % 29.8 % Free cash flow $ 398,989 $ 450,947 Net Cash Provided By Operating Activities – The net cash provided by our operating activities was $684.8 million for the year ended March 31, 2022, compared to $689.6 million for the year ended March 31, 2021.
LIQUIDITY AND CAPITAL RESOURCES The following table summarizes significant components of our cash flows for the years ended March 31, 2023 and 2022: Years Ended March 31, (dollars in thousands) 2023 2022 Net cash provided by operating activities $ 756,947 $ 684,811 Net cash used in investing activities (383,330) (666,559) Net cash (used in) provided by financing activities (498,718) 115,830 Debt-to-total capital ratio 33.6 % 32.1 % Free cash flow $ 409,565 $ 398,989 Net Cash Provided By Operating Activities – The net cash provided by our operating activities was $756.9 million for the year ended March 31, 2023, compared to $684.8 million for the year ended March 31, 2022.
Net cash flows from operations were $684.8 million and free cash flow was $399.0 million in fiscal 2022 compared to net cash flows from operations of $689.6 million and free cash flow of $450.9 million in fiscal 2021 (see subsection of MD&A 31 Table of Contents titled, "Non-GAAP Financial Measures" for additional information and related reconciliation of non-GAAP financial measures to the most comparable GAAP measures) .
Cash flows from operations were $756.9 million and free cash flow was $409.6 million in fiscal 2023 compared to cash flows from operations of $684.8 million and free cash flow of $399.0 million in fiscal 2022 (see subsection of MD&A titled, "Non-GAAP Financial Measures" for additional information and related reconciliation of cash flows from operations to free cash flow) .
Significant components of total selling, general, and administrative expenses (“SG&A”) are compensation and benefit costs, fees for professional services, travel and entertainment, facilities costs, gains or losses from divestitures, and other general and administrative expenses. SG&A increased 105.5% in fiscal 2022 over fiscal 2021.
Significant components of total Selling, general, and administrative expenses (“SG&A”) are compensation and benefit costs, fees for professional services, travel and entertainment, facilities costs, gains or losses from divestitures, and other general and administrative expenses. SG&A decreased 13.6% in fiscal 2023, as compared to fiscal 2022.
Post- Retirement Benefits Plan Funding Status Funded Funded Unfunded Unfunded Unfunded Funded Unfunded Assumptions used to determine March 31, 2022 Benefit obligations: Discount rate 2.80 % 1.80 % 0.90 % 1.60 % 1.50 % 2.85 % 3.25 % Assumptions used to determine fiscal 2022 Net periodic benefit costs: Discount rate 2.10 % 0.90 % 1.00 % 1.50 % 2.00 % 2.85 % 2.50 % Expected return on plan assets 3.60 % 0.90 % 1.00 % n/a n/a n/a n/a NA – Not applicable.
Post- Retirement Benefits Plan Funding Status Funded Funded Unfunded Unfunded Unfunded Funded Unfunded Assumptions used to determine March 31, 2023 Benefit obligations: Discount rate 4.70 % 3.70 % 2.05 % 3.80 % 3.70 % 4.80 % 4.75 % Assumptions used to determine fiscal 2023 Net periodic benefit costs: Discount rate 2.80 % 1.80 % 2.05 % 2.00 % 2.20 % 4.80 % 3.25 % Expected return on plan assets 3.20 % 1.80 % 1.95 % n/a n/a n/a n/a NA – Not applicable.
For more information, refer to our Note 2 to our consolidated financial statements, titled "Business Acquisitions and Divestitures." • Purchases of investments – During fiscal 2021, we purchased an equity inve stment for $4.4 million. • Acquisition of businesses, net of cash acquired – During fiscal 2022 and 2021, we used $550.4 million and $909.2 million, respectively, for acquisitions.
For more information, refer to Note 2 to our consolidated financial statements titled, "Business Acquisitions and Divestitures." • Acquisition of businesses, net of cash acquired – During fiscal 2023 and 2022, we used $42.6 million and $550.4 million, respectively, for acquisitions.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+3 added−2 removed4 unchanged
Biggest changeCOMMODITY RISK We are dependent on basic raw materials, sub-assemblies, components, and other supplies used in our operations. Our financial results could be affected by the availability and changes in prices of these materials. Some of these materials are sourced from a limited number of suppliers or only a single supplier.
Biggest changeOur financial results could be affected by the availability and changes in prices of these materials. Some of these materials are sourced from a limited number of suppliers or only a single supplier. These materials are also key source materials for our competitors. Therefore, if demand for these materials rises, we may experience increased costs and/or limited or unavailable supplies.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK In the ordinary course of business, we are exposed to various risks, including, but not limited to, interest rate, foreign currency, and commodity risks. These risks are described in the sections that follow. INTEREST RATE RISK As of March 31, 2022, we had $2,199.7 million in fixed rate senior notes outstanding.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK In the ordinary course of business, we are exposed to various risks, including, but not limited to, interest rate, foreign currency, and commodity risks. These risks are described in the sections that follow. INTEREST RATE RISK As of March 31, 2023, we had $2,100.3 million in fixed rate senior notes outstanding.
We enter into foreign currency forward co ntracts to hedge monetary assets and liabilities denominated in foreign currencies, including inter-company transactions. We do not use derivative financial instruments for speculative purposes. At March 31, 2022, we held a foreign currency forward contract to sell 11.0 million euros.
We enter into foreign currency forward co ntracts to hedge monetary assets and liabilities denominated in foreign currencies, including intercompany transactions. We do not use derivative financial instruments for speculative purposes.
Translation adjustments for subsidiaries whose local currency is their functional currency are recorded as a component of accumulated other comprehensive income (loss) within equity. Note 18 to our consolidated financial statements titled, “ Reclassifications out of Accumulated Other Comprehensive Income (Loss),” contains additional information about the impact of translation on accumulated other comprehensive income (loss) and equity.
Note 18 to our consolidated financial statements titled, “Reclassifications out of Accumulated Other Comprehensive (Loss) Income,” contains additional information about the impact of translation on accumulated other comprehensive income (loss) and equity.
At March 31, 2022, we held commodity swap contracts to buy 801.6 thousand pounds of nickel. 52
At March 31, 2023, we held commodity swap contracts to buy 753.0 thousand pounds of nickel. 51 Table of Contents
For most operations, local currencies have been determined to be the functional currencies. The financial statements of subsidiaries are translated to their U.S. dollar equivalents at end-of-period exchange rates for assets and liabilities and at average currency exchange rates for revenues and expenses.
The financial statements of subsidiaries are translated to their U.S. dollar equivalents at end-of-period exchange rates for assets and liabilities and at average currency exchange rates for revenues and expenses. Translation adjustments for subsidiaries whose local currency is their functional currency are recorded as a component of accumulated other comprehensive income (loss) within equity.
For additional information regarding our debt structure, refer to Note 6 to our Consolidated Financial Statements titled, “Debt.” FOREIGN CURRENCY RISK We are exposed to the impact of foreign currency exchange fluctuations. This foreign currency exchange risk arises when we conduct business in a currency other than the U.S. dollar.
We monitor our interest rate risk, but do not engage in any hedging activities using derivative financial instruments. For additional information regarding our debt structure, refer to Note 6 to our consolidated financial statements titled, “Debt.” FOREIGN CURRENCY RISK We are exposed to the impact of foreign currency exchange fluctuations.
Removed
As of March 31, 2022, we had $58.9 million in outstanding borrowings under our Credit Agreement which are exposed to changes in interest rates. We monitor our interest rate risk, but do not engage in any hedging activities using derivative financial instruments.
Added
As of March 31, 2023, we had $301.7 million in outstanding borrowings under our Credit Agreement and $698.1 million in term loans which are exposed to changes in interest rates. Based upon our debt structure at March 31, 2023, a hypothetical 100 basis point increase in floating interest rates would increase annual interest expense by approximately $10.0 million.
Removed
These materials are also key source materials for our competitors. Therefore, if demand for these materials rises, we may experience increased costs and/or limited or unavailable supplies.
Added
This foreign currency exchange risk arises when we conduct business in a currency other than the U.S. dollar. For most operations, local currencies have been determined to be the functional currencies.
Added
At March 31, 2023, we held foreign currency forward contracts to buy 19.5 million British pounds sterling; and to sell 150.0 million Mexican pesos, and 7.0 million Singapore dollars and 6.0 million euros. COMMODITY RISK We are dependent on basic raw materials, sub-assemblies, components, and other supplies used in our operations.

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