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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

## Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)OF THE SECURITIES EXCHANGE ACT OF 1934For the quarter ended September 30, 2001

Commission file number 0-20165

STERIS Corporation




|                                        |                                
|--------------------------------------- | -------------------------------
|                                        |                                
|Ohio                                    | 34-1482024                     
|(State or other jurisdiction of         | (IRS Employer                  
|incorporation or organization)          | Identification No.)            
|                                        |                                
|                                        |                                
|5960 Heisley Road,                      | 440-354-2600                   
|Mentor, Ohio 44060-1834                 | (Registrants telephone number,
|(Address of principal executive office) | including area code)           



Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes [X] No [ ].

The number of Common Shares outstanding as of October 31, 2001: 69,341,946



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STERIS CorporationIndex

|Part I  Financial Statements | Page   
|----------------------------- | -------
|                              |        
|                              | Item 1.
|                              |        
|                              | Item 2.
|                              |        
|                              | Item 3.
|                              |        
|                              |        
|Part II  Other Information   |        
|                              |        
|                              | Item 1.
|                              |        
|                              | Item 6.
|                              |        
|                              |        



PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

STERIS CORPORATIONCONSOLIDATED BALANCE SHEETS(in thousands)



|                                                                                                            |   | September 30, |   |  |   | March 31, |  
|----------------------------------------------------------------------------------------------------------- | - | ------------- | - |  | - | --------- | -
|                                                                                                            |   | 2001          |   |  |   | 2001      |  
|                                                                                                            |   |               |   |  |  
|                                                                                                            |   | (Unaudited)   |   |  |   |           |  
|Assets                                                                                                      |   |               |   |  |   |           |  
|Current assets:                                                                                             |   |               |   |  |   |           |  
|Cash and cash equivalents                                                                                   | $ | 10,942        |   |  | $ | 24,710    |  
|Accounts receivable (net of allowances of $8,235 and $9,006, respectively)                                  |   | 182,400       |   |  |   | 201,305   |  
|Inventories                                                                                                 |   | 87,931        |   |  |   | 82,239    |  
|Current portion of deferred income taxes                                                                    |   | 24,025        |   |  |   | 24,025    |  
|Prepaid expenses and other assets                                                                           |   | 8,691         |   |  |   | 7,920     |  
|                                                                                                            |   |               |   |  |  
|Total current assets                                                                                        |   | 313,989       |   |  |   | 340,199   |  
|                                                                                                            |   |               |   |  |   |           |  
|Property, plant, and equipment                                                                              |   | 476,501       |   |  |   | 456,864   |  
|Accumulated depreciation                                                                                    |   | (162,146      | ) |  |   | (142,722  | )
|                                                                                                            |   |               |   |  |  
|Net property, plant, and equipment                                                                          |   | 314,355       |   |  |   | 314,142   |  
|Intangibles                                                                                                 |   | 238,966       |   |  |   | 269,326   |  
|Accumulated amortization                                                                                    |   | (52,743       | ) |  |   | (81,402   | )
|                                                                                                            |   |               |   |  |  
|Net intangibles                                                                                             |   | 186,223       |   |  |   | 187,924   |  
|Other assets                                                                                                |   | 1,863         |   |  |   | 2,715     |  
|                                                                                                            |   |               |   |  |  
|Total assets                                                                                                | $ | 816,430       |   |  | $ | 844,980   |  
|                                                                                                            |   |               |   |  |  
|                                                                                                            |   |               |   |  |   |           |  
|Liabilities and shareholders equity                                                                        |   |               |   |  |   |           |  
|Current liabilities:                                                                                        |   |               |   |  |   |           |  
|Current portion of long-term indebtedness                                                                   | $ | 1,263         |   |  |   | $1,263    |  
|Accounts payable                                                                                            |   | 41,527        |   |  |   | 48,494    |  
|Accrued expenses and other                                                                                  |   | 101,673       |   |  |   | 104,557   |  
|                                                                                                            |   |               |   |  |  
|Total current liabilities                                                                                   |   | 144,463       |   |  |   | 154,314   |  
|Long-term indebtedness                                                                                      |   | 166,297       |   |  |   | 205,825   |  
|Deferred income taxes                                                                                       |   | 10,529        |   |  |   | 10,529    |  
|Other long-term liabilities                                                                                 |   | 50,469        |   |  |   | 49,928    |  
|                                                                                                            |   |               |   |  |  
|Total liabilities                                                                                           |   | 371,758       |   |  |   | 420,596   |  
|Shareholders equity:                                                                                       |   |               |   |  |   |           |  
|Serial preferred shares, without par value, 3,000 shares authorized; no shares

   issued or outstanding    |   | --            |   |  |   | --        |  
|Common Shares, without par value; 300,000 shares authorized;                                                |   |               |   |  |   |           |  
|issued and outstanding shares of 69,299 at September 30, 2001 and 68,665 at    March 31, 2001, respectively |   | 210,730       |   |  |   | 203,760   |  
|Retained earnings                                                                                           |   | 245,267       |   |  |   | 231,665   |  
|Cumulative translation adjustment                                                                           |   | (11,325       | ) |  |   | (11,041   | )
|                                                                                                            |   |               |   |  |  
|Total shareholders equity                                                                                  |   | 444,672       |   |  |   | 424,384   |  
|                                                                                                            |   |               |   |  |  
|Total liabilities and shareholders equity                                                                  | $ | 816,430       |   |  | $ | 844,980   |  
|                                                                                                            |   |               |   |  |  
|                                                                                                            |   |               |   |  |   |           |  
|See notes to consolidated financial statements.                                                             |   |               |   |  |   |           |  





STERIS CORPORATIONCONSOLIDATED STATEMENTS OF INCOME(in thousands, except per share amounts)(Unaudited)



|                                                |                                 |                               |      |   |         |  |      |         |  |   |        
|----------------------------------------------- | ------------------------------- | ----------------------------- | ---- | - | ------- |  | ---- | ------- |  | - | -------
|                                                | Three Months EndedSeptember 30, | Six Months EndedSeptember 30,
|                                               
|                                                |                                 |                               |      |  
|                                                | 2001                            |                               | 2000 |   | 2001    |  | 2000
|                                                |                                 |                               |      |   |         |  |     
|                                                |                                 |                               |      |   |         |  |      |         |  |   |        
|Net revenues                                    | $                               | 206,393                       |      | $ | 193,178 |  | $    | 403,467 |  | $ | 376,991
|Cost of products sold                           |                                 | 121,719                       |      |   | 111,962 |  |      | 237,580 |  |   | 221,790
|                                                |                                 |                               |      |   |         |  |     
|Gross profit                                    |                                 | 84,674                        |      |   | 81,216  |  |      | 165,887 |  |   | 155,201
|                                                |                                 |                               |      |   |         |  |      |         |  |   |        
|Costs and expenses:                             |                                 |                               |      |   |         |  |      |         |  |   |        
|Selling, general and administrative             |                                 | 62,963                        |      |   | 59,798  |  |      | 127,765 |  |   | 122,356
|Research and development                        |                                 | 4,978                         |      |   | 5,479   |  |      | 11,270  |  |   | 11,300 
|                                                |                                 |                               |      |   |         |  |     
|                                                |                                 | 67,941                        |      |   | 65,277  |  |      | 139,035 |  |   | 133,656
|                                                |                                 |                               |      |   |         |  |     
|                                                |                                 |                               |      |   |         |  |      |         |  |   |        
|Income from operations                          |                                 | 16,733                        |      |   | 15,939  |  |      | 26,852  |  |   | 21,545 
|Interest expense, net                           |                                 | 2,099                         |      |   | 5,191   |  |      | 5,261   |  |   | 9,462  
|                                                |                                 |                               |      |   |         | 
|Income before income taxes                      |                                 | 14,634                        |      |   | 10,748  |  |      | 21,591  |  |   | 12,083 
|Income tax expense                              |                                 | 5,415                         |      |   | 4,024   |  |      | 7,989   |  |   | 4,531  
|                                                |                                 |                               |      |   |         |  |     
|Net income                                      | $                               | 9,219                         |      | $ | 6,724   |  | $    | 13,602  |  | $ | 7,552  
|                                                |                                 |                               |      |   |         |  |     
|                                                |                                 |                               |      |   |         |  |      |         |  |   |        
|                                                |                                 |                               |      |   |         |  |      |         |  |   |        
|Net income per share - basic                    | $                               | 0.13                          |      | $ | 0.10    |  | $    | 0.20    |  | $ | 0.11   
|                                                |                                 |                               |      |   |         |  |     
|Net income per share - diluted                  | $                               | 0.13                          |      | $ | 0.10    |  | $    | 0.19    |  | $ | 0.11   
|                                                |                                 |                               |      |   |         |  |     
|                                                |                                 |                               |      |   |         |  |      |         |  |   |        
|See notes to consolidated financial statements. |                                 |                               |      |   |         |  |      |         |  |   |        
|                                                |                                 |                               |      |   |         |  |      |         |  |   |        







STERIS CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(Unaudited)

|                                                             |                                |         |   |  |   |         |  
|------------------------------------------------------------ | ------------------------------ | ------- | - |  | - | ------- | -
|                                                             | Six Months Ended September 30,
|                                                            
|                                                             |                               
|                                                             |                                | 2001    |   |  |   | 2000    |  
|                                                             |                                |         |  
|                                                             |                                |         |   |  |   |         |  
|Operating activities                                         |                                |         |   |  |   |         |  
|Net income                                                   | $                              | 13,602  |   |  | $ | 7,552   |  
|Adjustments to reconcile net income to                       |                                |         |   |  |   |         |  
|net cash provided by operating activities:                   |                                |         |   |  |   |         |  
|Depreciation and amortization                                |                                | 23,732  |   |  |   | 22,199  |  
|Other items                                                  |                                | 6,317   |   |  |   | 525     |  
|Changes in operating assets and liabilities:                 |                                |         |   |  |   |         |  
|Accounts receivable                                          |                                | 18,905  |   |  |   | 5,800   |  
|Inventories                                                  |                                | (5,692  | ) |  |   | 18,890  |  
|Other current assets                                         |                                | (771    | ) |  |   | (2,070  | )
|Accounts payable and accruals                                |                                | (9,851  | ) |  |   | (16,551 | )
|                                                             |                                |         |  
|Net cash provided by operating activities                    |                                | 46,242  |   |  |   | 36,345  |  
|                                                             |                                |         |   |  |   |         |  
|Investing activities                                         |                                |         |   |  |   |         |  
|Purchases of property, plant, equipment, and patents         |                                | (24,583 | ) |  |   | (26,295 | )
|Proceeds from sales of assets                                |                                | -       |   |  |   | 90      |  
|                                                             |                                |         |  
|Net cash used in investing activities                        |                                | (24,583 | ) |  |   | (26,205 | )
|                                                             |                                |         |   |  |   |         |  
|Financing activities                                         |                                |         |   |  |   |         |  
|Payments on long-term obligations                            |                                | (228    | ) |  |   | (1,116  | )
|Payments under the Revolving Credit Facility                 |                                | (39,300 | ) |  |   | (13,000 | )
|Stock option and other equity transactions                   |                                | 4,348   |   |  |   | (739    | )
|                                                             |                                |         |  
|Net cash used in financing activities                        |                                | (35,180 | ) |  |   | (14,855 | )
|Effect of exchange rate changes on cash and cash equivalents |                                | (247    | ) |  |   | (1,714  | )
|                                                             |                                |         |  
|Decrease in cash and cash equivalents                        |                                | (13,768 | ) |  |   | (6,429  | )
|Cash and cash equivalents at beginning of period             |                                | 24,710  |   |  |   | 35,476  |  
|                                                             |                                |         |  
|Cash and cash equivalents at end of period                   | $                              | 10,942  |   |  | $ | 29,047  |  
|                                                             |                                |         |  
|See notes to consolidated financial statements.              |                                |         |  





STERIS CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)For the Three and Six Months EndedSeptember 30, 2001 and 2000(in thousands)

Significant Accounting and Reporting Policies

1. Reporting Entity

STERIS Corporation (the Company or STERIS) develops, manufactures, and markets infection prevention, contamination prevention, microbial reduction, and therapy
support systems, products, services, and technologies for healthcare, scientific, research, food, and industrial customers throughout the world. The Company has approximately 4,500 employees worldwide, with approximately half involved in direct
sales, service, and field and customer support. Customer support facilities are located in several major global market centers with production and manufacturing operations in the United States, Australia, Canada, Germany, Finland, and Sweden. STERIS
operates in a single business segment.

2. Basis of Presentation

The Companys unaudited consolidated financial statements for the three and six months ended September 30, 2001 and September 30, 2000 included in this Quarterly
Report on Form 10-Q have been prepared in accordance with the accounting policies described in the Notes to Consolidated Financial Statements for the fiscal year ended March 31, 2001 which were included in the Companys Annual Report on Form
10-K filed with the Securities and Exchange Commission on June 22, 2001, and in managements opinion contain all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position,
results of operations, and cash flows for the interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States
have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission. These financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included
in the Form 10-K referred to above. The balance sheet at March 31, 2001 has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by accounting principles
generally accepted in the United States for complete financial statements.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated upon consolidation. Certain
reclassifications have been made to prior year amounts to conform to the current year presentation.

3. Recently Issued Accounting Standards

Effective April 2001, the Company adopted Statement of Financial Accounting Standard (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, (as amended
by SFAS 138). In accordance with the Statement, the Company will recognize the fair value of its derivative instruments as assets or liabilities in its consolidated balance sheet. The resulting gain or loss will be reflected as other comprehensive
income or in earnings, depending upon the achievement of hedge accounting criteria. As of September 30, 2001, the Company owned no derivative instruments and consequently the adoption had no impact on the consolidated financial statements.

In June 2001, SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets, were issued. Under the new rules, goodwill (and intangible assets
deemed to have indefinite lives) will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives. The Company will apply the
new rules on accounting for goodwill and other intangible assets beginning in the first quarter of fiscal 2003. During fiscal 2003, the Company will perform the first of the required impairment tests of goodwill and intangible assets deemed to have
indefinite lives. The Company has not yet determined the effect of these tests on the Companys consolidated financial statements.



STERIS CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

For the Three and Six Months Ended

September 30, 2001 and 2000

(in thousands)

In August 2001, SFAS No. 143, Accounting for Asset Retirement Obligations, was issued. This Statement requires entities to record the fair value of a liability for an asset retirement
obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes the associated retirement costs by increasing the carrying amount of the related long-lived asset. Over time, the liability is
accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. The Company is required to adopt this Statement in fiscal 2004. The Company has not yet determined the impact of adoption
on the Companys consolidated financial statements.

In October 2001, SFAS No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets, was issued. This Statement, which supersedes SFAS No. 121, Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to Be Disposed Of, provides a single accounting model for long-lived assets to be disposed of. Although retaining many of the fundamental recognition and measurement provisions of SFAS
No. 121, the Statement significantly changes the criteria that would have to be met to classify an asset as held-for-sale. The new rules also will supersede the provisions of the Accounting Principles Board Opinion 30 (APB 30) with
regard to reporting the effects of a disposal of a segment of a business and will require expected future operating losses from discontinued operations to be displayed in discontinued operations in the period(s) in which the losses are incurred
(rather than as of the measurement date as presently required by APB 30). In addition, more dispositions will qualify for discontinued operations treatment in the income statement. The Statement is effective for the Company beginning April 1, 2002.
The Company has not yet determined the impact of adoption on the Companys consolidated financial statements.

4. Earnings per Share

The following is a summary of Common Shares and Common Share equivalents outstanding used in the calculations of earnings per share:

|                                                         | Three Months Ended September 30, | Six Months Ended September 30,
|-------------------------------------------------------- | -------------------------------- | ------------------------------
|                                                        
|                                                         |                                 
|                                                         | 2001                             |                               
|                                                         |                                  |                               
|Weighted average Common Shares outstanding - basic       | 69,104                           |                               
|                                                         |                                  |                               
|Dilutive effect of stock options                         | 1,592                            |                               
|                                                         |                                  |                               
|Weighted average Common Shares and equivalents - diluted | 70,696                           |                               
|                                                         |                                  |                               
|                                                         |                                  |                               

5. Comprehensive Income

Comprehensive income amounted to $9,388 and $4,953 for the quarters ended September 30, 2001 and 2000, respectively. Comprehensive income amounted to $13,318 and $5,838 for the six months ended
September 30, 2001 and 2000, respectively. The difference between net income and comprehensive income for the periods resulted from the change in the cumulative translation adjustment.





STERIS CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

For the Three and Six Months Ended

September 30, 2001 and 2000

(in thousands)

6. Inventories

Inventories are stated at cost, which does not exceed market. The Company uses the last-in, first-out (LIFO) and first-in, first-out (FIFO) cost methods. Inventory costs include material, labor,
and overhead. Inventories were as follows:

|                  |   | September 30,  2001 |  |   | March 31, 2001
|----------------- | - | ------------------- |  | - | --------------
|                  |   |                     | 
|                  |   |                     | 
|Raw material      | $ | 24,505              |  | $ | 19,463        
|Work in process   |   | 23,446              |  |   | 22,810        
|Finished goods    |   | 39,980              |  |   | 39,966        
|                  |   |                     | 
|Total Inventories | $ | 87,931              |  | $ | 82,239        
|                  |   |                     | 
|                  |   |                     |  |   |               

7. Contingencies

There are various pending lawsuits and claims arising out of the conduct of STERISs business. In the opinion of management, the ultimate outcome of these lawsuits and claims will not have
a material adverse effect on STERISs consolidated financial position or results of operations. STERIS presently maintains product liability insurance coverage in amounts and with deductibles that it believes are prudent.

8. Non-recurring Transactions

Fiscal 2001 Charge

During the fourth quarter of fiscal 2001, the Company concluded its review of manufacturing, service, and support functions and recorded a non-recurring charge of $41,476. This charge primarily
related to plans for manufacturing consolidations, up-grading of the Companys service, sales and distribution organizations, and associated workforce reductions. The complete implementation of these actions will result in a reduction of
approximately 350 employees.

The charge to cost of sales included $10,923 for inventory write-downs and asset disposals relating to the restructuring of the Companys production, distribution, service, and sales
activities. The charge to cost of sales also included $10,587 for consolidating manufacturing operations. The Companys production operations in Medina, Ohio were consolidated into the Companys Montgomery, Alabama facility in August 2001.
The Companys two St. Louis, Missouri manufacturing facilities will be consolidated into one facility on or about December 2001. The consolidation costs primarily included severance and property abandonment costs.

The charge to selling, general, and administrative expenses included $10,163 to write-off net goodwill related to purchased product lines that the Company is discontinuing and $9,803 for
severance and asset write-offs related to portions of the sales, service, and distribution organizations.

As of September 30, 2001, these plans have been or are in the process of being implemented with a remaining accrued balance of approximately $9,895. Reserve reductions primarily related to cash
payments for employee severance costs. The actions taken to date have resulted in the elimination of approximately 250 positions. An inventory reserve of $1,475 remained as of September 30, 2001 for the future disposal of discontinued and
restructured inventory.



INDEPENDENT ACCOUNTANTS REVIEW REPORT

Board of Directors and ShareholdersSTERIS Corporation

We have reviewed the accompanying consolidated balance sheet of STERIS Corporation and subsidiaries as of September 30, 2001, and the related consolidated statements of income for the three-month and
six-month periods ended September 30, 2001 and 2000, and the consolidated statements of cash flows for the six-month periods ended September 30, 2001 and 2000. These financial statements are the responsibility of the Companys
management.

We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying
analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the
United States, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based upon our reviews, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements referred to above for them to be in conformity with
accounting principles generally accepted in the United States.

We have previously audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheet of STERIS Corporation and subsidiaries as of March 31, 2001
and the related consolidated statements of income, shareholders equity and cash flows for the year then ended, not presented herein, and in our report dated April 23, 2001, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of March 31, 2001, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been
derived.

/s/ Ernst & Young LLP

Cleveland, Ohio

October 16, 2001



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Net revenue increased by 6.8% to $206.4 million in the second quarter of fiscal 2002 from $193.2 million in the second quarter of fiscal 2001. The increase in revenues was primarily attributable to
growth from the Scientific and Industrial Group, reflecting strong order patterns from customers in the pharmaceutical production and research markets. Net revenue for the first six months of fiscal 2002 increased by 7.0% to $403.5 million from
$377.0 million in the comparable prior year period.

Healthcare Group revenues in the second quarter of fiscal 2002 increased 3.4% to $143.8 million from $139.1 million in the comparable prior year period. Scientific and Industrial Group revenues
increased 15.7% to $62.6 million in the second quarter of fiscal 2002 as compared to $54.1 million in the prior year period. Healthcare Group revenues in the first six months of fiscal 2002 were $282.1 million as compared to $269.2 million for the
prior year period, an increase of 4.8%. Scientific and Industrial Group revenues were $121.4 million in the first six months of fiscal 2002, an increase of 12.6% from $107.8 million in the first six months of fiscal 2001.

Capital equipment revenue for the three and six months ended September 30, 2001 was $83.8 million, or 40.6% and $155.1 million, or 38.4% of revenue, respectively, compared to $82.7 million, or 42.8%
and $147.8 million, or 39.2% of revenue in the comparable prior year periods. Consumable and service revenue for the three and six months ended September 30, 2001 was $122.6 million, or 59.4% and $248.4 million, or 61.6% of revenue, respectively,
compared to $110.5 million, or 57.2% and $229.2 million, or 60.8% of revenue in the comparable prior year periods. The Companys ability to maintain an approximately 60% consumable and service mix moderates the financial impacts of downturns in
capital equipment spending patterns.

The cost of products sold for the three and six months ended September 30, 2001 increased to $121.7 million and $237.6 million, respectively, from $112.0 million and $221.8 million for the comparable
periods last year. The cost of products sold as a percentage of revenues was 59.0% and 58.9%, for the three and six months ended September 30, 2001, respectively, as compared to 58.0% and 58.8% for the comparable periods last year. Certain costs
(primarily distribution costs) incurred in fiscal 2001 were reclassified from operating expenses into cost of products sold to improve comparability and accountability of expenses company-wide and to conform with the fiscal 2002 presentation. The
increase in the cost of products sold as a percentage of revenues reflects consolidation costs associated with the Companys Medina, Ohio and St. Louis, Missouri plant closings as well as a shift in the mix due to the rapid growth of lower
margin Scientific and Industrial Group products. The corresponding gross margin rates were 41.0% and 41.1%, respectively, for the three and six months ended September 30, 2001 as compared to 42.0% and 41.2%, respectively, for the comparable periods
last year.

Reflecting the reclassifications referred to above, selling, general, and administrative expenses were $63.0 million, or 30.5% of revenues and $127.8 million, or 31.7% of revenues for the three and
six months ended September 30, 2001, respectively, as compared to $59.8 million, or 31.0% of revenues and $122.4 million, or 32.5% of revenues for the three and six months ended September 30, 2000, respectively. This decrease as a percentage of
revenues reflects the Companys continued efforts to control administrative operating expenses. The overall dollar amount increase is attributable to increased spending for marketing initiatives, a higher level of spending to upgrade certain
information systems, and variable costs associated with revenue growth.

Research and development expenses for the three months ended September 30, 2001 decreased by 9.1% to $5.0 million in the second quarter of fiscal 2002 from $5.5 million in the second quarter of fiscal
2001 as a result of improved cost management initiatives. Research and development expenses were consistent at $11.3 million in the first six months of both fiscal 2002 and 2001.

Interest expense, net, decreased by 59.6% to $2.1 million in the second quarter of fiscal 2002 from $5.2 million in the second quarter of fiscal 2001. Interest expense, net, decreased by 44.2% to $5.3
million in the first six months of fiscal 2002 from $9.5 million in the first six months of fiscal 2001. The decrease was due to lower average outstanding borrowings under the Company's Revolving Credit Facility (the "Facility") and lower interest
rates.



Income tax expense was 37.0% of pretax earnings for both the three and six months ended September 30, 2001. This compares with effective tax rates of 37.4% and 37.5%,
respectively, for the three and six months ended September 30, 2000. The reduction in the tax rate resulted from the Companys continued efforts to improve global tax strategies and active tax management programs.

Net income, as a result of the foregoing factors, was $9.2 million for the second quarter of fiscal 2002 as compared to $6.7 million for the second quarter of fiscal 2001. Net income in the first six
months of fiscal 2002 was $13.6 million as compared to $7.6 million in the first six months of fiscal 2001.

Liquidity and Capital Resources

The Companys operating activities generated $46.2 million of cash during the six months ended September 30, 2001, which was an increase of $9.9 million over the comparable period last year.
Accounts receivable reductions continue to be a driver of improved cash flow from operations. The continuous improvement in accounts receivable management is evidenced by weighted days sales outstanding improvement to 56 days at September 30, 2001
compared to 82 days at September 30, 2000. Another significant factor affecting cash flow from operations was improved accounts payable management processes, which held the use of cash from operations to $9.9 million during the six months ended
September 31, 2001 compared to a use of $16.6 million the first six months of fiscal 2001. A $5.7 million increase in inventory, related to the inventory build for the plant consolidations and general seasonality, offset the above stated
factors.

Net cash used for investing activities was $24.6 million for the six months ended September 30, 2001 versus $26.2 million in the comparable prior year period. The decrease was primarily due to the
quarter-to-quarter timing of capital expenditures.

Net cash used for financing activities was $35.2 million for the six months ended September 30, 2001 compared with $14.9 million for the six months ended September 30, 2000. Current year financing
activities primarily represent the repayment of $39.3 million on the Facility versus a repayment of $13.0 million in the comparable prior year period.

The Company has a $325.0 million Facility which matures June 29, 2003. The Facility may be used for general corporate purposes and bears interest at LIBOR plus 1.00 to 1.75 percent or KeyBank National
Associations prime rate, at the Companys option. The Facility contains covenants that include maintenance of certain financial ratios such as fixed charge coverage, interest coverage, minimum net worth, and leverage ratios. As of
September 30, 2001, the Company had outstanding borrowings of $160.7 million under the Facility at an average weighted interest rate of 4.29%.

The Company has no material commitments for capital expenditures. The Company believes that its available cash, cash flow from operations, and sources of credit will be adequate to satisfy its
operating and capital needs for the foreseeable future.

Inflation

The overall effects of inflation on the Companys business during the periods discussed have not been significant. The Company monitors the prices it charges for its products and services on an
ongoing basis and believes that it will be able to adjust those prices to take into account future changes in the rate of inflation.

Market Risk

The overall effects of foreign currency exchange rates on the Companys business during the periods discussed have not been significant. Movements in foreign currency exchange rates create a
degree of risk to the Companys operations. These movements affect the United States dollar value of sales made in foreign currencies, and the United States dollar value of costs incurred in foreign currencies. Changing currency exchange rates
also affects the Companys competitive position, as exchange rate changes may affect profitability and business and/or pricing strategies of non-United States based competitors.





Contingencies

For a discussion of contingencies, see Note 7 to the consolidated financial statements.

Seasonality

The Companys financial results have been subject to recurring seasonal fluctuations. A number of factors have contributed to the seasonal patterns, including sales promotion and compensation
programs, customer buying patterns of capital equipment, and international business practices. Sales and profitability of certain product lines have historically been disproportionately weighted toward the latter part of each quarter and generally
weighted toward the latter part of each fiscal year.

Euro

On January 1, 1999, eleven of the fifteen member countries of the European Monetary Union (EMU) began a three-year transition phase during which a common currency called the Euro was adopted. On
January 1, 2002, all legacy currencies will be withdrawn from circulation and the new Euro denominated bills and coins will be used for cash transactions. The Company believes that it can readily update or convert current systems to appropriately
handle all aspects of Euro processing by the effective date of January 1, 2002. Based on current estimates, the Company does not expect that the costs incurred to address the Euro will have a material impact on its financial condition or results of
operations.

Cautionary Statements Regarding Forward-Looking Statements

This Form 10-Q contains statements concerning certain trends and other forward-looking information affecting or relating to the Company and its industry that are intended to qualify for the protections
afforded forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terms such as may, will,
expects, believes, anticipates, plans, estimates, projects, targets, forecasts, and seeks or the negative of such terms or other variations
on such terms or comparable terminology. Many important factors could cause actual results to differ materially from those in the forward-looking statements. Many of these important factors are outside STERISs control. Changes in market
conditions, including competitive factors and changes in government regulations, could cause actual results to differ materially from the Companys expectations. No assurance can be provided as to any future financial results. Other potential
risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements include (a) the potential for increased pressure on pricing that leads to erosion of profit margins, (b) the possibility that
market demand will not develop for new technologies, products, and applications, (c) the possibility that compliance with the regulations and certification requirements of domestic and foreign authorities may delay or prevent new product
introductions or affect the production and marketing of existing products, (d) the potential effects of fluctuations in foreign currencies where the Company does a sizable amount of business, (e) the possibility that implementation of the
Companys business improvement initiatives will take longer, cost more or produce lower benefits than anticipated, and (f) the possibility of reduced demand, or reductions in the rate of growth in demand, for the Companys products and
services.



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A discussion of market risk exposures is included in Part II, Item 7a, Quantitative and Qualitative Disclosure about Market Risk, of the Companys 2001 Annual Report and Form 10-K.
There were no material changes during the six months ended September 30, 2001.



PART II  OTHER INFORMATION

Item 1. Legal Proceedings

Reference is made to Part I, Item 1., Note 7 of this Report on Form 10-Q, which is incorporated herein by reference.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

|Exhibit Number |  | Exhibit Description                               
|-------------- |  | --------------------------------------------------
|15.1           |  | Letter Re: Unaudited Interim Financial Information

(b) Reports on Form 8-K: None



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



| |  | STERIS Corporation       
| |  | -------------------------
| |  | (Registrant)             
| |  |                          
| |  |                          
| |  | /s/ Laurie Brlas         
| |  | Laurie Brlas             
| |  | Senior Vice President and
| |  | Chief Financial Officer  
| |  | November 8, 2001         
| |  |