<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------- ------
Commission File Number: 000-20997
STERILE RECOVERIES, INC.
(Exact name of Registrant as specified in its Charter)
FLORIDA 59-3252632
(State of incorporation) (I. R. S. Employer
Identification No.)
28100 U.S. HIGHWAY 19 NORTH, SUITE 201
CLEARWATER, FLORIDA 33761
(Address of Principal Executive Offices)
(813) 726-4421
(Registrant's Telephone Number)
Indicate by check 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
--- ---
Number of outstanding shares of each class of Registrant's Common Stock as of
July 13, 1998:
Common Stock, par value $.001 - 5,660,694
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Statements of Earnings for the three month
period and six month period ended June 30, 1998
(unaudited) and the three month period and six month
period ended June 30, 1997 (unaudited)....................... 1
Condensed Balance Sheets as of June 30, 1998
(unaudited) and December 31, 1997 ........................... 2
Condensed Statements of Cash Flow for the six month
period ended June 30, 1998 (unaudited) and six month
period ended June 30, 1997 (unaudited)....................... 3
Notes to Condensed Financial Statements (unaudited).......... 4
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 5
PART II OTHER INFORMATION
Item 1 Legal Proceedings ...........................................11
Item 2 Changes in Securities........................................11
Item 3 Defaults Upon Senior Securities..............................11
Item 4 Submission of Matters to a Vote of Security Holders..........11
Item 5 Other Information............................................11
Item 6 Exhibits and Reports on Form 8-K.............................11
SIGNATURE........................................................................12
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
STERILE RECOVERIES, INC.
CONDENSED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 12,283 $ 9,675 $ 24,015 $ 18,712
Cost of revenues 8,134 6,470 15,868 12,419
-------- -------- -------- --------
Gross profit 4,149 3,205 8,147 6,293
Distribution expenses 859 729 1,746 1,486
Selling and administrative expenses 1,768 1,395 3,465 2,723
-------- -------- -------- --------
Income from operations 1,522 1,081 2,936 2,084
Interest expense (income), net (5) (38) (12) (82)
-------- -------- -------- --------
Income before income tax expense 1,527 1,119 2,948 2,166
Income tax expense 595 431 1,150 850
-------- -------- -------- --------
Net income $ 932 $ 688 $ 1,798 $ 1,316
======== ======== ======== ========
Net income per common share - basic $ 0.16 $ 0.12 $ .32 $ .23
======== ======== ======== ========
Net income per common share - diluted $ 0.16 $ 0.12 $ .31 $ .22
======== ======== ======== ========
Weighted average common shares
outstanding - basic 5,660 5,656 5,660 5,614
======== ======== ======== ========
Weighted average common shares
outstanding - diluted 5,902 5,880 5,879 5,867
======== ======== ======== ========
</TABLE>
See accompanying Notes to Condensed Financial Statements Page 1 of 12
<PAGE> 4
STERILE RECOVERIES, INC.
CONDENSED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
June 30, Dec. 31,
1998 1997
----------- --------
(unaudited)
ASSETS
<S> <C> <C>
Cash $ 60 $ 380
Accounts receivable, net 6,286 6,016
Inventories 1,954 1,979
Prepaid expenses and other assets 552 1,203
Reusable surgical products, net 11,888 10,034
Property, plant and equipment, net 8,077 7,253
Goodwill, net 507 521
Deferred income taxes 160 160
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Total assets $29,484 $27,546
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 1,775 $ 1,603
Employee related accrued expenses 802 926
Other accrued expenses 752 669
------- -------
Total liabilities 3,329 3,198
Commitments and contingencies -- --
Shareholders' equity
Preferred stock--authorized 5,000,000 shares
of $.001 par value; no shares issued and
outstanding -- --
Common stock--authorized 30,000,000 shares
of $.001 par value; issued and outstanding
5,660,694 shares and 5,659,894 shares, respectively 6 6
Additional paid-in capital 20,176 20,167
Retained earnings 5,973 4,175
------- -------
Total shareholders' equity 26,155 24,348
------- -------
Total liabilities and shareholders' equity $29,484 $27,546
======= =======
</TABLE>
See accompanying Notes to Condensed Financial Statements Page 2 of 12
<PAGE> 5
STERILE RECOVERIES, INC.
CONDENSED STATEMENTS OF CASH FLOW
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30, June 30,
1998 1997
------- -------
<S> <C> <C>
Increase (decrease) in cash
Cash flows from operating activities
Net income $ 1,798 $ 1,316
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 415 297
Amortization of reusable surgical products 1,364 906
Provision for reusable surgical products shrinkage 584 282
Change in assets and liabilities
Accounts receivable (270) 17
Inventories 25 (362)
Prepaid expenses and other assets 651 (115)
Accounts payable 172 1,044
Accrued expenses (41) (626)
------- -------
Net cash provided by operating activities 4,698 2,758
------- -------
Cash flows from investing activities
Purchases of property, plant and equipment (1,225) (1,636)
Purchases of reusable surgical products (3,802) (2,735)
------- -------
Net cash used in investing activities (5,027) (4,371)
------- -------
Cash flows from financing activities
Payments on related party debt 0 (250)
Net proceeds from issuance of common stock 9 (37)
------- -------
Net cash provided by (used in) financing
activities 9 (287)
------- -------
Increase (decrease) in cash (320) (1,900)
Cash and cash equivalents at beginning of period 380 5,199
------- -------
Cash and cash equivalents at end of period $ 60 $ 3,299
======= =======
Supplemental cash flow information
Cash paid for interest $ 19 $ 35
======= =======
Cash paid for income taxes $ 1,151 $ 1,098
======= =======
Conversion of Convertible Demand Note into 128,205
shares of Common Stock $ -- $ 750
======= =======
</TABLE>
Page 3 of 12
<PAGE> 6
Notes to Financial Statements
STERILE RECOVERIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation. The accompanying unaudited condensed
financial statements of Sterile Recoveries, Inc. (the
"Company") have been prepared in accordance with the
Securities and Exchange Commission's instructions to Form 10-Q
and, therefore, omit or condense footnotes and certain other
information normally included in financial statements prepared
in accordance with generally accepted accounting principles.
The accounting policies followed for quarterly financial
reporting conform with generally accepted accounting
principles for interim financial statements and include those
accounting policies disclosed in the Company's Form 10-K for
the year ended December 31, 1997 filed with the Securities and
Exchange Commission. In the opinion of management, all
adjustments of a normal recurring nature that are necessary
for a fair presentation of the financial information for the
interim periods reported have been made. The results of
operations for the six months ended June 30, 1998 are not
necessarily indicative of the results that can be expected for
the entire year ending December 31, 1998. The unaudited
financial statements should be read in conjunction with the
financial statements and the notes thereto included in the
Form 10-K.
2. INDEBTEDNESS
The Company does not have any borrowings under its
$15.0 million unsecured revolving credit facility with First
Union National Bank.
Page 4 of 12
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
OVERVIEW
The Company provides hospitals and surgery centers with a comprehensive
surgical procedure-based delivery and retrieval service for reusable gowns,
towels, drapes, and basins and provides other disposable products necessary for
surgery. At eight regional facilities, the Company collects, sorts, cleans,
inspects, packages, sterilizes, and delivers its reusable products on a
just-in-time basis. The Company offers an integrated "closed-loop" reprocessing
service that uses two of the most technologically advanced reusable textiles:
(i) a GORE(R) Surgical Barrier Fabric for gowns and drapes that is breathable
yet liquidproof and provides a viral/bacterial barrier and (ii) an advanced
microfiber polyester surgical fabric for gowns and drapes that is liquid and
bacterial resistant. The Company believes that its reusable surgical products
made from these fabrics provide protection and comfort that are superior to
disposable alternatives.
The Company purchased the assets of its business from AMSCO Sterile
Recoveries, Inc., an indirect wholly-owned subsidiary of AMSCO International,
Inc., on July 31, 1994 (the "Acquisition").
RESULTS OF EARNINGS
The following table sets forth for the periods shown the percentage of
revenues represented by certain items reflected in the statement of earnings of
the Company.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
------ ------ ------ -----
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Cost of revenues 66.2 66.9 66.1 66.4
----- ----- ----- -----
Gross profit 33.8 33.1 33.9 33.6
Distribution expense 7.0 7.5 7.3 7.9
Selling and administrative expenses 14.4 14.4 14.4 14.6
----- ----- ----- -----
Income from operations 12.4 11.2 12.2 11.1
Interest expense (income), net .0 (0.4) (0.1) (0.5)
----- ----- ----- -----
Income before income taxes 12.4 11.6 12.3 11.6
Income tax expense 4.8 4.5 4.8 4.6
----- ----- ----- -----
Net income 7.6% 7.1% 7.5% 7.0%
===== ===== ===== =====
</TABLE>
GORE(R) Surgical Barrier Fabric is a registered trademark of W.L. Gore &
Associates, Inc.
Page 5 of 12
<PAGE> 8
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
REVENUES. The Company's revenues increased $2.6 million, or 27.0%, to
$12.3 million in the three months ended June 30, 1998 from $9.7 million in the
three months ended June 30, 1997. In the six months ended June 30, 1998, the
Company's revenues increased $5.3 million, or 28.3%, to $24.0 million, from
$18.7 million in the six months ended June 30, 1997. The revenue increases were
equally attributable to new customers and increased revenues from current
customers.
GROSS PROFIT. Gross profit increased $944,000, or 29.5%, to $4.1
million in the three months ended June 30, 1998 from $3.2 million in the three
months ended June 30, 1997; and $1.9 million, or 29.5%, to $8.1 million in the
six months ended June 30, 1998, from $6.3 million in the six months ended June
30, 1997. The Company continues to benefit from labor efficiencies in the pack
room and the economies of scale associated with spreading fixed costs over more
revenues. These benefits were partially offset by higher amortization expense
and provisions for shrinkage of reusable surgical products as the Company
supplements the products purchased in the Acquisition with products purchased at
current higher replacement cost. Gross profit as a percentage of revenues
increased by .7% to 33.8% in the three months ended June 30, 1998, from 33.1%
in the three months ended June 30, 1997; and increased .3% to 33.9% in the
six months ended June 30, 1998, from 33.6% in the six months ended June 30,
1997.
DISTRIBUTION EXPENSES. Distribution expenses increased $130,000, or
17.8%, to $859,000 in the three months ended June 30, 1998, from $729,000 in the
three months ended June 30, 1997; and $260,000, or 17.5%, to $1.7 million in the
six months ended June 30, 1998, from $1.5 million in the six months ended June
30, 1997. Distribution expenses as a percentage of revenues decreased by .5% to
7.0% in the three months ended June 30, 1998 from 7.5% in the three months ended
June 30, 1997; and decreased .6% to 7.3% in the six months ended June 30, 1998,
from 7.9% in the six months ended June 30, 1997. The improvement in distribution
expenses as a percentage of revenues resulted primarily from efficiencies
derived from delivering more volume over existing routes and from adding
additional routes and equipment at a slower pace than revenue growth.
SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative
expenses increased $373,000, or 26.7%, to $1.8 million in the three months ended
June 30, 1998, from $1.4 million in the three months ended June 30, 1997; and
increased $742,000, or 27.2%, to $3.5 million in the six months ended June 30,
1998, from $2.7 million in the six months ended June 30, 1997. As a percentage
of revenues, selling and administrative expenses remained the same at 14.4% in
the three months ended June 30, 1998, and the three months ended June 30, 1997;
and decreased .2% to 14.4% in the six months ended June 30, 1998, from 14.6% in
the six months ended June 30, 1997. The Company's continuing increase in its
sales force in the second quarter of 1998 was offset by its continuing ability
to leverage administrative costs over more revenues.
INTEREST EXPENSE (INCOME), NET. Interest income decreased $33,000, or
86.8%, to an income of $5,000 in the three months ended June 30, 1998, from an
income of $38,000 in the three months ended June 30, 1997, and decreased
$70,000, or 85.4%, to an income of $12,000 in the six months ended June 30,
Page 6 of 12
<PAGE> 9
1998, from $82,000 in the six months ended June 30, 1997, due to a reduction of
cash available for investing.
INCOME BEFORE INCOME TAX EXPENSE. As a result of the foregoing, the
Company's income before taxes increased to $1.5 million in the three months
ended June 30, 1998, from income before taxes of $1.1 million in the three
months ended June 30, 1997; and increased to $2.9 million in the six months
ended June 30, 1998, from an income before taxes of $2.2 million in the six
months ended June 30, 1997. As a percentage of revenues, income before taxes in
the three months ended June 30, 1998 was 12.4% of revenues, compared to income
before taxes of 11.6% of revenues in the three months ended June 30, 1997; and
income before taxes of 12.3% of revenue in the six months ended June 30, 1998,
compared to income before taxes of 11.6% of revenues in the six months ended
June 30, 1997.
INCOME TAX EXPENSE. Income tax expense increased $164,000 to $595,000
in the three months ended June 30, 1998, compared to $431,000 in the three
months ended June 30, 1997; and increased $300,000 to $1.1 million in the six
months ended June 30, 1998, compared to $850,000 in the six months ended June
30, 1997. The Company's effective tax rate is 39.0%.
NET INCOME PER SHARE. The Company recorded a net income per share of
$0.16 on a basic and diluted per share basis for the three months ended June 30,
1998, compared with $0.12 basic and diluted per share net income for the three
months ended June 30, 1997; and net income per share of $0.32 on basic per share
basis and $0.31 on a diluted per share basis for the six months ended June 30,
1998, compared with a net income per share of $0.23 on a basic per share basis
and $0.22 on a diluted per share basis for the six months ended June 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's positive cash flow from operating activities was $4.7
million during the six months ended June 30, 1998, compared to $2.8 million
during the six months ended June 30, 1997. The increase in cash from operating
activities resulted primarily from increased net income before amortization and
depreciation expense and a decrease in prepaid expenses offset by a decrease in
accounts payable and an increase in accounts receivable.
The Company used approximately $700,000 more net cash in investing
activities in the six months ended June 30, 1998 than in the six months ended
June 30, 1997. The Company has made capital expenditures in the six months ended
June 30, 1998 for equipment of $1.2 million and for reusable surgical products
of $3.8 million compared to $1.6 million for equipment and $2.7 million for
reusable surgical products during the six months ended June 30, 1997. These
expenditures were funded primarily by cash provided by operating activities.
The Company continues to increase its expenditures for reusable
surgical products, primarily to support anticipated increases in business. The
Company's business is capital intensive and will require substantial capital
expenditures for additional surgical products and equipment during the next
several years to achieve its operating and expansion plans. To adequately
service a new customer, the Company estimates that it makes an investment in new
reusable surgical products and carts equal to approximately 50% of the
Page 7 of 12
<PAGE> 10
projected first year revenue from the customer. The Company estimates capital
expenditures for new carts and reusable surgical products will be approximately
$750,000 per month for the next 12 months, although the amount will fluctuate
with the growth of its business. The Company also expects to make additional
expenditures of approximately $500,000 in 1998 for equipment upgrades and
maintenance to increase the aggregate capacity of its facilities and $1.0
million for new technology software and related computer hardware. The Company
plans to add two facilities in the first half of 1999, at an estimated cost of
between $3.0 and $4.0 million each depending on size and location.
The Company does not have any borrowings under its $15.0 million
unsecured revolving credit facility with First Union National Bank.
As of June 30, 1998, the Company had cash of approximately $60,000. The
Company believes this current cash balance, combined with its cash flow from
operating activities and funds available under its credit facility, will be
sufficient to fund its growth and anticipated capital requirements for the next
twelve months. In the longer term, the Company expects to fund additional
capital expenditures from a combination of internal cash flow, its credit
facility, and other new capital sources.
CERTAIN CONSIDERATIONS
This report, other documents that are publicly disseminated by the
Company, and oral statements that are made on behalf of the Company contain or
might contain both statements of historical fact and forward-looking
statements. Examples of forward-looking statements include: (i) projections of
revenue, earnings, capital structure, and other financial items, (ii)
statements of the plans and objectives of the Company and its management, (iii)
statements of future economic performance, and (iv) assumptions underlying
statements regarding the Company or its business. The cautionary statements set
forth below discuss important factors that could cause actual results to differ
materially from any forward-looking statements.
Sales Process and Market Acceptance of Products and Services. The
Company's future performance depends on its ability to increase revenues to new
and existing customers. The Company's sales process for new customers is
typically between six and twelve months in duration from initial contact to
purchase commitment. The extended sales process is typically due to the
complicated approval process within hospitals for purchases from new suppliers,
the long duration of existing supply contracts, and implementation delays
pending termination of a hospital's previous supply relationships. SRI's future
performance will also depend on market acceptance of its combination of reusable
surgical products, disposable accessory packs, and direct delivery and retrieval
service. SRI's market is now dominated by disposable products, and the Company's
primary strategic emphasis on reusable surgical products and reprocessing
services requires its customers to change their customary purchasing patterns.
The Company's inability to gain wider market acceptance of its reusable products
and reprocessing services would have a material adverse effect on the Company's
operating and expansion plans.
Need for Capital. The Company's business is capital intensive and will
require substantial capital expenditures for additional surgical products and
equipment during the next several years to achieve its operating and expansion
Page 8 of 12
<PAGE> 11
plans. In the longer term, the Company expects that its needs for capital
expenditures will be substantial and will depend on its growth and opportunities
ties. The Company's inability to obtain adequate capital could have a material
adverse effect on the Company. See -- "Liquidity and Capital Resources."
Dependence on a Significant Customer and Market Consolidation. During
the second quarter of 1998, Columbia/HCA Healthcare Corporation ("Columbia")
hospitals, with which the Company currently does business, accounted for
approximately 15.4% of SRI's revenues, compared to 15.0% in the second quarter
of 1997. Although each Columbia hospital currently makes its purchasing
decisions on an individual basis, and no single hospital accounted for more than
3% of the Company's revenues, the Company believes the executive management of
Columbia has the ability to influence the selection of particular vendors. The
loss of a substantial portion of the Columbia hospitals' business would have a
material adverse effect on the Company. Additionally, hospitals are increasingly
buying products and services in groups to improve efficiency and lower costs.
Although SRI is increasingly targeting these groups for its sales efforts, a
change of its customers' purchasing patterns could have a material adverse
effect on the Company.
Competition. The Company's business is highly competitive. The
Company's competitors include a number of distributors and manufacturers, as
well as the in-house reprocessing operations of hospitals. Certain of the
Company's existing and potential competitors possess substantially greater
resources than the Company, and the Company's market is dominated by their
disposable products. Some of the Company's competitors, including the Convertors
division of Allegiance Corporation, serve as the sole supplier of a wide
assortment of products to a significant number of hospitals. The Company does
not provide an array of products as complete as those provided by some of its
competitors, which in some instances is a competitive disadvantage. There is no
assurance that the Company will be able to compete effectively with existing or
potential competitors.
Dependence on Key Executives. The Company is largely dependent upon the
management expertise and experience of Richard T. Isel, Bertram T. Martin, Jr.,
Wayne R. Peterson, and James T. Boosales, its principal officers. The loss of
the services of one or more of these key executives could have a material
adverse effect on the Company. In December 1997, the Company appointed Mr. Isel
as its Chairman of the Board and Mr. Martin as its President. These changes
recognize Mr. Isel's shift from responsibility for day-to-day operations to
focus on longer-term business opportunities, including additional products and
services, strategic relationships, and joint venture or acquisition
opportunities.
Increased Replacement and Amortization Costs. SRI acquired its
equipment and surgical products at a cost substantially below both their
original cost and current replacement cost, which has resulted in lower
depreciation, amortization, and shrinkage expense for those assets since the
Acquisition, as compared to the expenses incurred by Amsco Sterile. Since the
Acquisition, SRI has purchased equipment and surgical products at current
replacement cost, resulting in increased depreciation, amortization, and
shrinkage expense. SRI amortizes its reusable surgical products on a per use
basis. If the products' actual number of uses proves to be shorter than SRI's
current estimates, SRI's annual product amortization expense would increase,
which would adversely affect its profitability. The amount of shrinkage (loss
and scrap of reusable surgical products) experienced by the Company is
influenced by a variety of
Page 9 of 12
<PAGE> 12
factors including the customers' surgical product rotation and operating room
control procedures, the Company's internal tracking of reusable surgical
products through bar coding and the Company's increased use of standardized
surgical packs.
Government Regulation. Significant aspects of the Company's businesses
are subject to state and federal statutes and regulations governing, among other
things, medical waste-disposal and workplace health and safety. In addition,
most of the products furnished or sold by the Company are subject to regulation
as medical devices by the U.S. Food and Drug Administration, as well as by other
federal and state agencies. The Company's facilities are subject to regular
inspections by FDA officials. The FDA has the power to enjoin future violations,
seize adulterated or misbranded devices, require the manufacturer to remove
products from the market, and publicize relevant facts. Federal or state
governments might impose additional restrictions or adopt interpretations of
existing laws that could materially adversely affect the Company.
Page 10 of 12
<PAGE> 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Neither the Company nor any of its property is subject to any litigation or
other legal proceeding that is expected to have a material effect on the Company
or its business.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
At the annual meeting of the Company's shareholders on May 19, 1998,
the shareholders voted on a proposal to elect Bertram T. Martin, Jr. and Wayne
R. Peterson as directors of the Company to serve until the 2001 annual meeting.
The following sets forth the votes in this election:
<TABLE>
<CAPTION>
Director Votes For Votes Against or Withheld
-------- --------- -------------------------
<S> <C> <C>
Bertram T. Martin, Jr. 3,152,951 -0-
Wayne R. Peterson 3,152,951 -0-
</TABLE>
Richard T. Isel, James T. Boosales, James M. Emanuel and Lee R.
Kemberling continue to serve as directors. The shareholders also approved the
Company's 1998 Stock Option Plan, which provides up to 300,000 shares in the
Plan, by a vote of 3,152,351 votes for and 600 votes against or withheld.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
EXHIBIT
Exhibit 27 Financial Data Schedule
REPORTS ON FORM 8-K
The Company did not file a report on Form 8-K during the three months
ended June 30, 1998.
Page 11 of 12
<PAGE> 14
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.
STERILE RECOVERIES, INC.
Date: August 10, 1998 By: /s/ James T. Boosales
--------------- ---------------------------------
Executive Vice President and
Chief Financial Officer
Page 12 of 12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 60
<SECURITIES> 0
<RECEIVABLES> 6,350
<ALLOWANCES> 64
<INVENTORY> 1,954
<CURRENT-ASSETS> 0
<PP&E> 10,217
<DEPRECIATION> 2,140
<TOTAL-ASSETS> 29,484
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 6
<OTHER-SE> 26,149
<TOTAL-LIABILITY-AND-EQUITY> 29,484
<SALES> 24,015
<TOTAL-REVENUES> 24,015
<CGS> 15,868
<TOTAL-COSTS> 15,868
<OTHER-EXPENSES> 5,211
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (12)
<INCOME-PRETAX> 2,948
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</TABLE>
