UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2010~~ March 31, 2011

¨	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 0-21229

Stericycle, Inc.

(Exact name of registrant as specified in its charter)

Delaware

36-3640402

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification Number)

28161 North Keith Drive

Lake Forest, Illinois 60045

(Address of principal executive offices, including zip code)

(847) 367-5910

(Registrant’s telephone number, 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 reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x

As of ~~November 2, 2010~~May 3, 2011 there were ~~85,530,675~~85,848,988 shares of the registrant’s Common Stock outstanding.

~~Stericycle, Inc.~~ LOGO

Stericycle, Inc.

Table of Contents


	Page No.

PART I. Financial Information

Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of ~~September 30, 2010~~March 31, 2011 (Unaudited) and December 31, ~~2009~~2010 (Audited)		1

Condensed Consolidated Statements of Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2011 and 2010 ~~and 2009~~ (Unaudited)		2

Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2011 and 2010 ~~and 2009~~ (Unaudited)		3

Condensed Consolidated Statements of Changes in Equity for the ~~nine~~three months ended ~~September 30,~~March 31, 2011 (Unaudited) and year ended December 31, 2010 ~~and 2009 (Unaudited)~~(Audited)		4

Notes to Condensed Consolidated Financial Statements (Unaudited)		5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1817

Item 3. ~~Qualitative~~Quantitative and ~~Quantitative~~Qualitative Disclosures about Market Risk		2522

Item 4. Controls and Procedures		2623

PART II. Other Information

Item 1. Legal Proceedings		2724

Item 2. ~~Changes in Securities, Uses of Proceeds and Issuer Purchases~~Unregistered Sales of Equity Securities and Use of Proceeds		2724

Item 6. Exhibits		2825

~~Signatures~~Signature		2925

Certifications		3026

PART I. – FINANCIAL INFORMATION

~~ITEM 1.~~

~~FINANCIAL STATEMENTS~~

ITEM 1. FINANCIAL STATEMENTS

STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


In thousands, except share and per share data	September 30, 2010			December 31, 2009			In thousands, except share and per share data
								March 31, 2011			December 31, 2010
	(Unaudited)			(Audited)				(Unaudited)			(Audited)
ASSETS
Current Assets:
Cash and cash equivalents	$	20,627		$	15,767			$	24,656		$	77,053
Short-term investments		18,632			1,131				19,768			18,471
Accounts receivable, less allowance for doubtful accounts of $11,432 in 2010 and $8,709 in 2009		216,508			179,770
Accounts receivable, less allowance for doubtful accounts of $9,916 in 2011 and $10,845 in 2010									231,171			215,420
Deferred income taxes		14,935			14,087				15,408			16,824
Prepaid expenses		13,490			12,421				21,448			16,038
Other current assets		28,949			23,364				25,212			24,882

Total Current Assets		313,141			246,540				337,663			368,688
Property, Plant and Equipment, net		262,650			246,154				272,593			267,971
Other Assets:
Goodwill		1,476,156			1,394,091				1,616,504			1,595,764
Intangible assets, less accumulated amortization of $25,179 in 2010 and $18,546 in 2009		349,375			269,454
Intangible assets, less accumulated amortization of $31,991 in 2011 and $28,394 in 2010									388,812			375,174
Other		32,964			26,564				28,065			31,426

Total Other Assets		1,858,495			1,690,109				2,033,381			2,002,364

Total Assets	$	2,434,286		$	2,182,803			$	2,643,637		$	2,639,023

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	96,932		$	78,026			$	83,516		$	88,899
Accounts payable		49,354			47,608				56,120			54,777
Accrued liabilities		106,778			92,226				127,623			134,711
Deferred revenues		16,925			14,954				14,679			14,455
Other current liabilities									10,307			15,647

Total Current Liabilities		269,989			232,814				292,245			308,489
Long-term debt, net of current portion		880,452			910,825				921,554			1,014,222
Deferred income taxes		214,050			171,744				241,096			222,647
Other liabilities		12,811			10,247				10,735			13,315
Shareholders’ Equity:
Common stock (par value $.01 per share, 120,000,000 shares authorized, 85,467,697 issued and outstanding in 2010, 84,715,005 issued and outstanding in 2009)		855			847
Equity:
Common stock (par value $.01 per share, 120,000,000 shares authorized, 85,702,145 issued and outstanding in 2011 and 85,242,387 issued and outstanding in 2010)									857			852
Additional paid-in capital		70,659			47,522				75,146			46,945
Accumulated other comprehensive loss		(14,448	)		(12,292	)
Accumulated other comprehensive income									(3,931	)		(16,869	)
Retained earnings		967,517			809,618				1,073,171			1,017,497

Total Stericycle, Inc. Shareholders’ Equity		1,024,583			845,695
Total Stericycle, Inc.’s Equity									1,145,243			1,048,425
Noncontrolling interest		32,401			11,478				32,764			31,925

Total Shareholders’ Equity		1,056,984			857,173
Total Equity									1,178,007			1,080,350

Total Liabilities and Shareholders’ Equity	$	2,434,286		$	2,182,803
Total Liabilities and Equity								$	2,643,637		$	2,639,023

The accompanying notes are an integral part of these financial statements.

STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


In thousands, except for share and per share data													In thousands, except for share and per share data
														Three Months Ended March 31,
	Three Months Ended September 30,						Nine Months Ended September 30,							2011			2010
In thousands, except share and per share data	2010			2009			2010			2009
Revenues	$	362,988		$	297,836		$	1,045,899		$	864,194			$	398,126		$	335,177

Costs and Expenses:
Cost of revenues		185,515			150,272			532,625			438,484				205,816			170,570
Selling, general and administrative expenses		65,033			54,312			191,067			158,090				69,972			62,470
Depreciation and amortization		13,504			9,959			38,510			28,463				15,103			12,389
Acquisition expenses		1,891			3,478			3,247			5,418				3,798			800
Integration expenses		790			282			3,253			466				766			1,149
Restructuring costs and plant closure expense		216			—			2,446			—
Litigation settlement		—			—			937			—
Gain on sale of assets		—			—			(2,955	)		—
Restructuring costs															258			667

Total Costs and Expenses		266,949			218,303			769,130			630,921				295,713			248,045

Income from Operations		96,039			79,533			276,769			233,273				102,413			87,132


Other Income (Expense):
Interest income		82			48			194			271				184			80
Interest expense		(8,509	)		(9,262	)		(26,342	)		(25,561	)			(11,372	)		(8,963	)
Other income (expense), net		333			(646	)		(1,562	)		(2,264	)
Other expense, net															(263	)		(1,003	)

Total Other Income (Expense)		(8,094	)		(9,860	)		(27,710	)		(27,554	)
Total Other Expense															(11,451	)		(9,886	)


Income Before Income Taxes		87,945			69,673			249,059			205,719				90,962			77,246

Income Tax Expense		30,645			23,110			89,359			74,488				34,376			28,612


Net Income		57,300			46,563			159,700			131,231			$	56,586		$	48,634

Less: Net Income Attributable to Noncontrolling Interests		614			37			1,801			148				912			515


Net Income Attributable to Stericycle, Inc.	$	56,686		$	46,526		$	157,899		$	131,083			$	55,674		$	48,119

Earnings Per Share Attributable to Stericycle, Inc. Common Shareholders:

Earnings Per Common Share Attributable to Stericycle Inc. Common Shareholders:
Basic	$	0.66		$	0.55		$	1.86		$	1.54			$	0.65		$	0.57

Diluted	$	0.65		$	0.54		$	1.82		$	1.51			$	0.64		$	0.56


Weighted Average Number of Common Shares Outstanding:
Basic		85,295,740			84,899,815			84,986,187			84,909,316				85,459,302			84,766,721
Diluted		87,179,057			86,794,118			86,830,761			86,827,626				87,526,683			86,573,237

The accompanying notes are an integral part of these financial statements.

STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


In thousands							In thousands
								Three Months Ended March 31,
	Nine Months Ended September 30,							2011			2010
In thousands	2010			2009
OPERATING ACTIVITIES:
Net income	$	159,700		$	131,231			$	56,586		$	48,634
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of assets		(2,955	)		—
Stock compensation expense		11,441			10,861				3,863			3,874
Excess tax benefit of stock options exercised		(17,951	)		(357	)
Excess tax benefit stock options exercised									(8,092	)		(1,163	)
Depreciation		31,858			24,643				11,756			10,414
Amortization		6,652			3,820				3,347			1,975
Deferred income taxes		20,307			20,718				16,051			13,784
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
Accounts receivable		(26,366	)		8,204				(11,615	)		(7,932	)
Accounts payable		(3,477	)		(4,502	)			(433	)		(3,522	)
Accrued liabilities		19,214			20,452				(1,341	)		15,601
Deferred revenues		1,942			252
Other assets		5,061			(1,395	)
Deferred revenue									(34	)		1,611
Other assets and liabilities									(4,503	)		(2,221	)

Net cash provided by operating activities		205,426			213,927				65,585			81,055


INVESTING ACTIVITIES:
Payments for acquisitions and international investments, net of cash acquired		(95,615	)		(107,079	)			(19,543	)		(50,459	)
Purchases of short-term investments		(17,172	)		(58	)
Proceeds from sale of assets		8,000			640
Purchase of short-term investments									(1,240	)		(423	)
Proceeds from sale of property and equipment									389			0
Capital expenditures		(35,937	)		(29,644	)			(11,692	)		(12,804	)

Net cash used in investing activities		(140,724	)		(136,141	)			(32,086	)		(63,686	)


FINANCING ACTIVITIES:
Repayment of long-term debt		(45,292	)		(10,443	)			(24,563	)		(27,533	)
Net repayments on senior credit facility		(13,072	)		(213,027	)
Proceeds from term loan		—			215,000
Payments of deferred financing costs		(5,757	)		(3,620	)
Payments on capital lease obligations		(2,172	)		(255	)
Net (repayments)/ borrowings on senior credit facility									(86,044	)		24,873
Purchase / cancellation of treasury stock		(43,589	)		(69,986	)			0			(10,616	)
Proceeds from other issuance of common stock		38,224			11,726
Excess tax benefit of stock options exercised		17,951			357
Proceeds from issuance of common stock									14,811			4,195
Excess tax benefit stock options exercised									8,092			1,163

Net cash used in financing activities		(53,707	)		(70,248	)			(87,704	)		(7,918	)
Effect of exchange rate changes on cash		(6,135	)		(2,347	)			1,808			(2,332	)

Net increase in cash and cash equivalents		4,860			5,191
Net (decrease)/ increase in cash and cash equivalents									(52,397	)		7,119
Cash and cash equivalents at beginning of period		15,767			9,095				77,053			15,767

Cash and cash equivalents at end of period	$	20,627		$	14,286			$	24,656		$	22,886


NON-CASH ACTIVITIES:
Net issuance of notes payable for certain acquisitions	$	31,641		$	32,116			$	1,100		$	10,038

The accompanying notes are an integral part of these financial statements.

STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

~~September 30, 2010~~Three Months Ended March 31, 2011 (Unaudited) and

Year Ended December 31, ~~2009~~

~~(Unaudited)~~2010 (Audited)


In thousands																				In thousands
																					Stericycle, Inc. Equity
	Stericycle, Inc. Equity																				Issued and Outstanding Shares			Common Stock			Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest			Total Equity
In thousands	Issued and Outstanding Shares			Common Stock			Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest		Total Equity
Balance at December 31, 2008		85,253		$	852		$	67,776		$	633,927	$	(32,075	)	$	158	$	670,638
Balance at December 31, 2009																						84,715		$	847		$	47,522		$	809,618	$	(12,292	)	$	11,478		$	857,173
Net income																															207,879					2,578			210,457
Currency translation adjustment																																	(2,544	)		2,938			394
Change in fair value of cash flow hedge, net of tax of $1,353																																	(2,033	)					(2,033	)

Comprehensive income																																							208,818
Issuance of common stock for exercise of options and employee stock purchases		1,132			12			15,889			—		—			—		15,901				1,988			20			50,491											50,511
Purchase/ cancellation of treasury stock		(1,670	)		(17	)		(73,164	)		—		—			—		(73,181	)			(1,461	)		(15	)		(94,320	)										(94,335	)
Stock compensation expense		—			—			14,638			—		—			—		14,638										18,565											18,565
Excess tax benefit of disqualifying dispositions of stock options and exercise of non-qualified stock options		—			—			22,383			—		—			—		22,383
Excess tax benefit of stock options exercised																												24,687											24,687
Change in noncontrolling interest		—			—			—			—		—			9,787		9,787																		14,931			14,931

Balance at December 31, 2010																						85,242		$	852		$	46,945		$	1,017,497	$	(16,869	)	$	31,925		$	1,080,350

Net income																															55,674					912			56,586
Currency translation adjustment		—			—			—			—		17,595			835		18,430															12,853			138			12,991
Change in fair value of cash flow hedge, net of tax of $454		—			—			—			—		2,188			—		2,188
Net income		—			—			—			175,691		—			698		176,389
Amounts reclassified into income, net of tax of $54																																	85						85

Comprehensive income																		197,007																					69,662
Issuance of common stock for exercise of options and employee stock purchases																						460			5			16,246											16,251
Stock compensation expense																												3,863											3,863
Excess tax benefit of stock options exercised																												8,092											8,092
Change in noncontrolling interest																																				(211	)		(211	)

Balance at December 31, 2009		84,715		$	847		$	47,522		$	809,618	$	(12,292	)	$	11,478	$	857,173
Balance at March 31, 2011																						85,702		$	857		$	75,146		$	1,073,171	$	(3,931	)	$	32,764		$	1,178,007

Issuance of common stock for exercise of options and employee stock purchases		1,504			15			37,327			—		—			—		37,342
Purchase/ cancellation of treasury stock		(751	)		(7	)		(43,582	)		—		—			—		(43,589	)
Stock compensation expense		—			—			11,441			—		—			—		11,441
Excess tax benefit of disqualifying dispositions of stock options and exercise of non-qualified stock options		—			—			17,951			—		—			—		17,951
Change in noncontrolling interest		—			—			—			—		—			16,923		16,923
Currency translation adjustment		—			—			—			—		(2,831	)		2,199		(632	)
Change in fair value of cash flow hedge, net of tax of $431		—			—			—			—		675			—		675
Net income		—			—			—			157,899		—			1,801		159,700

Comprehensive income																		159,743

Balance at September 30, 2010		85,468		$	855		$	70,659		$	967,517	$	(14,448	)	$	32,401	$	1,056,984

The accompanying notes are an integral part of these financial statements.

STERICYCLE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Unless the context requires otherwise, “we”, “us” or “our” refers to Stericycle, Inc. and its subsidiaries on a consolidated basis.

NOTE 1 – BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and ~~regulations; but~~regulations. However, the Company believes the disclosures included in the accompanying condensed consolidated financial statements are adequate to make the information presented not misleading. In our opinion, all adjustments necessary for a fair presentation for the periods presented have been reflected and are of a normal recurring nature. ~~Current amounts in previously issued financial statements were reclassified to conform to the current period presentation.~~ These condensed consolidated financial statements should be read in conjunction with the Stericycle, Inc. and Subsidiaries Consolidated Financial Statements and notes thereto for the year ended December 31, ~~2009,~~2010, as filed with our Annual Report on Form 10-K for the year ended December 31, ~~2009.~~2010. The results of operations for the ~~nine~~three months ended ~~September 30, 2010~~March 31, 2011 are not necessarily indicative of the results that may be achieved for the entire year ending December 31, ~~2010.~~2011.

There were no material changes in the Company’s critical accounting policies since the filing of its 2010 Form 10-K. As discussed in the 2010 Form 10-K, the preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amount of reported assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates.

NOTE 2 – ACQUISITIONS AND ~~DIVESTITURE~~DIVESTITURES

During the quarter ended March 31, ~~2010,~~2011, we completed nine acquisitions. Domestically, we acquired selected assets of ~~two domestic~~three regulated waste ~~businesses,~~businesses. Internationally, we acquired 100% of the stock of two regulated waste businesses in the UK ~~70%~~and two regulated waste businesses in Romania, selected assets of a regulated waste business in Ireland, and 80% of the stock of a regulated waste business in ~~Brazil,~~Chile.

The following table summarizes the aggregate purchase price paid for acquisitions and ~~100%~~other adjustments of consideration to be paid on acquisitions during the ~~stock of a regulated waste business in Chile. We also increased our majority share in a previous acquisition in Chile from 60% to 67%.~~quarter ended March 31, 2011:


In thousands
Cash	$	19,543
Promissory notes		1,100
Adjustments to consideration		(370	)

Total purchase price	$	20,273

During the quarter ended June 30, 2010, we completed four acquisitions. Domestically, we acquired all of the stock of two regulated waste businesses. Internationally, we acquired all of the stock of one regulated waste business located in the United Kingdom and selected assets of a regulated waste business located in Mexico.

During the quarter ended September 30, 2010, we completed six acquisitions. Domestically, we acquired selected assets of two regulated waste businesses and all of the stock of a third regulated waste business. Internationally, we acquired three regulated waste businesses: 100% of the stock of a company in Portugal, 100% of the stock of a company in Japan, and 88.2% of the stock of a second company in Japan.

~~STERICYCLE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

The aggregate purchase price of our acquisitions during the nine months ended September 30, 2010 was approximately $134.6 million, of which approximately $95.6 million was paid in cash, $31.6 million was paid by the issuance of promissory notes, and $7.4 million was recorded as contingent consideration. For financial reporting purposes,March 31, 2011, we recognized ~~$98.2~~$10.8 million in goodwill of which ~~$14.3~~$7.8 million ~~is tax deductible. We~~was assigned to our United States reporting segment and $3.0 million to our Foreign Countries reporting segment. Approximately $5.6 million of the good will recognized ~~$66.2~~during the quarter will be deductible for income taxes. During the quarter ended March 31, 2011, we recognized $11.9 million in intangible assets of which ~~$48.2~~$11.8 million ~~have~~represents the estimated fair value of acquired customer relationships with amortizable lives of 15-40 ~~years, $0.9 million have amortizable lives of 3-5 years, and $17.1 million are indefinite lived.~~years. The allocation of the acquisition price paid is preliminary pending completion of certain intangible asset valuations and completion accounts.

In thousands
   Preliminary
Allocation of
2010
Acquisitions Adjustments
During
Allocation
Period Total Allocations
Fixed assets
   $ 14,236    $ (1,232 ) $ 13,004
Intangibles
   66,216    16,843    83,059
Goodwill
   98,166    (14,600 ) 83,566
Net other assets
   7,606    694    8,300
Debt
   (16,412 ) —      (16,412 )
Net deferred tax liabilities
   (18,466 ) (1,556 ) (20,022 )
Noncontrolling interests
   (16,923 ) —      (16,923 )

   $ 134,423    $ 149    $ 134,572

The ~~results~~following table summarizes the preliminary purchase price allocation for current period acquisitions and other adjustments to purchase price allocations during the quarter ended March 31, 2011:


In thousands
Fixed assets	$	2,859
Intangibles		11,887
Goodwill		10,849
Net other assets/ (liabilities)		(2,365	)
Debt		(526	)
Net deferred tax liabilities		(2,642	)
Noncontrolling interests		211

	$	20,273

For financial reporting purposes, our 2011 and 2010 acquisitions were accounted for using the acquisition method of ~~operations of these acquired businesses have been included in the consolidated statements of income from the dates of acquisition.~~accounting. These acquisitions resulted in recognition of goodwill in our financial statements reflecting the ~~complementary strategic fit~~premium paid to acquire businesses that ~~the acquired businesses brought~~we believe are complementary to our ~~company.~~existing operations and fit our strategy. During the ~~nine month period~~quarters ended ~~September 30,~~March 31, 2011 and 2010, ~~and 2009,~~ the Company incurred ~~$3.2~~$3.8 million and ~~$5.4~~$0.8 million, respectively, of acquisition related expenses. These expenses are identified on our Condensed Consolidated Statements of Income as ~~Acquisition expenses.~~

~~Our acquisition~~“acquisition expenses”. The purchase prices in excess of ~~MedServe in December~~acquired tangible assets for these acquisitions have been primarily allocated to goodwill and other intangibles and are preliminary pending completion of ~~2009 required us to divest~~ certain ~~acquired assets. These assets were sold for $8.0 million resulting in a second quarter pre-tax gain of $3.0 million. The following table describes the assets:~~intangible asset valuations.

In thousands
   Asset Group
Sold
Fixed assets
   $ (1,565 )
Intangibles
   (1,127 )
Goodwill
   (2,345 )
Net other assets
   (8 )

   $ (5,045 )

On ~~September 24, 2010,~~April 18, 2011, we ~~entered into a merger agreement for the~~completed our acquisition of Healthcare Waste Solutions, Inc., a Delaware corporation (“HWS”). HWS provides a resource management assessment and consulting program for all waste streams to healthcare providers and is also engaged in the collection, transportation, treatment and disposal of medical waste, universal waste and other regulated wastes, sharps management services, safety and compliance training, and other related businesses.

~~STERICYCLE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

The total merger consideration ~~is $245~~was $237 million in cash, subject to the various adjustments ~~including a reduction~~provided for ~~HWS’s indebtedness as of~~in the ~~closing date. The~~ merger ~~is subject to customary closing conditions and regulatory reviews, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.~~agreement. See Note 16 – Subsequent Events.

NOTE 3 – NEW ACCOUNTING STANDARDS

Accounting Standards Recently Adopted

~~Consolidation~~Revenue Recognition

On January 1, ~~2010,~~2011, Stericycle adopted changes issued by the FASB ~~related~~ to amendments to previous guidance on the consolidation of variable interest entities (“VIE”). This standard clarifies the characteristics that identify a VIE and changes how a reporting entity identifies a primary beneficiary that would consolidate the VIE from a quantitative risk and rewards calculation to a qualitative approach based on which a variable interest holder has controlling financial interest and the ability to direct the most significant activities that impact the VIE’s economic performance. This statement requires the primary beneficiary assessment to be performed on a continuous basis. It also requires additional disclosures about an entity’s involvement with a VIE, restrictions on the VIE’s assets and liabilities that are included in the reporting entity’s consolidated balance sheet, significant risk exposures due to the entity’s involvement with the VIE, and how its involvement with a VIE impacts the reporting entity’s consolidated financial statements. Our adoption of the standard did not have any impact to our financial statements.

~~Accounting Standards not yet adopted~~

~~Revenue Recognition~~

~~In October 2009, the FASB issued an update to existing~~ guidance on revenue recognition for arrangements with multiple deliverables. This update ~~will allow~~allows companies to allocate consideration received for qualified separate deliverables using estimated selling price for both delivered and undelivered items when vendor-specific objective evidence or third-party evidence is unavailable. Additional disclosures discussing the nature of multiple element arrangements, the types of deliverables under the arrangements, the general timing of their delivery, and ~~the~~ significant factors and estimates used to determine estimated selling prices are required. We ~~will adopt this update for new revenue arrangements entered into or materially modified beginning January 1, 2011. We~~ do not generally have arrangements with multiple deliverables and therefore dothis new guidance did not ~~expect any~~have a material impact to our financial ~~statements upon adoption.~~statements.

~~STERICYCLE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

NOTE 4 – FAIR VALUE MEASUREMENTS

Fair value is ~~defined as~~ the price that would be received ~~to sell~~from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ~~The~~Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy ~~distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs)~~upon the lowest level of input that is available and ~~(2) an entity’s own assumptions about market participant assumptions developed based on~~significant to the ~~best information available in the circumstances (unobservable inputs). The~~ fair value ~~hierarchy consists of three broad levels, which gives the highest priority to unadjusted~~measurement:

Level 1– Quoted prices in active markets for identical assets or liabilities.

Level 2– Observable inputs other than quoted prices in active markets for identical assets orand liabilities, ~~(Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:~~

~~Level 1 – Valuations based on~~ quoted prices ~~in active markets~~ for identical ~~assets~~ or ~~liabilities that the entity has the ability to access.~~

~~Level 2 – Valuations based on quoted prices for~~ similar assets or liabilities ~~quoted prices~~ in inactive markets, ~~that are not active,~~ or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3– ~~Valuations based on inputs~~Inputs that are ~~supported by little~~generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or ~~no market activity and that are significant to the fair value of the assets or liabilities.~~

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels. The impact of our creditworthiness has been considered in the fair value measurements noted below. In addition, the fair value measurement of a liability must reflect the nonperformance risk of an entity.liability.

      Fair Value Measurements Using
In thousands
   Total as of
September 30, 2010    Level 1
Inputs    Level 2
Inputs    Level 3
Inputs
Assets:

Cash and cash equivalents
   $ 20,627       $ 20,627       $ —         $ —
Short-term investments
   18,632       18,632       —         —

Total assets
   $ 39,259       $ 39,259       $ —         $ —
Liabilities:

Interest rate hedge (accrued liabilities)
   60       —         60       —

Total liabilities
   $ 60       $ —         $ 60       $ —

~~STERICYCLE, INC. AND SUBSIDIARIES~~
In thousands

   Total as of
March 31, 2011    Fair Value Measurements Using
      Level 1
Inputs    Level 2
Inputs    Level 3
Inputs
Assets:

Cash and cash equivalents
   $ 24,656       $ 24,656       $ 0       $ 0
Short-term investments
   19,768       19,768       0       0

Total assets
   $ 44,424       $ 44,424       $ 0       $ 0
   Total as of
December 31, 2010    Level 1
Inputs    Level 2
Inputs    Level 3
Inputs
Assets:

Cash and cash equivalents
   $ 77,053       $ 77,053       $ 0       $ 0
Short-term investments
   18,471       18,471       0       0

Total assets
   $ 95,524       $ 95,524       $ 0       $ 0

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

      Fair Value Measurements Using
In thousands
   Total as of
December 31, 2009    Level 1
Inputs    Level 2
Inputs    Level 3
Inputs
Assets:

Cash and cash equivalents
   $ 15,767       $ 15,767       $ —         $ —
Short-term investments
   1,131       1,131       —         —

Total assets
   $ 16,898       $ 16,898       $ —         $ —
Liabilities:

Interest rate hedges (accrued liabilities)
   $ 1,165       $ —         $ 1,165       $ —

Total liabilities
   $ 1,165       $ —         $ 1,165       $ —

Level 1: At ~~September 30, 2010,~~March 31, 2011, we have ~~$20.6~~$24.7 million in cash and cash equivalents, ~~and~~ $15.8 million in ~~Certificates~~certificates of ~~Deposit,~~deposit, and ~~$2.8~~$4.0 million in money market accounts, that we ~~carry on our books~~recorded at fair value using Level 1 inputs. WeAt December 31, 2010, we had $77.1 million in cash and cash equivalents, $15.8 million in certificates of deposit, and $2.7 million in money market accounts. In 2010, we financed a portion of our Japan acquisition through local borrowings of ¥1.2 billion which required us to deposit the equivalent USD amount of $15.8 million in one year ~~Certificates~~certificates of ~~Deposit into~~deposit with an affiliated bank located in the United States. ~~At December 31, 2009, we had $15.8 million in cash and cash equivalents and $1.1 million of short-term investments on our books at fair value using market price inputs.~~

Level 2: At September 30, 2010, we have an interest rate swap contract covering $25 million of our variable interest debt. The objective of the swap is to reduce the risk of volatile interest expense by fixing the rate. The interest rate hedge is designated as a cash flow hedge; the notional amount and all other significant terms of the hedge agreement are matched to the provisions and terms of the debt hedged. We ~~apply hedge accounting to this instrument with changes in the~~had no assets or liabilities measured at fair value ~~of the hedge agreement recorded as a component of accumulated other comprehensive income. The fair value was determined~~ using ~~market data~~Level 2 inputs ~~to calculate expected future interest rates. The cash streams attributable to the difference between expected future rates and the fixed rate payable are discounted to arrive~~ at ~~the fair value of the hedge. At September 30, 2010 and~~March 31, 2011 or December 31, ~~2009 the fair value of the interest rate hedges was recorded as a current liability of $60 thousand and $1.2 million, respectively.~~2010.

Level 3: We had no assets or liabilities measured at fair value using Level 3 inputs at ~~September 30, 2010~~March 31, 2011 or December 31, ~~2009.~~2010.

Fair Value of ~~Debt:~~Debt: At ~~September 30,~~March 31, 2011, the fair value of the Company’s debt obligations was estimated at $999.9 million, compared to a carrying amount of $1.105 billion. At December 31, 2010, the fair value of the Company’s debt obligations was estimated at ~~$960.1 million,~~$1.105 billion, compared to a carrying amount of ~~$977.4 million. At December 31, 2009, the~~$1.103 billion. The fair ~~value of the Company’s debt obligations was estimated at $985.0 million, compared to a carrying amount of $988.9 million. This fair value was~~values were estimated using market interest rates for comparable instruments. The Company has no current plans to retire a significant amount of its debt prior to maturity.

There were no movements of items between fair value hierarchies.

~~STERICYCLE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

NOTE 5 – DERIVATIVE INSTRUMENTS

~~As of September 30, 2010,~~At March 31, 2011, we have one interest rate swap contract, which expired in October 2010, covering $25 million of our borrowings outstanding under our senior credit facility. The objective of the hedge was to reduce the risk of volatile interest expense by fixing the rate.

~~The fair market of the hedge is recorded as a current liability of $60 thousand at September 30, 2010.~~

During the quarter ending September 30, 2010, we settled our Treasury Lock hedge related to our private debt placement. The settlement resulted in a cash payment of $4.6 million and is reflected on our Statement of Cash Flows within Financing Activities. This settlement amount will be amortized over the life of the related debt.had no derivative instruments.

NOTE 6 – INCOME TAXES

We and our subsidiaries file U.S. federal income tax returns and income tax returns in various states and foreign jurisdictions. With a few exceptions, we are no longer subject to U.S. federal, state, local, or non-U.S. income tax examinations by tax authorities for years before ~~2004. We have tax years open to examination in the US from 2007 and our subsidiaries in foreign countries have tax years open ranging from 2004 through 2009.~~2005.

The Company has recorded accruals to cover ~~certain unresolved tax issues. Such~~ uncertain tax positions taken on previously filed tax returns. Such liabilities relate to additional taxes, interest and ~~interest~~penalties the Company may be required to pay in various tax jurisdictions. During the course of examinations by various taxing authorities, proposed adjustments may be asserted. The Company evaluates such items on a case-by-case basis and adjusts the accrual for uncertain tax ~~positions as deemed necessary.~~positions.

The total amount of unrecognized tax ~~benefits~~positions as of ~~September 30, 2010 and December~~March 31, ~~2009~~2011 was ~~$7.7~~$11.8 million, ~~and $7.6 million, respectively,~~ which ~~included immaterial amounts of~~includes interest and penalties and is reflected as a liability on the balance sheet. The amount of unrecognized tax ~~benefits~~positions that, if recognized, would affect the effective tax rate is approximately ~~$7.7~~$11.8 million. We recognize interest and penalties accrued related to income tax reserves in income tax expense. ~~This method of accounting is consistent with prior years.~~

The following table summarizes the changes in unrecognized tax positions during the ~~nine months~~quarter ended ~~September 30, 2010:~~March 31, 2011:

In thousands

Unrecognized tax positions, January 1, 2010
   $ 7,622
Net decreases- tax positions in prior period
   (77 )
Expiring by lapse of the Statute of Limitations
   (1,123 )
Net increases- tax positions in current period
   1,276

Unrecognized tax positions, September 30, 2010
   $ 7,698

~~STERICYCLE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~


In thousands
Unrecognized tax positions, January 1, 2011	$	9,132
Gross increases- tax positions in prior period		1,341
Gross decreases- tax positions in prior period		(137	)
Gross increases- current period tax positions		1,507

Unrecognized tax positions, March 31, 2011	$	11,843

NOTE 7 – STOCK BASED COMPENSATION

At ~~September 30, 2010~~March 31, 2011, we had stock options outstanding under the following plans:

(i)

The 2008 Incentive Stock Plan, which our stockholders approved in May 2008;

(ii)

the 2005 Incentive Stock Plan, which our stockholders approved in April 2005;

(iii)

the 2000 Nonstatutory Stock Option Plan, which ~~our Board of Directors adopted~~expired in February ~~2000;~~2010;

(iv)

the 1997 Stock Option Plan, which expired in January 2007;

(v)

the Directors Stock Option Plan, which expired in May 2006;

(vi)

the 1995 Incentive Compensation Plan, which expired in July 2005;

(vii)

our Employee Stock Purchase Plan (ESPP), which our stockholders approved in May 2001.

The following table ~~sets forth~~presents the total stock-based compensation expense resulting from stock option awards and the ESPP included in the consolidation statement of income:


In thousands
	Three Months Ended March 31,
	2011		2010
Cost of revenues – stock option plan	$	26	$	60
Selling, general and administrative – stock option plan		3,424		3,590
Selling, general and administrative – restricted stock unit		158		0
Selling, general and administrative – ESPP		255		224

Total pre-tax expense	$	3,863	$	3,874

As of March 31, 2011, there was $35.9 million of total unrecognized compensation expense, related to non-vested stock ~~compensation:~~options, which is expected to be recognized over a weighted-average period of 2.08 years.

   Three Months Ended
September 30,    Nine Months Ended
September 30,
In thousands
   2010    2009    2010    2009
Stock options
   $ 3,483       $ 3,604       $ 10,807       $ 10,362
Employee Stock Purchase Plan
   217       166       634       499

Total pre-tax expense
   $ 3,700       $ 3,770       $ 11,441       $ 10,861

The following table sets forth the tax benefits related to stock compensation:


In thousands										In thousands
											Three Months Ended March 31,
	Three Months Ended September 30,					Nine Months Ended September 30,					2011		2010
In thousands	2010		2009			2010		2009
Tax benefit recognized in income statement	$	1,486	$	1,453		$	4,547	$	4,207
Tax benefit recognized in the income statement											$	9,361	$	1,528
Excess tax benefit realized		4,521		(194	)		17,951		357			8,092		1,163

The Black-Scholes option-pricing model is used in determining the fair value of each option grant using the assumptions noted in the table below. The expected term of ~~the~~ options granted is based on historical experience and represents the period of time that awards granted are expected to be outstanding. Expected volatility is based upon historical volatility of ~~our~~the company’s stock. The expected dividend yield is zero. The risk-free interest rate is based upon the U.S. Treasury yield rates of a comparable period.

~~STERICYCLE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

The assumptions that we used in the Black-Scholes model are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2010			2009			2010			2009			2011			2010
Expected term (in years)		5.75			5.5			5.75			5.5			5.75			5.75
Expected volatility		27.62	%		28.21	%		28.39	%		28.28	%		26.88	%		28.32	%
Expected dividend yield		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Risk free interest rate		1.71	%		2.69	%		2.38	%		2.12	%		2.28	%		2.46	%

The weighted average grant date fair value of the stock options granted during the three months ended March 31, 2011 and 2010 was as follows:

   Three Months Ended
September 30,    Nine Months Ended
September 30,
   2010    2009    2010    2009
Weighted average grant date fair value of the stock options granted
   $ 15.36       $ 12.31       $ 13.43       $ 11.89


	Three Months Ended March 31,
	2011		2010
Weighted average grant date fair value of the stock options granted	$	20.51	$	13.13

Stock option activity for the ~~nine~~three months ended ~~September 30, 2010,~~March 31, 2011, was as follows:

   Number of
Options Weighted
Average
Exercise
Price per
Share    Weighted
Average
Remaining
Contractual
Life    Aggregate
Intrinsic
Value
      (in years)
Outstanding at December 31, 2009
   7,387,753    $ 35.43
Granted
   1,304,681    52.56
Exercised
   (1,627,108 ) 26.69
Cancelled or expired
   (125,577 ) 47.87

Outstanding at September 30, 2010
   6,939,749    $ 40.43       6.70       $ 202,391,523

Exercisable at September 30, 2010
   3,512,385    $ 33.51       5.46       $ 126,326,580
Vested and expected to vest in the future at September 30, 2010
   6,393,121    $ 39.69       6.57       $ 190,428,356


	Number of Options			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
						(in years)
Outstanding at December 31, 2010		6,508,833		$	41.86
Granted		917,668			84.94
Exercised		(459,758	)		32.07
Cancelled or expired		(111,470	)		49.36

Outstanding at March 31, 2011		6,855,273		$	48.16		7.00	$	277,678,609

Exercisable at March 31, 2011		3,664,417		$	38.48		5.74	$	183,900,934
Vested and expected to vest in the future at March 31, 2011		6,198,579		$	46.62		6.81	$	260,678,920

~~The restricted~~

Restricted stock units (RSUs)~~, included above, account~~ activity for ~~20,000 shares granted and $1.4 million of~~the three months ended March 31, 2011, was as follows:


	Number of Options			Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
				(in years)
Outstanding at December 31, 2010		20,000
Granted		18,488
Forfeited		(3,250	)

Outstanding at March 31, 2011		35,238			2.39	$	3,124,553

Exercisable at March 31, 2011		0			0.00	$	0.00
Vested and expected to vest in the future at March 31, 2011		26,753			2.36	$	2,372,152

The total exercise intrinsic value ~~which have a weighted average contractual life of 2.4 years.~~represents the total pre-tax value (the difference between the sales price on that trading day in the quarter ended March 31, and the exercise price associated with the respective option).

   Three Months Ended
September 30,    Nine Months Ended
September 30,
In thousands
   2010    2009    2010    2009
Total intrinsic value of options exercised
   $ 14,485       $ 3,166       $ 56,318       $ 12,073

~~Intrinsic value is measured using the fair market value at the date of the exercise (for options exercised) or at September 30, 2010 (for outstanding options), less the applicable exercise price.~~

As of September 30, 2010, there was $24.4 million of total unrecognized compensation expense, related to non-vested stock options, which is expected to be recognized over a weighted average period of 1.69 years.


In thousands
	Three Months Ended March 31,
	2011		2010
Total exercise intrinsic value of options exercised	$	24,274	$	4,314

NOTE 8 – COMMON STOCK

During the ~~quarters~~quarter ended March 31, 2011 we had no common stock repurchases. During the quarter ended March 31, 2010, ~~and 2009,~~ we repurchased on the open market, and subsequently cancelled, 207,114 ~~and 536,346~~ shares of common stock ~~respectively. The~~with a weighted average repurchase price ~~was~~of $54.36 ~~and $47.59~~ per ~~share, respectively.~~share.

~~STERICYCLE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

During the quarters ended June 30, 2010 and 2009, we repurchased on the open market, and subsequently cancelled, 235,436 and 40,162 shares of common stock, respectively. The weighted average repurchase price was $55.22 and $48.51 per share, respectively.

During the quarters ended September 30, 2010 and 2009, we repurchased on the open market, and subsequently cancelled 308,588 and 848,169 shares of common stock, respectively. The weighted average repurchase price was $62.64 and $48.61 per share, respectively.

NOTE 9 – NET INCOME PER COMMON SHARE

The following table sets forth the computation of basic and diluted net income per share:

   Three Months Ended    Nine Months Ended
   September 30,    September 30,
In thousands, except share and per share data
   2010    2009    2010    2009
Numerator:

Numerator for basic earnings per share

Net income attributable to Stericycle, Inc.
   $ 56,686       $ 46,526       $ 157,899       $ 131,083

Denominator:

Denominator for basic earnings per share weighted average shares
   85,295,740       84,899,815       84,986,187       84,909,316
Effect of diluted securities:

Employee stock options
   1,883,317       1,894,303       1,844,574    �� 1,918,310

Dilutive potential share
   1,883,317       1,894,303       1,844,574       1,918,310

Denominator for diluted earnings per share-adjusted weighted average shares and after assumed conversions
   87,179,057       86,794,118       86,830,761       86,827,626

Earnings per share – Basic
   $ 0.66       $ 0.55       $ 1.86       $ 1.54

Earnings per share – Diluted
   $ 0.65       $ 0.54       $ 1.82       $ 1.51

~~STERICYCLE, INC. AND SUBSIDIARIES~~
In thousands, except share and per share data

   Three Months Ended March 31,
   2011    2010
Numerator:

Numerator for basic earnings per share

Net income attributable to Stericycle, Inc.
   $ 55,674       $ 48,119

Denominator:

Denominator for basic earnings per share-weighted average shares
   85,459,302       84,766,721
Effect of diluted securities:

Employee stock options
   2,067,381       1,806,516

Dilutive potential shares
   2,067,381       1,806,516

Denominator for diluted earnings per share-adjusted weighted average shares and after assumed exercises
   87,526,683       86,573,237

Earnings per share – Basic
   $ 0.65       $ 0.57

Earnings per share – Diluted
   $ 0.64       $ 0.56

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

NOTE 10 – COMPREHENSIVE INCOME

The components of total comprehensive income are net income, net income attributable to non-controlling interests, the change in cumulative currency translation adjustments, and gains and losses on derivative instruments qualifying as cash flow hedges.The following table sets forth the components of total comprehensive income for the three ~~and nine~~ months ended ~~September 30, 2010~~March 31, 2011 and ~~2009:~~2010:


In thousands											In thousands
												Three Months Ended March 31,
	Three Months Ended					Nine Months Ended						2011		2010
Net income												$	56,586	$	48,634
	September 30,					September 30,
In thousands	2010		2009			2010			2009
Net income	$	57,300	$	46,563		$	159,700		$	131,231
Other comprehensive income:
Currency translation adjustments		17,253		(3,498	)		(632	)		16,955			12,991		(10,405	)
Change in fair value of cash flow hedge, net of tax		2,312		669			675			1,676
Amounts reclassified into income, net of tax													85		371

Other comprehensive income/ (loss)		19,565		(2,829	)		43			18,631			13,076		(10,034	)


Comprehensive income	$	76,865	$	43,734		$	159,743		$	149,862			69,662		38,600
Less: net income attributable to noncontrolling interests		614		37			1,801			148
Less: net income attributable to non-controlling interests													912		515

Comprehensive income attributable to Stericycle, Inc.	$	76,251	$	43,697		$	157,942		$	149,714		$	68,750	$	38,085

NOTE 11 – GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and identifiable indefinite lived intangible assets are not amortized, but are subject to an annual impairment test. Other intangible assets are amortized over their useful lives. We have determined that our customer relationships have useful lives from 15 to 40 years based upon the type of customer, with a weighted average remaining useful life of 30.1 years. We have covenants not-to-compete intangibles with useful lives from two to ten years, with a weighted average remaining useful life of 6.0 years. We have tradename intangibles with useful lives from 20 to 40 years, with a weighted average remaining useful life of 30.5 years. We have determined that our permits have indefinite lives due to our ability to renew these permits with minimal additional cost, and therefore they are not amortized.

We have two geographical reporting segments, ~~United States~~“United States” and ~~Foreign Countries,~~“Foreign Countries”, both of which have goodwill. The changes in the carrying amount of goodwill ~~for the nine months ended September 30,~~since December 31, 2010 were as ~~follows:~~follows by reporting segment:

In thousands
   United States Foreign
Countries Total
Balance as of January 1, 2010
   $ 1,153,149    $ 240,942    $ 1,394,091
Changes due to currency fluctuation
   —      844    844
Sale of assets
   (2,345 ) —      (2,345 )
Changes in goodwill on 2009 acquisitions
   (1,973 ) (12,627 ) (14,600 )
Goodwill on 2010 acquisitions
   41,992    56,174    98,166

Balance as of September 30, 2010
   $ 1,190,823    $ 285,333    $ 1,476,156


In thousands
	United States			Foreign Countries			Total
Balance as of December 31, 2009	$	1,153,149		$	240,942		$	1,394,091
Goodwill acquired during year		128,954			74,049			203,003
Sale of assets		(2,345	)		0			(2,345	)
Changes due to currency fluctuation		0			1,015			1,015

Balance as of December 31, 2010	$	1,279,758		$	316,006		$	1,595,764

Goodwill on 2011 acquisitions		5,600			8,346			13,946
Changes in goodwill on 2010 acquisitions		2,190			(5,287	)		(3,097	)
Changes due to currency fluctuation		0			9,891			9,891

Balance as of March 31, 2011	$	1,287,548		$	328,956		$	1,616,504

The changes into goodwill for ~~2009~~2010 acquisitions are primarily due to the finalization of intangible valuations and allocation of goodwill to the asset group held for sale.

As of March 31 2011 and December 31, 2010, the values of the amortizable intangible assets were as follows:


In thousands
	March 31, 2011						December 31, 2010
	Gross Carrying Amount		Accumulated Amortization		Net Value		Gross Carrying Amount		Accumulated Amortization		Net Value
Covenants not-to-compete	$	10,844	$	3,338	$	7,506	$	10,402	$	2,952	$	7,450
Customer relationships		319,276		26,386		292,890		304,175		23,177		280,998
Tradenames		1,200		261		939		1,200		253		947
License agreements		720		235		485		766		211		555
Other		1,771		1,771		0		1,801		1,801		0

Total	$	333,811	$	31,991	$	301,820	$	318,344	$	28,394	$	289,950

In addition to the amortizable intangible assets above, at March 31, 2011 and December 31, 2010, we had $87.0 million and $85.2 million, respectively, of indefinite lived intangibles that consist of environmental permits.

During the ~~quarter~~quarters ended ~~June 30,~~March 31, 2011 and 2010, ~~we performed our annual goodwill impairment evaluation for our three reporting units, Domestic Regulated Waste, Domestic Regulated Returns Management,~~the aggregate amortization expense was $3.3 million and Foreign Countries. We performed two impairment tests, one using a market approach and the other using an income approach. Both the market and income approaches indicated no impairment to goodwill to any of our three reporting units.

~~Market Approach~~: Our market approach begins by calculating the market capitalization of the Company using the average stock price for the prior 30 days and the outstanding share count at June 30, 2010. We then look at the Company’s Earnings Before Interest, Tax, Depreciation, and Amortization (“EBITDA”), adjusted for stock compensation expense and non-core operational expenses, such as a gain on sale of divested assets, for the prior twelve months. The calculated market capitalization is divided by the modified EBITDA to arrive at a valuation multiple. The fair value of each reporting unit is then calculated by taking the product of the valuation multiple and the

~~STERICYCLE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

trailing twelve month modified EBITDA of that reporting unit. The fair value was then compared to the reporting units’ book value and determined to be in excess of the book value. We believe that starting with the fair value of the company as a whole is a reasonable measure as that fair value is then allocated to each reporting unit based on that reporting unit’s individual earnings. A sustained drop in our stock price would have a negative impact to our fair value calculations. A temporary drop in earnings of a reporting unit would have a negative impact to our fair value calculations.$2.0 million, respectively.

The results of our goodwill impairment test using the market approach indicated the fair value of our Domestic Regulated Waste and Foreign Countries reporting units exceeded book value by a substantial amount, in excess of 100% of book value. Our Regulated Returns Management reporting unit fair value exceeded book value in excess of 30%. We currently have $119.9 million of goodwill assigned to our Regulated Returns Management reporting unit.

~~Income Approach:~~ The income approach uses expected future cash flows of each reporting unit and discounts those cash flows to a present value. Expected future cash flows are calculated using management assumptions of internal growth, capital expenditures, and cost efficiencies. Future acquisitions are not included in the expected future cash flows. We use a discount rate based on our Company calculated Weighted Average Cost of Capital which is adjustedestimated amortization expense for each of the next five years, assuming no additional amortizable intangible assets, is as follows for the years ended December 31:


In thousands
2011	$	12,956
2012		12,739
2013		12,589
2014		12,308
2015		12,101

Future amortization expense may fluctuate depending on changes in foreign currency rates. The estimates for amortization expense noted above are based upon foreign exchange rates as of March 31, 2011.

NOTE 12 – DEBT

Long-term debt consisted of the following:


In thousands
	March 31, 2011		December 31, 2010
Obligations under capital leases	$	6,474	$	6,330
$850 million revolver weighted average rate 1.6%, due in 2012, variable rate debt at Libor +75 bps and base rate		96,827		175,407
$215 million term loan, due in 2012, variable rate debt at Libor + 300bps		76,938		80,969
$100 million Private Placement notes 5.64%, due in 2015		100,000		100,000
$175 million Private Placement notes 3.89%, due in 2017		175,000		175,000
$225 million Private Placement notes 4.47%, due in 2020		225,000		225,000
Acquisition notes weighted average rate of 3.2% and weighted average maturity of 5.0 years		236,247		248,982
Foreign bank debt weighted average rate 5.5% and weighted average maturity of 3.9 years		88,584		91,433

		1,005,070		1,103,121
Less: current portion		83,516		88,899

Total	$	921,554	$	1,014,222

Our $850.0 million senior credit facility maturing in August 2012, our $76.9 million term loan maturing in June 2012, our $100.0 million private placement notes maturing April 2015, our $175.0 million private placement notes maturing in October 2017 and our $225.0 million private placement notes maturing in October 2020, all require us to comply with various financial, reporting ~~units based~~and other covenants and restrictions, including a restriction on ~~risk size premium and foreign country premium. Significant assumptions used in~~dividend payments. The financial debt covenants are the ~~income approach include realization of future cash flows~~same for the senior credit facility, the term loan credit agreement and the ~~discount rate used to present value those cash flows.~~

~~The results of our goodwill impairment test using the income approach indicated the fair value~~private placement notes. At March 31, 2011, we were in compliance with all of our ~~reporting units exceeded book value by a substantial amount; in excess~~financial debt covenants.

As of ~~100%.~~March 31, 2011 and December 31, 2010, we had $173.9 million and $184.0 million, respectively, committed to outstanding letters of credit under our senior credit facility. The unused portion of the revolving credit facility as of March 31, 2011 and December 31, 2010 was $579.2 million and $490.6 million, respectively.

Guarantees

We ~~complete~~have guaranteed a loan to JPMorganChase Bank N.A. on behalf of Shiraishi-Sogyo Co. Ltd (“Shiraishi”). Shiraishi is a customer in Japan that is expanding its medical waste management business and has a one year loan with a current balance of $6.0 million with JPMorganChase Bank N.A. that matures on May 2011. The loan with

JPMorganChase and our ~~annual impairment analysis~~associated guarantee is in the process of ~~our indefinite lived intangibles (facility permits) during~~being extended beyond May 2011. We also have extended notes receivable to Shiraishi for approximately $15.2 million in support of its medical waste business. These amounts are collateralized with the ~~quarter ended December 31~~assets of ~~each year.~~Shiraishi and related companies.

NOTE 1213 – GEOGRAPHIC INFORMATION

Management has determined that we have two reportable segments, United States ~~(including~~(which includes Puerto Rico) and ~~Foreign.~~Foreign Countries. Revenues are attributed to countries based on the location of customers. Inter-company revenues recorded by the United States for work performed in Canada, which are immaterial, are eliminated prior to reporting United States revenues. The same accounting principles and critical accounting policies are used in the preparation of the financial statements for both reporting segments.

~~STERICYCLE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

Detailed information for our United States reporting segment is as follows:


In thousands									In thousands
										Three Months Ended March 31,
	Three Months Ended September 30,				Nine Months Ended September 30,					2011		2010
In thousands	2010		2009		2010		2009
Regulated waste management services	$	241,724	$	212,509	$	707,389	$	622,136		$	254,807	$	229,090
Regulated returns management services		31,895		15,986		83,598		53,984
Regulated returns and recall management services											35,805		26,288

Total revenue		273,619		228,495		790,987		676,120			290,612		255,378
Net interest expense		7,033		7,841		22,053		21,145			9,685		7,613
Income before income taxes		73,229		56,609		207,590		174,690			72,301		64,760
Income taxes		26,494		20,145		76,243		65,994			29,150		23,943

Net income attributable to Stericycle, Inc.	$	46,735	$	36,464	$	131,347	$	108,696		$	43,151	$	40,817


Depreciation and amortization	$	9,009	$	7,520	$	26,395	$	21,421		$	9,449	$	8,696

Detailed information for our Foreign Countries reporting segment is as follows:


In thousands									In thousands
										Three Months Ended March 31,
	Three Months Ended September 30,				Nine Months Ended September 30,					2011		2010
In thousands	2010		2009		2010		2009
Regulated waste management services	$	89,369	$	69,341	$	254,912	$	188,074		$	107,514	$	79,799
Net interest expense		1,394		1,373		4,095		4,145			1,503		1,270
Income before income taxes		14,716		13,064		41,469		31,029			18,661		12,486
Income taxes		4,151		2,965		13,116		8,494			5,226		4,669
Net income		10,565		10,099		28,353		22,535			13,435		7,817
Less: net income attributable to noncontrolling interests		614		37		1,801		148			912		515

Net income attributable to Stericycle, Inc.	$	9,951	$	10,062	$	26,552	$	22,387		$	12,523	$	7,302


Depreciation and amortization	$	4,495	$	2,439	$	12,115	$	7,042		$	5,654	$	3,693

NOTE 1314 – LEGAL PROCEEDINGS

We operate in a highly regulated industry and must deal with regulatory inquiries or investigations from time to time that may be instituted for a variety of reasons. We are also involved in a variety of civil litigation from time to time.

On November 30, 2009, we entered into an agreement with the United States Department of Justice (“DOJ”) and the States of Missouri and Nebraska providing clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 that allowed us to complete the acquisition of MedServe, Inc., which we closed on December 4, 2009. Our agreement with the DOJ and the States of Missouri and Nebraska agreement required us to divest certain assets that we acquired from MedServe consisting of an autoclave treatment facility in Newton, Kansas, four transfer stations in Kansas, Oklahoma, Nebraska and Missouri and certain large customer accounts and associated assets related to these facilities. We completed this required divestiture in May 2010 (see Note 2 – Acquisitions and Divestiture). In addition, our agreement requires us for a period of ten years to notify the DOJ and the States of Missouri and Nebraska before acquiring any business that is engaged in both the collection and treatment of infectious waste in Kansas, Missouri, Nebraska or Oklahoma.

~~During the quarter ended June 30, 2010, we entered into a settlement of litigation related to an acquisition agreement for $0.9 million.~~

~~STERICYCLE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

~~NOTE 14 – GUARANTEE~~

We have guaranteed a loan to JPMorganChase Bank N.A. on behalf of Shiraishi-Sogyo Co. Ltd (“Shiraishi”). Shiraishi is a customer in Japan that is expanding their medical waste management business and has a one year loan with a current balance of $5.8 million with JPMorganChase Bank N.A. that expires in May 2011. We also have extended notes receivable to Shiraishi for approximately $15.2 million in support of their medical waste business. These amounts are collateralized with the assets of Shiraishi and related companies.

NOTE 15 – RESTRUCTURING CHARGES

In December of 2009, we announced the consolidation of operations within our ~~Returns Management Services~~returns and recall management services (“RMS”) business. This consolidation ~~will result~~resulted in the closure of our facilities in Boynton Beach, Florida and Conyers, Georgia. The operations of those facilities ~~will be~~have been moved to our Indianapolis, Indiana location. We have recognized expense of ~~$1.6 million during the fourth quarter of 2009, $0.7~~$0.1 million during the first quarter of 2010, $1.1 million during the second quarter of 2010, and $0.2 million during the third quarter of 2010 related to this restructuring. We have an accrual balance of $0.4 million related to the restructuring at September 30, 2010.2011. We estimate immaterial additional expense during ~~the remainder of 2010.~~2011. We believe this restructuring will allow us to maximize the efficiency of our ~~Returns Management Services~~RMS business at a single location and management ~~infrastructure.~~ infrastructure

In ~~addition~~December 2010, we reorganized the structure of our international management group in order to ~~the Returns Management Services restructuring charges, we~~leverage strong local management, resulting in employee severance and other charges. We recognized ~~$0.5~~$0.1 million in ~~expenses during~~expense related to this restructuring in the ~~second~~first quarter of ~~2010~~2011. We had $0.9 million accrual remaining related to this reorganization at March 31, 2011, which will be paid primarily during 2011 with some additional disbursements in 2012.

The following tables below highlight the ~~consolidation~~pre-tax charges and changes in the reserves for the quarter ended March 31, 2011 and for the year ended December 31, 2010. All charges related to these costs are reflected on our Consolidated Statement of ~~some redundant plant operations.~~Income within “Restructuring costs” for both costs of revenue and selling, general, and administrative expenses.


In thousands
	Beginning Reserve at 01/01/11		Charges for the Quarter Ended 3/31/11		Cash Paid			Ending Reserve at 3/31/11
Employee severance	$	1,835	$	125	$	(1,102	)	$	858
Other costs		217		133		(311	)		39
Non-cash items
Employee severance		0				0			0
Other costs		0				0			0

Total	$	2,052	$	258	$	(1,413	)	$	897

   Beginning
Reserve at
01/01/10

Charges for
the Year
Ended
12/31/10
   Cash Paid Ending
Reserve at
12/31/10
Employee severance
   $ 666       $ 3,100       $ (1,931 ) $ 1,835
Other costs
   6       1,080       (869 ) 217
Non-cash items

Employee severance
   0       3,266       0    0
Other costs
   0       925       0    0

Total
   $ 672       $ 8,371       $ (2,800 ) $ 2,052

NOTE 16 – SUBSEQUENT EVENT

~~The Company evaluated subsequent events through~~On April 18, 2011, we completed the ~~date~~acquisition of ~~filing this Quarterly Report on Form 10-Q.~~

~~On August 18,~~HWS pursuant to the merger agreement, dated as of September 24, 2010, ~~we entered into a note purchase~~as amended. Completion of the merger followed our agreement with ~~39 institutional purchasers pursuant to which we agreed to issue~~the U.S. Department of Justice and ~~sell~~the State of New York providing for clearance of the transaction under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

The total merger consideration was $237 million in cash, subject to the ~~purchasers $175.0 million of our new 3.89% Series A seven-year unsecured senior notes and $225.0 million of our new 4.47% Series B 10-year unsecured senior notes. Closing~~various adjustments provided for in the merger agreement, including a reduction for HWS’s indebtedness as of the ~~note purchase agreement occurred on October 15, 2010.~~

The Series A notes bear interest at the fixed rate of 3.89% per annum, and the Series B notes bear interest at the fixed rate of 4.47% per annum. Interest is payable in arrears semi-annually on April 15 and October 15 beginning on April 15, 2011. The principal of the Series A notes is payable at the maturity of the notes on October 15, 2017, and the principal of the Series B notes is payable at the maturity of the notes on October 15, 2020. The notes are unsecured obligations.

~~We applied $100.0~~closing date. In addition, $10 million of the ~~proceeds from the sale~~merger consideration was deposited into escrow to cover indemnification obligations of the ~~notes to repay a portion of our term loans~~HWS shareholders and ~~applied $300.0 million of~~“in-the-money” option holders under the ~~proceeds to reduce our borrowings under our revolving credit facility.~~merger agreement.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

~~ITEM 2.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

We were incorporated in 1989 and presently serve a ~~very~~ diverse customer base of ~~approximately 476,000~~over 489,000 customers throughout the United States, Argentina, Brazil, Canada, Chile, Ireland, Japan, Mexico, Portugal, ~~Puerto Rico,~~ Romania, and the United Kingdom. We have fully integrated networks including processing centers, and transfer and collection sites. We use these networks to provide a broad range of services to our customers including regulated waste management services, and regulated return management services. Regulated waste management services include regulated waste removal services, sharps management services, products and services for infection control, and safety and compliance programs. Regulated return management services are physical services provided to companies and individual businesses that assist with the handling of products that are being removed from the supply chain due to recalls and expiration. These services also include advanced notification technology that is used to communicate specific instructions to the users of the product. Our waste treatment technologies include autoclaving, incineration, chemical treatment, and our proprietary electro-thermal-deactivation system. In addition, we have technology licensing agreements with companies located in Japan, Brazil, and ~~Japan.~~South Africa.

There were no material changes in the Company’s critical accounting policies since the filing of its ~~2009~~2010 Form 10-K. As discussed in the ~~2009~~2010 Form 10-K, the preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amount of reported assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates.

Highlights of our first quarter results for 2011 include the ~~three months ended September 30, 2010:~~following:

revenues for the first quarter 2011 grew to ~~$363.0~~$398.1 million, a ~~21.9%~~18.8% increase over ~~$297.8~~$335.2 million for the ~~third~~first quarter ~~2009;~~2010;

~~third quarter~~ gross margins decreased to 45.8% in 2011 from 46.3% in ~~2010 from 47.3% in 2009;~~2010;

operating income ~~was $96.0 million, a 20.8% increase from $79.5~~before acquisition-related costs and restructuring charges increased 19.5% to $107.2 million for ~~2009;~~

~~we incurred a net $2.1~~the first quarter 2011 from $89.7 million in ~~non-core operational pre-tax expenses, and;~~the first quarter 2010; and

cash flow from operations was ~~$76.1 million.~~

~~Highlights of the nine months ended September 30, 2010:~~

~~revenues grew to $1.05 billion, a 21.0% increase over $864.2 million for 2009;~~

~~gross margins decreased to 46.4% from 46.9% in 2009;~~

~~operating income was $276.8 million, a 18.7% increase from $233.3 million for 2009;~~

~~we incurred a net $3.6 million in non-core operational pre-tax expenses, and;~~

~~cash flow from operations was $205.4~~$65.6 million.

THREE MONTHS ENDED ~~SEPTEMBER 30, 2010~~MARCH 31, 2011 COMPARED TO THREE MONTHS ENDED ~~SEPTEMBER 30, 2009~~MARCH 31, 2010

The following summarizes the Company’s operations:


	Three Months Ended September 30,
In thousands, except per share data	2010				2009				In thousands, except per share data
	$		%		$		%			Three Months Ended March 31,
										2011				2010
										$		%		$		%
Revenues	$	362,988		100.0	$	297,836		100.0		$	398,126		100.0	$	335,177		100.0
Cost of revenues		185,515		51.1		150,272		50.5			205,816		51.7		170,570		50.9
Depreciation											9,818		2.5		8,862		2.6
Restructuring costs		185		0.1		—		—			62		0.0		428		0.1
Depreciation		9,190		2.5		6,647		2.2

Total cost of revenues		194,890		53.7		156,919		52.7			215,696		54.2		179,860		53.7
Gross profit		168,098		46.3		140,917		47.3			182,430		45.8		155,317		46.3
Selling, general and administrative expenses		65,033		17.9		54,312		18.2			69,972		17.6		62,470		18.6
Depreciation		1,796		0.5		1,878		0.6			1,938		0.5		1,552		0.5
Amortization		2,518		0.7		1,434		0.5			3,347		0.8		1,975		0.6

Total selling, general and administrative expenses		69,347		19.1		57,624		19.3			75,257		18.9		65,997		19.7
Acquisition expenses		1,891		0.5		3,478		1.2			3,798		1.0		800		0.2
Integration expenses		790		0.2		282		0.1			766		0.2		1,149		0.3
Restructuring costs and plant closure expense		31		0.0		—		—
Restructuring costs											196		0.0		239		0.1

Income from operations		96,039		26.5		79,533		26.7			102,413		25.7		87,132		26.0
Net interest expense		8,427		2.3		9,214		3.1			11,188		2.8		8,883		2.7
Income tax expense		30,645		8.4		23,110		7.8			34,376		8.6		28,612		8.5
Net income		57,300		15.8		46,563		15.6			56,586		14.2		48,634		14.5
Less: net income attributable to noncontrolling interests		614		0.2		37		0.0			912		0.2		515		0.2

Net income attributable to Stericycle, Inc.	$	56,686		15.6	$	46,526		15.6		$	55,674		14.0	$	48,119		14.4
Earnings per share- diluted	$	0.65			$	0.54				$	0.64			$	0.56

Revenues: Our revenues increased ~~$65.1~~$62.9 million, or ~~21.9%~~18.8%, to ~~$363.0~~$398.1 million in ~~2010~~2011 from ~~$297.8~~$335.2 million in ~~2009.~~2010. Domestic revenues increased ~~$45.1~~$35.2 million or ~~19.7%,~~13.8% to ~~$273.6~~$290.6 million from ~~$228.5~~$255.4 million in ~~2009~~2010 as internal revenue growth for domestic small account customers increased by ~~$13.1~~$10.9 million, or approximately ~~10%~~8%, and internal

revenue growth for large quantity customers increased by ~~$4.7~~$4.0 million, or approximately 6%5%. Internal ~~revenues~~revenue growth for returns management increased by ~~$15.9 million. Internal revenues excludes acquisitions less than one year old. Total regulated waste~~$8.7 million, and ~~returns management~~ domestic acquisitions less than one year old contributed approximately ~~$11.4~~$11.6 million to the increase in domestic revenues.

International revenues increased ~~$20.0~~$27.7 million, or ~~28.9%~~34.7%, to ~~$89.4~~$107.5 million from ~~$69.3~~$79.8 million in ~~2009.~~2010. Internal growth in the international segment contributed ~~$3.9~~$6.5 million, or ~~approximately 6%~~over 8%, to the increase in ~~increased revenues. Internal growth excludes~~international revenues, before taking into consideration the effect of ~~foreign~~ exchange rates and ~~acquisitions less than one year old.~~acquisitions. The effect of exchange rate fluctuations ~~negatively~~favorably impacted international revenues approximately ~~$1.6~~$2.3 million while acquisitions less than one year old contributed ~~an additional $17.7~~$18.9 million in international revenues.

Cost of Revenues: Our cost of revenues increased ~~$38.0~~$35.8 million, or ~~24.2%~~19.9%, to ~~$194.9~~$215.7 million during ~~2010~~2011 from ~~$156.9~~$179.9 million during ~~2009.~~2010. Our domestic cost of revenues increased ~~$23.2~~$17.4 million, or ~~20.2%~~13.5%, to ~~$137.8~~$146.4 million from ~~$114.6~~$129.0 million in ~~2009~~2010 as a result of costs related to a proportional increase in revenues from acquisitions and internal growth. Our international cost of revenues increased ~~$14.8~~$18.4 million, or ~~35.0%~~36.1%, to ~~$57.1~~$69.3 million from ~~$42.3~~$50.9 million in ~~2009~~2010 primarily driven by the impact of exchange rates and impact from integration ofand acquisitions. Our company wide gross margin percentage decreased to 45.8% during 2011 from 46.3% during 2010 ~~from 47.3% during 2009 primarily~~ due to ~~slightly~~ higher fuel and energy costs as well as integration of lower margin newly acquired revenues and higher Regulated Returns Management ~~revenues, offset by improvements in the base business margins.~~revenues.

Selling, General and Administrative Expenses: Selling, general and administrative (“SG&A”) expenses increased ~~approximately $11.7~~$9.3 million, or ~~20.4%~~14.0%, to ~~$69.4~~$75.3 million, for the quarter ended ~~September 30, 2010~~March 31, 2011 from ~~$57.6~~$66.0 million for the comparable quarter in ~~2009 primarily as investment spending supported the increase in revenues and acquisition related SG&A spending.~~2010. As a percentage of revenue, these costs decreased ~~by 0.2%~~0.8% for the quarter ended ~~September 30, 2010~~March 31, 2011 compared to the same period in ~~2009.~~2010. Depreciation expense as a percentage of revenue was 0.5% in both 2011 and 2010. Amortization expense, as a percentage of revenue, increased to 0.8% in the first quarter of 2011 from 0.6% in the same period in 2010 due to additional acquisitions, and related increase in intangibles and related amortization.

Domestically, ~~third~~our first quarter 2011 SG&A ~~expenses~~ increased ~~$8.2~~$5.1 million ~~or 18.1%,~~ to ~~$53.6~~$56.5 million from ~~$45.4~~$51.4 million in the same period ~~in 2009.~~last year. As percentage of revenues, SG&A was lower at ~~19.6%~~19.4% in the ~~third~~first quarter of ~~2010~~2011 compared to 19.9% in 2009. As a percentage of revenues, amortization expense of acquired intangible assets increased by 0.2% while other expenses decreased by 0.55%. There was no single factor that was a major contributor to the decrease in SG&A.

~~Internationally, third quarter SG&A expenses increased $3.6 million or 29.5% to $15.8 million from $12.2 million~~20.1% in the same period ~~last year.~~in 2010.

Internationally, our first quarter 2011 SG&A increased $4.2 million to $18.8 million from $14.6 million during the same period in 2010, mostly due to acquisitions and related higher expenses. As a percentage of revenues, SG&A was ~~17.7%~~lower at 17.4% in ~~2010~~the first quarter of 2011 compared to ~~17.6%~~18.3% in ~~2009. The increase~~the same period in SG&A was partially due to our acquisitions in Japan and Portugal, which have slightly higher SG&A expenses. Higher amortization expense related to recognized intangible assets from acquisitions and investment for our Clinical Services program also contributed to the increase in SG&A.2010.

Income from Operations: Income from operations increased $15.3 million to ~~$96.0~~$102.4 million for the quarter ended ~~September 30, 2010~~March 31, 2011 from ~~$79.5~~$87.1 million for the comparable quarter in ~~2009,~~2010, an increase of ~~20.8%~~17.5%. During the quarter ended ~~September~~March 31, 2011, we recognized $3.8 million in acquisition expenses, $0.8 million expenses related to the integration of new acquisitions, and $0.3 million of restructuring costs. During the

quarter ended March 31, 2010, we recognized ~~$1.9~~$0.8 million in acquisition expenses, $1.1 million related to the integration of new acquisitions, and ~~$0.2~~$0.7 million of restructuring ~~costs of~~costs.

Domestically, our ~~regulated returns management service business. During~~income from operations increased $8.7 million, or 11.8%, to $82.2 million during the quarter ended ~~September 30, 2009 we recognized $3.5~~March 31, 2011 from $73.5 million during the same period in ~~expenses related~~2010. Internationally, our income from operations increased $6.6 million, or 48.5%, to ~~acquisitions.~~

$20.2 million during the quarter ended March 31, 2011 from $13.6 million during the same period in 2010.

Net Interest Expense: Net interest expense ~~decreased~~increased to ~~$8.4~~$11.2 million during the quarter ended ~~September 30, 2010~~March 31, 2011 from ~~$9.2~~$8.9 million during the comparable quarter in ~~2009. Our interest expense was higher in 2009~~2010 due to ~~incremental expenses related to three~~higher interest ~~rate swap contracts, two of which expired prior to the third quarter of 2010.~~rates.

Income Tax Expense: Income tax expense increased to ~~$30.6~~$34.4 million for the quarter ended ~~September 30, 2010~~March 31, 2011 from ~~$23.1~~$28.6 million for the comparable quarter in ~~2009. In September 2010 and 2009, we recognized $1.2 million and $1.8 million, respectively; of tax benefits related~~2010. The increase was primarily due to ~~prior years unrecognized tax positions, which positively impacted our diluted earnings per share by $0.01 and $0.02, respectively.~~higher taxable income. The effective tax rates for the quarters ended ~~September 30,~~March 31, 2011 and 2010 were 37.8% and ~~2009 were 34.8% and 33.2%, respectively.~~

~~NINE MONTHS ENDED SEPTEMBER 30, 2010 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2009~~

~~The following summarizes the Company’s operations:~~

   Nine Months Ended September 30,
      2010    2009
In thousands, except per share data
               $                          %                             $                             %
Revenues
   $ 1,045,899    100.0       $ 864,194       100.0
Cost of revenues
   532,625    50.9       438,484       50.7
Restructuring costs
   1,339    0.1       —         —
Depreciation
   26,983    2.6       20,456       2.4

Total cost of revenues
   560,947    53.6       458,940       53.1
Gross profit
   484,952    46.4       405,254       46.9
Selling, general and administrative expenses
   191,067    18.3       158,090       18.3
Depreciation
   4,875    0.5       4,187       0.5
Amortization
   6,652    0.6       3,820       0.4

Total selling, general and administrative expenses
   202,594 �� 19.4       166,097       19.2
Acquisition expenses
   3,247    0.3       5,418       0.6
Integration expenses
   3,253    0.3       466       0.1
Restructuring costs and plant closure expense
   1,107    0.1       —         —
Litigation settlement
   937    0.1       —         —
Gain on sale of assets
   (2,955 ) -0.3       —         —

Income from operations
   276,769    26.5       233,273       27.0
Net interest expense
   26,148    2.5       25,290       2.9
Income tax expense
   89,359    8.5       74,488       8.6
Net income
   159,700    15.3       131,231       15.2
Less: net income attributable to noncontrolling interests
   1,801    0.2       148       0.0

Net income attributable to Stericycle, Inc.
   $ 157,899    15.1       $ 131,083       15.2
Earnings per share- diluted
   $ 1.82       $ 1.51

~~Revenues:~~ Our revenues increased $181.7 million, or 21.0%, to $1.05 billion in 2010 from $864.2 million in 2009. Domestic revenues increased $114.9 million, or 17.0%, to $791.0 million from $676.1 million in 2009 as internal revenue growth for domestic small account customers increased by $34.7 million, or approximately 9%, and internal revenue growth for large quantity customers increased by $12.9 million, or approximately 6%. Internal revenues for returns management increased by $29.6 million resulting from larger recalls in the quarter. Internal revenues exclude acquisitions less than one year old. Total domestic regulated waste and returns management acquisitions less than one year old contributed approximately $37.7 million to the increase in domestic revenues.

International revenues increased $66.8 million, or 35.5%, to $254.9 million in 2010 from $188.1 million in 2009. Internal growth in the international segment contributed $13.3 million, or approximately 7% in increased revenues. Internal growth excludes the effect of exchange rates and acquisitions less than one year old. The effect of exchange rate fluctuations favorably impacted international revenues approximately $3.5 million and acquisitions less than one year old contributed an additional $50.0 million in international revenues.

~~Cost of Revenues:~~ Our cost of revenues increased $102.0 million, or 22.2%, to $560.9 million during 2010 from $458.9 million during 2009. Our domestic cost of revenues increased $59.1 million, or 17.4%, to $399.0 million from $339.9 million in 2009 as a result of costs related to a proportional increase in revenues from acquisitions and internal growth. Our international cost of revenues increased $42.9 million, or 36.0% to $161.9 million from $119.0 million in 2009 as a result of costs related to a proportional increase in revenues, partially driven by the impact of exchange rates. Our company wide gross margin percentage decreased to 46.4% during 2010 from 46.9% during 2009 due to slightly higher energy expenses and the inclusion of lower margin acquired revenues.

~~Selling, General and Administrative Expenses:~~ SG&A expenses increased $36.5 million, or 22.0%, to $202.6 million, for the nine months ended September 30, 2010 from $166.1 million for the comparable period in 2009. As a percentage of revenue, these costs increased by 0.2% for the nine months ended September 30, 2010 compared to the same period in 2009 primarily due to higher expensing of stock options.

Domestically, SG&A increased $23.5 million in 2010, or 17.6%, to $156.7 million from $133.2 in 2009. The increase was primarily due to SG&A expenses related to the acquired revenues, higher amortization and stock option expenses, market penetration for our Pharmaceutical Waste programs, and investment in the Steri-Safe services.

Internationally, SG&A increased $13.0 million in 2010, or 39.5% to $45.9 million from $32.9 million in 2009. As a percentage of revenues, SG&A was 18.0% in 2010 and 17.5% in 2009. The increase in SG&A was partially due to our acquisitions in the UK, Brazil, and Japan, which have slightly higher SG&A expenses. Higher amortization expense related to recognized intangible assets from acquisitions and investment for our Clinical Services program also contributed to the increase in SG&A.

~~Income from Operations:~~ Income from operations increased to $276.8 million for the nine months ended September 30, 2010 from $233.3 million for the comparable period in 2009, an increase of 18.6%. During the nine months ended September 30, 2010, we recognized $3.2 million in expenses related to acquisitions, $2.0 million of restructuring costs of our regulated returns management service business, $0.5 million plant closure expense, and litigation settlement of $0.9 million, partially offset by a $3.0 million gain on sale of assets related to the MedServe divestiture. These non-core operational expenses totaled $3.6 million on pre-tax basis. During the nine months ended September 30, 2009, we recognized $5.4 million in expenses related to acquisitions.

~~Net Interest Expense:~~ ~~Net interest expense increased to $26.1 million during the nine months ended September 30, 2010 from $25.3 million during the comparable period in 2009 due to increased borrowings.~~

~~Income Tax Expense:~~ Income tax expense increased to $89.4 million for the nine months ended September 30, 2010 from $74.5 million for the comparable period in 2009. The increase was due to higher taxable income partially offset by a lower effective tax rate. In September 2010 and 2009, we recognized $1.2 million and $1.8 million, respectively; of tax benefits related to prior years unrecognized tax positions which positively impacted our diluted earnings per share by $0.01 and $0.02, respectively. The effective tax rates for the nine months ended September 30, 2010 and 2009 were 35.9% and 36.2%37.0%, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Our ~~$850~~$850.0 million senior credit facility maturing in August 2012, our ~~$206.9~~$76.9 million term loan maturing in June 2012, ~~and~~ our ~~$100~~$100.0 million private placement notes maturing April 2015, our $175.0 million private placement note maturing in October 2017 and our $225.0 million private placement notes maturing in October 2020, all require us to comply with various financial, reporting and other covenants and restrictions, including a restriction on dividend payments. The financial debt covenants are the same for the senior credit facility, the term loan credit agreement and the private placement notes. At ~~September 30, 2010,~~March 31, 2011, we were in compliance with all of our financial debt covenants.

As of ~~September 30, 2010,~~March 31, 2011, we had ~~$375.1~~$96.8 million of borrowings outstanding under our $850 million senior unsecured credit facility, which includes foreign currency borrowings of ~~$31.1~~$51.3 million. We also had ~~$185.2~~$173.9 million committed to outstanding letters of credit under this facility. The unused portion of the revolving credit facility as of ~~September 30, 2010~~March 31, 2011 was ~~$289.7~~$579.2 million. At ~~September 30, 2010,~~March 31, 2011, our interest rates on borrowings under our revolving credit facility were as follows:

For short-term borrowing (less than one month): Federal funds rate plus 0.5% or prime rate, whichever is higher; and

For borrowing greater than one month: LIBOR plus 0.75%.

The weighted average rate of interest on the unsecured revolving credit facility was ~~1.42%~~1.6% per annum.

As of ~~September 30, 2010,~~March 31, 2011, we had ~~$206.9~~$76.9 million term loan debt outstanding which was entered into during 2009 with several lenders maturing in June 2012. Term loans

under the term loan credit agreement bear interest at fluctuating interest rates determined, for any one-month or other applicable interest period, by reference to ~~the~~ LIBOR plus the applicable margin provided in the term loan agreement. The applicable margin is based on our consolidated leverage ratio and ranges from 2.75% to 3.50%. As of ~~September 30, 2010,~~March 31, 2011, the applicable margin was ~~3.00%~~3.0%. The weighted average rate of interest on the term loan was ~~3.56%~~3.25% per annum which includes the amounts under our interest rate hedge. WeAfter the first year, we are required to make quarterly principal payments ~~ranging between 2% to 3%~~of 2.5% of the principal amount of the outstanding term loans, and the remainder at maturity.

As of ~~September 30, 2010,~~March 31, 2011, we had ~~$100.0~~$100 million outstanding 5.64% private placement notes which we entered into on April 15, 2008 with nine institutional purchasers. The notes bear interest at the fixed rate of 5.64% per annum. Interest is payable in arrears semi-annually on April 15 and October 15 beginning on October 15, 2009, and principal is payable at the maturity of the notes on April 15, 2015.

~~At September 30, 2010,~~As of March 31, 2011, we had ~~$295.4~~$175.0 million of 3.89% seven-year unsecured senior notes and $225.0 million of 10-year 4.47% unsecured senior notes.

At March 31, 2011, we had $331.3 million in other debt outstanding, which includes promissory notes issued in connection with acquisitions during 2004 through ~~2010,~~2011, other foreign subsidiary bank debt, and capital leases.

Working Capital: At ~~September 30, 2010,~~March 31, 2011, our working capital ~~increased by $29.4~~decreased $14.8 million to ~~$43.2~~$45.4 million compared to ~~$13.7~~$60.2 million at December 31, ~~2009. Working capital~~2010. Cash and cash equivalents at December 31, 2010 included $23.0 million that was used for recalled product reimbursement, offset by an equivalent amount in accrued liabilities. Approximately $16.9 million of those amounts were paid during the first quarter of 2011 and we used excess cash to pay down debt. Our receivables increased ~~by $36.7 million for net accounts receivables related to higher sales, and by $17.5 million for short-term investments. In July 2010, we financed a portion~~in the first quarter of ~~our Japan acquisition through local borrowings which required us to deposit~~2011 by $15.8 million ~~in one year Certificates of Deposit into an affiliated bank located~~due to incremental revenues and acquisitions. Accrued liabilities decreased by $7.1 million, primarily due to compensation expense accruals and short term deferred acquisition payment accruals, in the ~~United States (see Note 4 – Fair Value Measurements). Working capital~~form of notes and deferred consideration, which decreased by $18.9 million for increases in current debt, which was used to fund acquisitions and stock repurchases. Working capital also decreased due to an increase in accrued liabilities of $14.6 million primarily related to acquisitions.$10.2 million.

Net Cash Provided or Used: Net cash provided by operating activities decreased ~~$8.5~~$15.5 million, or ~~4.0%~~19.1%, to ~~$205.4~~$65.6 million during the ~~nine months~~quarter ended ~~September 30, 2010~~March 31, 2011 compared to ~~$213.9~~$81.1 million for the comparable period in ~~2009. Higher earnings in 2010 were offset by an increase in accounts receivables resulting from higher revenues and timing of revenues~~2010. In 2011, we had $16.9 million decrease in the ~~quarter in our regulated returns business.~~cash used for recalled product reimbursements.

Net cash used in investing activities for the ~~nine months~~quarter ended ~~September 30, 2010~~March 31, 2011 was ~~$140.7~~$32.1 million compared to ~~$136.1~~$63.7 million in the comparable period in ~~2009.~~2010. The difference is mainly due to a ~~$15.8 increase in short-term investments related to our acquisitions in Japan (see Note 4 – Fair Value Measurements) partially offset by $11.5~~decrease of $30.9 million ~~paid less for~~spent on acquisitions and international investments in ~~2010.~~

the first quarter of 2011 as compared to the same period in the prior year.

Net cash used in financing activities was ~~$53.7~~$87.7 million during the ~~nine months~~quarter ended ~~September 30, 2010~~March 31, 2011 compared to ~~$70.2~~$7.9 million for the comparable period in ~~2009. A decrease~~2010. During the three months ended March 31, 2011, we repaid $86.0 million in borrowings on our senior credit facility. We had no repurchases of ~~$26.4 million for the repurchase and cancellation of~~our common stock ~~over~~during the ~~prior year period, and a decrease of $163.0 million in debt repayments and financing fees was partially offset by a $215.0 million term loan placed in 2009.~~three months ended March 31, 2011.

~~Guarantees:~~Guarantees: We have guaranteed a loan to JPMorganChase Bank N.A. on behalf of Shiraishi-Sogyo Co. Ltd (“Shiraishi”). Shiraishi is a customer in Japan that is expanding ~~their~~its medical waste management business and has a one year loan with a current balance of ~~$5.8~~$6.0 million with JPMorganChase Bank N.A. that ~~expires~~matures on May 2011. The loan with JPMorganChase and our associated guarantee is in the process of being extended beyond May 2011. We also have extended notes receivable to Shiraishi for approximately $15.2 million in support of ~~their~~its medical waste business. These amounts are collateralized with the assets of Shiraishi and related companies.

~~ITEM 3.~~

~~QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to market risks arising from changes in interest rates. As of September 30, 2010, we have one interest rate swap contract covering $25 million of our borrowings outstanding under our senior credit facility. The objective of the hedge is to reduce the risk of volatile interest expense by fixing the rate. The fair market of the hedge is recorded as a current liability of $60 thousand at September 30, 2010.

Our potential additional interest expense over one year that would result from a hypothetical, instantaneous and unfavorable change of 100 basis points in the interest rate on all of our variable rate obligations would be approximately ~~$6.1~~$2.4 million on a pre-tax basis.

We have exposure to foreign currency fluctuations. We have subsidiaries in ~~ten~~nine foreign countries whose functional currency is the local currency. Changes in foreign currency exchange rates could unfavorably impact our consolidated results of operations.

We have exposure to commodity pricing for gas and diesel fuel for our trucks and for the purchase of containers and boxes. We do not hedge these items to manage the exposure.

~~ITEM 4.~~

~~CONTROLS AND PROCEDURES~~

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our Chairman and Chief Executive Officer and our Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter covered by this Report. On the basis of this evaluation, our Chairman and Chief Executive Officer and our Chief Financial Officer each concluded that our disclosure controls and procedures were effective.

The term “disclosure controls and procedures” is defined in Rule 13a-14(e) of the Securities Exchange Act of 1934 as “controls and other procedures designed to ensure that information required to be disclosed by the issuer in the reports, files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.” Our disclosure controls and procedures are designed to ensure that material information relating to us and our consolidated subsidiaries is accumulated and communicated to our management, including our Chairman and Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding our required disclosures.

Internal Control Over Financial Reporting

The term internal control over financial reporting is defined as a process designed by, or under the supervision of, the issuers’ principal executive and principal financial officers, and effected by the issuer’s Board of Directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (added this). During the quarter ended ~~September 30, 2010,~~March 31, 2011, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially to affect, our internal controls over financial reporting.

FROM TIME TO TIME WE ISSUE FORWARD-LOOKING STATEMENTS RELATING TO SUCH THINGS AS ANTICIPATED FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, ACQUISITION ACTIVITIES AND SIMILAR MATTERS.

THESE FORWARD-LOOKING STATEMENTS MAY INVOLVE RISKS AND UNCERTAINTIES, SOME OF WHICH ARE BEYOND OUR CONTROL (FOR EXAMPLE, GENERAL ECONOMIC CONDITIONS). OUR ACTUAL RESULTS COULD DIFFER SIGNIFICANTLY FROM THE RESULTS DESCRIBED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE SUCH DIFFERENCES INCLUDE DIFFICULTIES IN COMPLETING THE INTEGRATION OF ACQUIRED BUSINESSES, CHANGES IN GOVERNMENTAL REGULATION OF MEDICAL WASTE COLLECTION AND TREATMENT, AND INCREASES IN TRANSPORTATION AND OTHER OPERATING COSTS, AS WELL AS VARIOUS OTHER FACTORS.

PART II. – OTHER INFORMATION

~~ITEM 1.~~

~~LEGAL PROCEEDINGS~~

ITEM 1. LEGAL PROCEEDINGS

See Note 1314 - Legal Proceedings, in the Notes to the Condensed Consolidated Financial Statements (Item 1 of Part I).

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~ITEM 2.~~

~~CHANGES IN SECURITIES, USES OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES~~

In May 2002 our Board of Directors authorized the Company to repurchase up to 6,000,000 shares of our common stock, in the open market or through privately negotiated transactions, at times and in amounts in the Company’s discretion.

In February 2005, at a time when we had purchased a total of 2,956,860 shares, the Board authorized us to purchase an additional 2,956,860 shares.

In February 2007, at a time when we had purchased an additional 3,142,080 shares since the prior increase in authorization, the Board authorized us to purchase up to an additional 3,142,080 shares.

In May 2007, at a time when we had purchased an additional 1,187,142 shares since the prior increase in authorization, the Board authorized us to purchase up to an additional 1,187,142 shares.

In May 2008, at a time when we had purchased an additional 2,938,496 shares since the prior increase in authorization, the Board authorized us to purchase up to an additional 2,938,496 shares.

In November 2010, at a time when we had purchased an additional 4,312,820 shares since the prior increase in authorization, our Board of Directors authorized us to purchase up to an additional 4,312,820 shares, thereby again giving the Company the authority to purchase up to a total of 6,000,000 additional shares.

Under resolutions that our Board of Directors adopted in May 2002, February 2005, February 2007, May 2007, ~~and~~ May 2008 and November 2010, we have been authorized to purchase a cumulative total of ~~16,224,578~~20,537,398 shares of our common stock on the open market. As of ~~September 30, 2010,~~March 31, 2011, we had purchased a cumulative total of ~~13,937,255~~14,647,122 shares.

~~The following table provides information about our purchases during the nine months ended September 30, 2010 of shares~~We had no repurchases of our common ~~stock:~~stock during the three months ended March 31, 2011.

~~Issuer Purchase of Equity Securities~~

Period
   Total
Number of
Shares (or
Units)
Purchased    Average
Price Paid
per Share
(or Unit)    Number of
Shares (or
Units)
Purchased
as Part of
Publicly
Announced
Plans or
Programs    Maximum Number
(or Approximate
Dollar Value) of
Shares (or Units)
that May Yet Be
Purchased Under
the Plans or
Programs
January 1- January 31, 2010
   —         $ —         —         3,038,461
February 1- February 28, 2010
   8,609       50.91       8,609       3,029,852
March 1- March 31, 2010
   198,505       54.51       198,505       2,831,347
April 1- April 30, 2010
   100,656       54.37       100,656       2,730,691
May 1- May 31, 2010
   134,780       55.85       134,780       2,595,911
June 1- June 30, 2010
   —         —         —         2,595,911
July 1- July 31, 2010
   308,588       62.64       308,588       2,287,323
August 1- August 31, 2010
   —         —         —         2,287,323
September 1- September 30, 2010
   —         —         —         2,287,323

~~ITEM 6.~~

~~EXHIBITS~~

ITEM 6. EXHIBITS


~~2.1~~		~~Merger Agreement dated as of September 24, 2010 by and among Stericycle, Inc., SAMW Acquisition Corp., Healthcare Waste Solutions, Inc. and Joseph Mayernik, as shareholder representative~~

		The exhibits and schedules to the Merger Agreement, which are listed following the table of contents, have been omitted pursuant to Item 601(b)(2) of Regulation S–K. We agree to furnish supplementally copies of any omitted exhibits or schedules to the Securities and Exchange Commission upon request.

31.1		Rules 13a-14(a)/15d-14(a) Certification of Mark C. Miller, Chairman and Chief Executive Officer

31.2		Rule 13a-14(a)/15d-14(a) Certification of Frank J.M. ten Brink, Executive Vice President and Chief Financial Officer

32		Section 1350 Certification of Mark C. Miller, Chairman and Chief Executive Officer, and Frank J.M. ten Brink, Executive Vice President and Chief Financial Officer



101.INS XBRL		Instance Document

101.SCH XBRL		Taxonomy Extension Schema Document

101.CAL XBRL		Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL		Taxonomy Definition Linkbase Document

101.LAB XBRL		Taxonomy Extension Label Linkbase Document

101.PRE XBRL		Taxonomy Extension Presentation Linkbase Document

SIGNATURES

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.

Dated: ~~November 5, 2010~~May 10, 2011


STERICYCLE, INC. ~~(Registrant)~~

~~By:~~		~~/s/ FRANK~~ ~~J.M.TEN~~ B~~RINK~~ (Registrant)
By:		/s/ Frank J.M. ten Brink
Frank J.M. ten Brink
*Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)*

2925


In thousands	Preliminary Allocation of 2010 Acquisitions			Adjustments During Allocation Period			Total Allocations
Fixed assets	$	14,236		$	(1,232	)	$	13,004
Intangibles		66,216			16,843			83,059
Goodwill		98,166			(14,600	)		83,566
Net other assets		7,606			694			8,300
Debt		(16,412	)		—			(16,412	)
Net deferred tax liabilities		(18,466	)		(1,556	)		(20,022	)
Noncontrolling interests		(16,923	)		—			(16,923	)

	$	134,423		$	149		$	134,572


In thousands	Asset Group Sold
Fixed assets	$	(1,565	)
Intangibles		(1,127	)
Goodwill		(2,345	)
Net other assets		(8	)

	$	(5,045	)


			Fair Value Measurements Using
In thousands	Total as of September 30, 2010		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Assets:
Cash and cash equivalents	$	20,627	$	20,627	$	—	$	—
Short-term investments		18,632		18,632		—		—

Total assets	$	39,259	$	39,259	$	—	$	—
Liabilities:
Interest rate hedge (accrued liabilities)		60		—		60		—

Total liabilities	$	60	$	—	$	60	$	—


In thousands
	Total as of March 31, 2011		Fair Value Measurements Using
	Total as of March 31, 2011		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Assets:
Cash and cash equivalents	$	24,656	$	24,656	$	0	$	0
Short-term investments		19,768		19,768		0		0

Total assets	$	44,424	$	44,424	$	0	$	0

	Total as of December 31, 2010		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Assets:
Cash and cash equivalents	$	77,053	$	77,053	$	0	$	0
Short-term investments		18,471		18,471		0		0

Total assets	$	95,524	$	95,524	$	0	$	0


			Fair Value Measurements Using
In thousands	Total as of December 31, 2009		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Assets:
Cash and cash equivalents	$	15,767	$	15,767	$	—	$	—
Short-term investments		1,131		1,131		—		—

Total assets	$	16,898	$	16,898	$	—	$	—
Liabilities:
Interest rate hedges (accrued liabilities)	$	1,165	$	—	$	1,165	$	—

Total liabilities	$	1,165	$	—	$	1,165	$	—


In thousands
Unrecognized tax positions, January 1, 2010	$	7,622
Net decreases- tax positions in prior period		(77	)
Expiring by lapse of the Statute of Limitations		(1,123	)
Net increases- tax positions in current period		1,276

Unrecognized tax positions, September 30, 2010	$	7,698


	Beginning Reserve at 01/01/10		Charges for the Year Ended 12/31/10		Cash Paid			Ending Reserve at 12/31/10
Employee severance	$	666	$	3,100	$	(1,931	)	$	1,835
Other costs		6		1,080		(869	)		217
Non-cash items
Employee severance		0		3,266		0			0
Other costs		0		925		0			0

Total	$	672	$	8,371	$	(2,800	)	$	2,052


Period	Total Number of Shares (or Units) Purchased		Average Price Paid per Share (or Unit)		Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
January 1- January 31, 2010		—	$	—		—		3,038,461
February 1- February 28, 2010		8,609		50.91		8,609		3,029,852
March 1- March 31, 2010		198,505		54.51		198,505		2,831,347
April 1- April 30, 2010		100,656		54.37		100,656		2,730,691
May 1- May 31, 2010		134,780		55.85		134,780		2,595,911
June 1- June 30, 2010		—		—		—		2,595,911
July 1- July 31, 2010		308,588		62.64		308,588		2,287,323
August 1- August 31, 2010		—		—		—		2,287,323
September 1- September 30, 2010		—		—		—		2,287,323

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company