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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

|X|   Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
      Act of 1934 for the fiscal year ended December 31, 2000

|_|   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 2-85008-NY

                           SSI Surgical Services, Inc.
             (Exact name of registrant as specified in its charter)

           New York                                               11-2621408
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)

5776 Hoffner Avenue, Suite 200, Orlando Florida                          32822
    (Address of principal executive offices)                          (Zip Code)

                                 (407) 249-1946
              (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act: None

        Securities registered pursuant to Section 12(g) of the Act: None

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

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|

      As of March 16, 2001, the aggregate market value of voting stock held by
non-affiliates of the registrant was approximately $825,383, based on the
average bid and asked price of the registrant's Common Stock on March 16, 2001
as reported on the Nasdaq Bulletin Board System.

      The registrant had 19,491,216 Common Shares outstanding as of March 16,
2001.

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Item 1. Description of Business

Overview

      SSI Surgical Services, Inc. ("Surgical Services" or the "Company") is a
healthcare services company focused on providing surgical support services to
hospitals and surgery centers throughout the United States. SSI Surgical
Services, Inc. (OTCBB, SGSI.OB) is approximately 84.5% owned by TFX Equities
Incorporated (TFX), a wholly owned subsidiary of Teleflex Incorporated
(Teleflex), a Fortune 1000 company with headquarters in Plymouth Meeting,
Pennsylvania.

      The Company was founded in May 1982 as Medical Sterilization, Inc., a New
York Corporation. Effective May 28, 1999, the Company changed its name to SSI
Surgical Services, Inc.

      On January 11, 1999, the Company acquired all of the issued and
outstanding shares of Endoscopy Specialists, Incorporated ("ESI"), a
Florida-based surgical instrument management services firm, and all of the
issued and outstanding shares not already held by the Company of SSI Surgical
Services, Inc. ("SSI"), a Joint Venture with TFX. Both businesses were acquired
from TFX in exchange for 13,400,000 shares of Common Stock and warrants to
purchase an aggregate of 1,500,000 shares of Common Stock. As a result of the
transaction, TFX now owns a majority of the outstanding common stock of the
Company.

      Beginning in the mid-1990's, TFX brought together several medical services
operations that made up ESI and SSI. Each of these operations brought its own
healthcare knowledge, specialties and expertise to the new company, resulting in
a comprehensive package of service offerings. Running through the history of the
company is a dedication to high-quality, reusable products offered to its
customers on a per procedure basis.

      In late 1995, TFX purchased ESI. ESI was founded in 1992 to provide
on-site speciality instrument management programs, primarily for minimally
invasive surgical procedures. This component of the Company provides surgical
instruments, video equipment, and on-site, trained technicians for each
contracted laproscopic procedure performed in a hospital.

      During 1997, ESI acquired three other companies to complement the services
already offered: United Endoscopy and Medco, which provided services similar to
ESI; and Morse Technologies, providing surgical and endoscopic instrument
repair.

      SSI was formed in 1997 as a joint venture between TFX and the Company. SSI
was established to provide general and specialty instrument sets, basins and
surgical gowns and towels to hospitals and other facilities. In August 1998, SSI
acquired Sterilization Management Group ("SMG") which owned and managed five
surgical instrument and linen reprocessing facilities located in Chicago,
Detroit, Tampa, Houston, and Baltimore/Washington.


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<PAGE>

      Today the Company offers a comprehensive menu of services to hospitals and
surgery centers, with a primary focus on the operating room (OR). Company
headquarters are located in Orlando, Florida and the Company's employees are
based in hospitals, medical centers and sterilization facilities in numerous
locations around the country.

On Site Services

      The Company provides customers specialty instrument management programs
that focus on minimally invasive surgical procedures (endoscopic services). The
Company has a variety of service programs to meet customer demand. Surgical
Services assigns trained service technicians to each customer hospital. The
service technician is responsible for assisting with the operating room set-up
prior to the start of the designated case, and remains on-site to serve as a
technical expert available to respond to questions from the surgical staff
regarding the proper use of the products and video systems supplied by the
Company. At the completion of the case, the technician decontaminates and
reprocesses the company's instruments and performs quality assurance checks on
the instruments to validate their readiness for the next procedure. The Company
manages all repairs, refurbishing, reprocessing and replacement costs associated
with the provided products.

      The Company offers services for general surgery, gynecology, urology, ENT,
orthopedics, plastic surgery, thoracic surgery and cardiovascular surgery. The
related instrument sets can be basic, containing only instrumentation, or
increasingly complex, to include scopes, video equipment and other accessories.
By using high quality reusable instruments that are properly managed by trained
technicians and a selection of disposable products, the Company delivers higher
quality products billed on a per procedure basis, thus providing a basis for
potentially reducing hospital costs.

      In addition to the specialty instrument management program, Surgical
Services provides professional management to train and direct the sterile
processing departments in hospitals. The Company provides the customer with
trained and certified technicians to increase productivity and assumes
responsibility for management of the instrument inventory that includes the
establishment of an inventory tracking system, repair and maintenance,
replacement and purchase of new instruments. This service is billed to the
customer on a contractual basis.

Off Site Services

      The Company provides off-site cleaning, decontamination and sterilization
processing of its standard containerized reprocessable surgical instrument sets
as well as sterilized items for healthcare providers such as hospitals and
ambulatory surgery centers within the United States. The Company contracts with
healthcare providers to provide instruments that are reprocessed and reusable
surgical products consisting of gowns, towels, mayo-stand and back table covers
and basins.


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<PAGE>

      This business currently operates six industrial reprocessing facilities
that can sterilize, package, reassemble, decontaminate and deliver to customers
on a daily basis. The Company provides Instrument Sets for operating room and
labor and delivery room procedures, such as gall bladder, tonsillectomy and
adenoidectomy, open heart, vascular, orthopedic, endoscopy, cesarean sections,
newborn delivery, hysterectomy and dilation and curettage.

      The Company also packages its reusable textiles (surgical gowns and
towels) in a variety of packs to meet customers' needs. The reusable textiles
are cleaned, inspected, sterilized, and delivered to the hospital. The Company
offers a reprocessing service that utilizes state-of-the-art products such as
GORE(R) Surgical Barrier Fabric (GORE is a trademark of W.L. Gore & Associates,
Inc.), a surgical barrier fabric for gowns that is liquidproof and a series of
one-ply and two-ply gowns that are liquid resistant. All of the gown materials
are technologically advanced for comfort.

      The Company's services are designed to replace or supplement the existing
in-house sterilization facilities of healthcare providers. Many hospitals have
less efficient sterilization facilities, staff their facilities with nurses
whose skills could be more effectively used elsewhere and underutilize their
sterilization facilities by operating their equipment only once per day. Because
of the relatively low volume of sterilization activities undertaken at many of
these facilities, worker productivity may not be as high as in other areas of
the healthcare organization, causing concern for administrators. In addition, as
hospitals continue to evaluate ways in which to utilize their available space
better, many hospitals are seeking to replace their in-house sterilization
facilities with profit generating centers such as operating rooms. Many
hospitals are also looking for ways in which to improve operating room
efficiency by eliminating the sterilization processing delays and shortages
sometimes experienced with their in-house sterilization facilities.

      By utilizing state of the art equipment, modern sterilization technology,
trained technicians, and handling larger volumes, the Company believes that it
offers a cost-effective, high quality alternative to in-house sterilization. The
Company has installed modern, industrial size sterilization equipment at its
facilities, including ultrasonic cleaning systems, tunnel washers, steam
sterilizers and ETO sterilizers.

      The Company believes that it is able to offer improved sterility assurance
levels than those maintained at many hospitals. The Company has established
rigorous testing measures and procedures, such as sterilization process monitors
(including temperature and pressure recording), chemical indicators and
bacteriological spore and culture testing. See "Government Regulation."

Competition

      The Company's principal competition with respect to its off-site
management programs comes from the in-house sterilization facilities of
hospitals and ambulatory surgi-centers. Most hospitals have in-house
sterilization capabilities and many have invested significant capital


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in their sterilization facilities. Also, healthcare facilities with in-house
sterilization departments may be committed to maintaining their sterilization
capabilities and their current staffing levels. As a result, healthcare
providers may be reluctant to shift their sterilization activities from in-house
to an off-site contractor. Furthermore, some hospitals have union agreements
that preclude or mitigate a hospital's ability to outsource. In today's managed
care driven, consolidating environment, hospitals and hospital networks are
renegotiating these agreements with yet to be determined success.

      The Company has competition for its off-site reprocessing facilities in
most of its markets. Surgical Express, previously Sterile Recoveries, Inc. and
Angelica Corporation now compete with the Company. Substantial know-how and
capital intensive barriers continue to limit competitive interest.

      The Company's principal competition for its on-site management programs is
the hospitals' in-house departments. In addition, on-site services are offered
by several local and regional service companies as well as large corporations
such as Allegiance, who now competes with several on-site service offerings that
include: instrument processing, consulting, department management, staffing,
training, and endoscopy services. The Company is recognized as one of the the
only service providers to offer the full service continuum and a flexible
service offering. It provides customized solutions that includes both on-site
and off-site management programs for individual hospitals and healthcare
delivery networks.

Customers

      The Company markets and sells services to acute care hospitals, and
stand-alone surgery centers in 17 states domestically. Customers have been
attracted to the Company because of its quality of service, comprehensive
service offering and cost reduction opportunities. The Company provides services
directly to the customer, thereby eliminating a third party to intervene on its
behalf. Customers become interested in the Company's service menu due to the
following:

      1.)   Savings from reusable versus disposable products
      2.)   Savings on reduced inventory requirements
      3.)   Savings from outside management of processes
      4.)   Added efficiencies by having trained technicians on site
      5.)   Upgrade to premium equipment and instruments
      6.)   Improved staff and physician satisfaction
      7.)   Capital avoidance
      8.)   The ability to convert non-productive space to revenue generating
            space
      9.)   Elimination of repair and maintenance costs

      Hospitals have continued to embrace the idea of outsourcing support
functions that are not core competencies. Outsourcing those areas that have
significant staff requirements demanding specialized knowledge, large upfront
capital demands, & space constraints has


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become increasingly more universal. The idea of outsourcing is consistent with
the customer's focus on improved efficiency, cost reduction, improved patient
care and staff and physician satisfaction. The Company allows hospitals to focus
on these initiatives by outsourcing the ownership of instrumentation, surgical
linen, and equipment.

      The Company's sales cycle for new customers is typically between three to
twelve months from the first contact. The sales cycle entails significant lead
times in most institutions due to existing agreements with suppliers, Group
Purchasing Organizations and cost reviews from hospital management. The Company
believes that once an agreement is signed with a new customer, the customer is
unlikely to move away from the service due to its premium service level, quality
of products provided, quantified cost savings and knowledgeable technical
personnel.

      Contracts are generally executed with terms of three years or more.
Termination with cause by either party for a breach of the agreement with ninety
days written notice is a standard provision of the contract. Surgical Services'
sales strategy is to expand its regional agreements. The majority of the
Company's service agreements are with single hospitals. It is the Company's
belief that the trend toward the increased development of the Integrated
Delivery Network's (IDN's) will continue well into the future. The IDN's and
regional buying groups have been able to negotiate for products and services in
many cases better than Group Purchasing Organizations. Surgical Services
continues to maximize its exposure to the individual hospital while intensifying
sales efforts at the regional or IDN level. Management feels the need for
hospitals to reduce operating costs and improve efficiencies provides
opportunities for continued sales growth.

      The Company plans to target existing markets in an effort to maximize
existing assets and infrastructure. Additionally, suppliers that provide
products to Surgical Services provide a valuable network in which the sales
force are able to identify new customers. The future performance of the Company
is dependent upon its ability to attract new customers and expand services in
existing facilities.

      As of March 16, 2001, the Company provided services pursuant to service
contracts with 175 hospitals and ambulatory surgi-centers. For the fiscal year
ended December 31, 2000, one customer accounted for 10% or more of the Company's
total revenues and 10 customers represented approximately 50% of the accounts
receivable balance. The loss of any one customer could have a significant impact
on the Company's financial position or results of operations.

Suppliers

      The Company purchases surgical instruments, sterilization containers,
surgeon's gowns and surgical towels from several vendors including Pilling Weck,
a wholly-owned subsidiary of Teleflex. The Company believes that such products
are readily available at market prices.


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Sales and Marketing

      Surgical Services' sales and marketing strategy is to develop new accounts
and grow existing accounts by service expansion: for example, if the Company is
serving the labor and delivery department of a hospital it will attempt to
leverage its services into the general operating room of the hospital after a
period of successful product performance in the labor and delivery area. The
Company has expanded its portfolio of reprocessing services to include new
service offerings such as consulting, on-site management services and EtO
sterilization. The Company's sales and marketing efforts are coordinated with
several manufacturer alliances and their sales forces to maximize growth
opportunities.

Intellectual Property

      The Company does not rely on any patents for the conduct of its business.
The Company does rely upon the know-how of its employees.

Government Regulation

      Significant aspects of the Company's business are subject to state and
federal statutes or regulations. Additionally, some products sold by the company
are regulated as medical devices by the US Food and Drug Administration (FDA) or
other state and federal agencies. The Company's facilities are subject to
regular inspection by the FDA which has the power to seize adulterated products,
require the manufacturer to remove non-compliant products from the market, or
administer other remedies deemed appropriate. Although the Company believes it
is in substantial compliance with applicable federal and state statutes and
regulations, additional restrictions could be imposed that could materially
affect the Company.

Employees

      As of December 31, 2000, the Company had 431 full-time and 22 part-time
employees. None of its employees are covered by any collective bargaining
agreement.

Item 2. Description of Property

      Surgical Services leases six reprocessing and sterilization facilities
located in Baltimore, Chicago, Detroit, Houston, Long Island, and Tampa. These
facilities are used for decontamination, sterilization, and packaging of
reusable surgical instruments and surgical linens. The Company owns substantial
leasehold improvements and equipment located in each of the facilities. The
Company also maintains its corporate headquarters and an instrument repair
facility in leased offices in Orlando, Florida.


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<PAGE>

      The table below sets forth information on the Company's properties:

Location                 Approximate Size        Owned/Leased  Lease Expiration
--------                 ----------------        ------------  ----------------

Baltimore, MD             40,000 sq. ft.            Leased     December 30, 2002
McGaw Park, IL            26,000 sq. ft.            Leased     September 7, 2010
Livonia, MI               32,000 sq. ft.            Leased     July 31, 2003
Houston, TX               46,500 sq. ft.            Leased     April 30, 2003
Syosset, NY              103,000 sq. ft.(1)         Leased     March 31, 2010
Tampa, FL                 47,000 sq. ft             Leased     November 30, 2002
Orlando, FL                8,500 sq. ft.            Leased     December 31, 2004

Note:

(1)   The short-term lease agreement providing for sublease of approximately
      50,000 square feet of the premises expired February 28, 2001. The Company
      is currently renegotiating this sublease agreement.

      The company conducts a substantial portion of its business in facilities
(primarily hospitals and surgery centers) owned or operated by the customer. The
Company has no obligation for rent, utilities, or maintenance of those
facilities.

      The Company believes that its facilities are suitable for its operations
as presently conducted and for its foreseeable future operations. Equipment
owned or leased by the company is believed adequate for the Company's present
and foreseeable operations, however, they will require capacity enhancements as
business continues to expand. The Company believes that additional facilities
and equipment can be acquired as necessary, although there can be no assurance
the additional facilities or equipment will be available upon reasonable or
acceptable terms, if at all.

Item 3. Legal Proceedings

      In management's opinion, there are no pending claims or litigation, the
adverse determination of which would have a material adverse effect on the
financial position, cash flows or results of operations of the Company.

Item 4. Submission of Matters to a Vote of Security-Holders

      No matters were submitted for a vote of security-holders during the
Company's fiscal quarter ended December 31, 2000.


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<PAGE>

                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

      The Company's Common Stock, $.01 par value per share, is quoted on the
Nasdaq Bulletin Board (under the symbol "SGSI"). Such quotations reflect
inter-dealer prices, without retail mark-up, mark-down, or commission and may
not necessarily represent actual transactions. The approximate number of record
holders of the Company's Common Stock as of March 16, 2001 was 251.

      The following table sets forth the high and low bid prices for a share of
the Company's Common Stock as reported on the Nasdaq Bulletin Board for each
fiscal quarter in the last two fiscal years and for the first fiscal quarter of
2001 (through March 16, 2001):

2001                                                High Bid             Low Bid
--------------------------------------------------------------------------------
First Quarter (through March 16, 2001)               $0.438               $0.250

2000
Fourth Quarter                                        0.438                0.125
Third Quarter                                         0.813                0.313
Second Quarter                                        1.250                0.500
First Quarter                                         1.500                0.125

1999
Fourth Quarter                                        0.469                0.156
Third Quarter                                         0.688                0.375
Second Quarter                                        0.875                0.500
First Quarter                                         1.125                0.531

      The Company has never paid cash dividends with respect to its shares of
Common Stock. The Company currently intends to retain earnings, if any, for use
in its business and does not anticipate paying cash dividends on its shares of
Common Stock in the foreseeable future.

Item 6. Selected Financial Data

      Not applicable.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Overview

      The Company's revenues are generated from a comprehensive menu of services
to hospitals and surgery centers, with a primary focus on the operating room.
These services


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<PAGE>

include specialty instrument management programs that focus on minimally
invasive surgical procedures, professional management and staffing of sterile
processing departments in hospitals, off-site cleaning, decontamination and
sterilization processing of containerized surgical instrument sets and reusable
surgical gowns and towels.

      The Company's sales cycle for new customers is typically between three to
twelve months from the first contact. Contracts are generally executed with
terms of three years or more providing a multi-year revenue stream.

      In fiscal 2000, the Company's instrument and linen sterilization services,
endoscopic services and management of sterile processing departments within
hospitals accounted for approximately 50%, 41% and 9%, respectively, of the
Company's revenues, compared to 50%, 42% and 8% in 1999. These sources of
revenue reflect the Company's stategy to provide a complete service offering to
hospitals and surgery centers.

      In December 2000, the Company renewed a revolving credit facility with
Teleflex. The agreement provides the Company up to $27,500,000 of unsecured
financing. The outstanding principal on this credit facility is due and payable
on April 30, 2003. Interest under this agreement is payable at the prevailing
Prime rate of PNC Bank, plus 1.25 percent, remaining unchanged from fiscal 2000.

Results of Operations

2000 Compared with 1999

Revenues

      Revenues increased $1,143,000, or 4%, from $30,792,000 in fiscal 1999 to
$31,935,000 in fiscal 2000. This increase is attributable to the partial year
impact of new multi-year instrument and linen sterilization contracts signed in
fiscal 2000, and the impact of 53 operating weeks in fiscal 2000 compared to 52
operating weeks in fiscal 1999.

Operating Expenses

      Operating expenses increased $1,505,000 or 6% from $23,888,000 in fiscal
1999 to $25,393,000 in fiscal 2000. This increase was principally the result of
higher depreciation expense on fiscal 1999 and fiscal 2000 instrument and linen
purchases. These purchases were made to support new and expanded multi-year
signed contracts.

Distribution Costs

      Distribution costs increased $321,000 or 22% from $1,447,000 in fiscal
1999 to $1,768,000 in fiscal 2000. The increase in distribution costs from
reprocessing facilities resulted


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<PAGE>

from an increase in volumes delivered, extended geographic delivery areas and an
increase in fuel and maintenance costs.

Selling, General and Administrative Expenses

      Selling, general and administrative expenses increased by $2,641,000 from
$3,691,000 in 1999 to $6,332,000 in fiscal 2000. The increase was primarily the
result of investments in sales force development and infrastructure. During
early 2000, sales personnel and management were added to implement the Company's
sales and marketing strategies with a focus on the areas surrounding existing
reprocessing facilities. Investments in internal infrastructure, including
upgrades to financial and operational computer systems, were made to service and
support revenue growth. The Company expects the current level of selling,
general and administrative expenses to remain relatively stable during 2001.

Interest Expense

      Interest expense increased by $790,000 from $1,048,000 in fiscal 1999 to
$1,838,000 in fiscal 2000. The increase is attributed to interest on existing
and additional borrowings from Teleflex used in connection with continued
capital spending on surgical instruments and linens to support the growth of the
hospital business.

Net Income (Loss)

      Net loss in fiscal 2000 was $2,072,000, a decrease of $2,593,000 from net
income of $521,000 in fiscal 1999.

Net (Loss) Income Applicable to Common Shareholders

      Diluted earnings (loss) per share in fiscal 2000 represented a net loss
per share of $0.11, compared to net income per share of $0.03 in fiscal 1999.
Basic earnings (loss) per share in fiscal 2000 also represented a net loss per
share of $0.11, compared to net income per share of $0.03 in fiscal 1999.

Results of Operations

1999 Compared with 1998

Revenues

      Revenues increased $23,232,000, or 307%, from $7,560,000 in fiscal 1998 to
$30,792,000 in fiscal 1999. The increase was principally the result of the
acquisition of ESI and SSI. Had the acquistion occurred at the beginning of
fiscal 1998, revenues would have increased approximately $1,824,000 from the
proforma amount of $28,968,000 in fiscal 1998. This increase is attributable to
the realization of the full year impact of revenues derived from multi-


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year surgical instrument sterilization contracts signed in fiscal 1998,
partially offset by some weakness in other off-site operations.

Operating Expenses

      Operating expenses increased $18,946,000 or 383.4% from $4,942,000 in
fiscal 1998 to $23,888,000 in fiscal 1999. This increase was principally the
result of the acquisition of ESI and SSI. On a proportionate basis, the acquired
operations have higher direct expenses and lower selling, general and
administrative expenses than historical operations.

Distribution Costs

      Distribution costs increased $692,000 or 91.7% from $755,000 in fiscal
1998 to $1,447,000 in fiscal 1999. The increase is directly related to increased
sales volume with the acquisition of ESI and SSI. Distribution costs as a
percentage of revenue generated from instrument and linen sterilization
services, remained relatively stable.

Selling, General and Administrative Expenses

      Selling, general and administrative expenses increased by $954,000 from
$2,737,000 in 1998 to $3,691,000 in fiscal 1999. The increase resulted from the
acquisition of ESI and SSI, including amortization expense of $406,000 in fiscal
1999. In addition, fiscal 1998 was negatively impacted by additional unexpected
one-time costs related to the disposal of the electron beam business and other
nonrecurring expenditures including severance and termination expenses related
to the elimination of several senior management positions.

Interest Expense

      Interest expense increased by $620,000 from $428,000 in fiscal 1998 to
$1,048,000 in fiscal 1999. The increase is attributed to borrowings from
Teleflex assumed in connection with the acquisition of ESI and SSI and continued
capital spending on surgical instruments and linens to support the growth of the
hospital business.

Net Income (Loss)

      Net income in fiscal 1999 was $521,000, an increase of $1,823,000 from a
net loss of $1,302,000 in fiscal 1998.

Net (Loss) Income Applicable to Common Shareholders

      Diluted earnings per share in fiscal 1999 represented net income per share
of $0.03, compared to a net loss per share of $0.46 in fiscal 1998. Basic
earnings per share in fiscal 1999 also represented net income per share of
$0.03, compared to a net loss per share of $0.46 in fiscal


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<PAGE>

1998. Excluding the effect of preferred dividends in 1998, diluted earnings per
share for fiscal 1998 were a net loss per share of $0.41.

Liquidity and Capital Resources

      The Company generated cash flows from operations of $1,575,000 in fiscal
2000 compared to $2,230,000 in fiscal 1999. The decrease in cash flows resulted
from a net loss offset by higher depreciation expense and a reduction in working
capital growth in relation to fiscal 1999.

      Capital expenditures totaled $7,534,000 in 2000 compared with $5,656,000
in 1999. These purchases were principally surgical instruments and linen
products made to support the Company's new sales contracts entered into during
fiscal 2000 and fiscal 1999. In addition, approximately $1,600,000 was invested
in leasehold improvements and equipment relating to the relocation of the McGaw
Park, IL reprocessing and sterilization facility.

      The Company plans to purchase additional surgical instruments and linens,
as and if required to support the Company's growth objectives. The Company
believes that additional borrowing capacity under the existing loan agreement
with Teleflex and cash flows from operating activities will provide support for
these expenditures.

      The Company had $939,000 in obligations under capital leases for equipment
and surgical instruments at December 31, 2000. In addition, the Company had
borrowings of $20,500,000 outstanding at December 31, 2000 under a $27,500,000
unsecured revolving loan agreement with Teleflex, its majority shareholder. The
additional borrowings under this agreement of $6,840,000 during fiscal 2000 were
used to support capital expenditures, working capital, growth and net third
party debt repayment of $1,064,000. The outstanding principal on this credit
facility is due and payable on April 30, 2003. Interest under this agreement is
payable at the prevailing Prime rate of PNC Bank, plus 1.25 percent.

      The Company believes that the anticipated future cash flow from
operations, along with its cash on hand and available funding from its major
shareholder will be sufficient to meet working capital requirements during 2001.
There can be no assurance, however, that the Company will not require additional
working capital and, if it does require such capital, that such capital will be
available to the Company on acceptable terms, if at all.

Inflation

      The Company believes that inflation has not had, and will not have in the
future, a material effect on its results of operations.


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<PAGE>

Certain Factors That May Affect Future Results

      From time to time, information provided by the Company, statements made by
its employees or information included in its filings with the Securities
Exchange Commission (including this Form 10-K) may contain statements which are
not historical facts, so-called "forward-looking statements," which involve
risks and uncertainties. Forward-looking statements are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995;
in particular, statements made relating to the suitability of the Company's
facilities and equipment for future operations and the availability of
additional facilities and equipment in the future; the sufficiency of funds for
the Company's working capital requirements during 2001 may be forward-looking
statements. The Company's actual future results may differ significantly from
those stated in any forward-looking statements. Factors that may cause such
differences include, but are not limited to, the factors discussed below. Each
of these factors, and others, are discussed from time to time in the Company's
filings with the Securities and Exchange Commission.

      The Company's future results are subject to risks and uncertainties. The
Company has operated at a loss or small profit for its entire history and there
can be no assurance of its ever achieving consistent profitability. The Company
may require additional working capital in the future and there can be no
assurance that such working capital will be available on acceptable terms, if at
all. The failure of the Company to continue to compete effectively with existing
or new competitors could result in price erosion, decreased margins and
decreased revenues, any or all of which could have a material adverse effect on
the Company's business, results of operations and financial condition.
Approximately 64% of the Company's healthcare provider customers are currently
concentrated in the Northeast Corridor. Any factors affecting this market
generally could have a material adverse effect on the Company's business,
results of operations and financial condition. The Company is subject to
government regulation in certain aspects of its operations. Changes in such
regulations could have a material adverse effect on the Company's business,
results of operations and financial condition.

      Future results of the Company will depend significantly on its ability to
successfully convince hospitals and other healthcare providers to utilize the
Company's instrument and linen sterilization services, endoscopic services and
sterile processing department management services as opposed to their own
resources. Hospitals may resist this change for a number of reasons, including
the preferences of hospital staffs which may wish to preserve their existing
staffing, labor unions which may resist any staffing reductions and the ongoing
consolidation of hospitals which may impact the willingness of hospital
administrators to make operational decisions on a timely basis and which may
affect a hospital's decision to outsource sterile processing services as opposed
to retaining one or more of the consolidated hospital group's central
sterilization facilities to provide services for the entire group.

      The Company's quarterly and annual operating results are affected by a
wide variety of factors that could materially and adversely affect revenues and
profitability, including: competitive pressures on selling prices and margins;
the timing and cancellation of customer


                                       13
<PAGE>

orders; the lengthy sales cycle of the Company's services to healthcare
organizations; the Company's ability to maintain state-of-the-art sterilization
facilities and the corresponding timing and amount of capital expenditures,
particularly if the Company executes its plan for growth; and the introduction
of new services by the Company's competitors. As a result of the foregoing and
other factors, the Company may experience material fluctuations in future
operating results on a quarterly or annual basis which could materially and
adversely effect its business, operating results and stock price.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

      The Company does not have any material market risk sensitive financial
instruments.

Item 8. Financial Statements

      For the following financial information required by this Item, see Index
on Page F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure

      Not applicable.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

      The following table sets forth certain information regarding the
individuals who are directors and executive officers as of March 16, 2001 and
the positions currently held by each such person with the Company.

        Name                  Age                   Position
        ----                  ---                   --------

Todd Riddell                  41    Director, President, Chief Executive Officer
John J. Sickler (1)           59    Director, Chairman of the Board
Steven K. Chance (2)          55    Director, Secretary
D. Michael Deignan (2)        57    Director
Douglas P. Gill               52    Director
Michael S. Irwin              53    Vice President Off Site Operations
Paul A. D'Alesio              43    Treasurer, Chief Financial Officer

(1)   Member of Compensation Committee
(2)   Member of Audit Committee


                                       14
<PAGE>

                                    Directors

      Todd Riddell was elected a Director, President and Chief Executive Officer
on August 3, 2000. From March 1999 to August 2000 he was Senior Vice President
and from September 1999 to August 2000 he was Chief Operating Officer. From
July, 1997 to March 1999 he was Executive Vice President of SSI Surgical
Services, Inc. which was acquired by the Company, then Medical Sterilization,
Inc., in January 1999. For five years prior thereto he was Vice President of
Endoscopy Specialists, Incorporated ("ESI") which was acquired by the Company in
January 1999.

      Steven K. Chance was elected a Director on January 8, 1999. He is and has
been since 1993 Vice President, Secretary and General Counsel of Teleflex.

      D. Michael Deignan was elected President, Chief Operating Officer and
Director of the Company on September 8, 1995 and Chief Executive Officer on
December 31, 1995. He resigned as President and Chief Executive Officer on
January 8, 1999. Since January 6, 2000 he has been President and Chief Executive
Officer of Vasomedical, Inc., a provider of noninvasive vascular device and
therapies to treat angina.

      John J. Sickler has been a Director since January 8, 1997. Since December
2000, he has been Vice Chairman of Teleflex. He is and has been since 1990 the
President of TFX, a subsidiary of Teleflex engaged in business development.

      Douglas P. Gill was elected Director of the Company on March 8, 2001.
Since March 5, 2001 he has been Senior Vice President - Business Design of
Teleflex Medical Group, a business segment of Teleflex. From 1998 to 2000 he was
President and Chief Executive Officer of Docucon, Inc., a document imaging
company. He is currently a Director of Docucon, Inc. From 1994 to 1998 he was
General Partner for Foster Management, a venture capital firm.

                               Executive Officers

      Michael S. Irwin was elected Vice President of Services and Solutions on
February 24, 2000. Prior thereto he was Vice President-Off Site Operations from
March 2, 1999. For two years prior to March 2, 1999 he was General Manager of
Sterilization Management Group ("SMG") which was acquired by SSI in August 1998.
SMG owned and managed five surgical instrument and linen reprocessing
facilities. From 1994 to 1997 he was a plant manager and division director of
operations for the Interwoven Division of Baxter Healthcare, Inc., a
manufacturer and distributor of medical supplies and equipment.

      Paul A. D'Alesio was elected Treasurer and Chief Financial Officer on
March 2, 1999. For more than five years prior thereto he was Controller of Meyer
International, Inc., a holding company for distributors of building materials
and its subsidiaries.


                                       15
<PAGE>

Item 11. Executive Compensation

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                Long-Term
                                            Annual Compensation            Compensation Awards
                                            -------------------            -------------------

                                                                      Securities
Name and Principal                               Salary      Bonus    Underlying          All Other
    Position                           Year       ($)         ($)       Options       Compensation ($)
                                       ---------------------------------------------------------------
<S>                                    <C>      <C>         <C>        <C>                <C>
Todd Riddell, Pres. & CEO              2000     179,231     15,000                        2,688(3)
Michael S. Irwin, VP                   2000     125,000     10,000                        1,927(3)
Paul A. D'Alesio, Treas. & CFO         2000     115,000     10,000                        1,854(3)
Michael T. Spagnuolo, VP(5)            2000     128,846     10,000      25,000            1,184(3)
Michael D. Klein, Pres. & CEO          2000     107,692                400,000(1)         1,755(3)
D. Michael Deignan, Pres. & CEO(5)     2000       8,115         --                           --
Todd Riddell, Senior VP & COO          1999     143,439     99,974      50,000            2,222(3)
Michael T. Spagnuolo, VP(5)            1999     119,077     36,414      25,000            1,799(3)
Michael S. Irwin, VP                   1999     115,391      8,000      15,000            1,074(3)
Paul A. D'Alesio, Treas. & CFO         1999      89,779         --                        1,240(3)
Scott A. Bartos, Pres. & CEO           1999     115,946     90,973     100,000(2)         1,779(3)
D. Michael Deignan, Pres. & CEO(5)     1999     160,718         --                        2,329(3)
D. Michael Deignan, Pres. & CEO        1998     165,000     42,600                        3,712(4)
</TABLE>

(1)   These options were terminated pursuant to the option agreement on October
      27, 2000 because of Michael Klein's resignation on July 28, 2000.

(2)   These options were terminated pursuant to the option agreement on November
      18, 1999 because of Scott Bartos' resignation on August 11, 1999.

(3)   Represents the Company's matching contributions to the 401K Plan.

(4)   Includes $2,062 in contributions by the Company to vested and un-vested
      defined contribution plans for Mr. Deignan's benefit.

(5)   See "Severance Agreements".


                                       16
<PAGE>

                        Option Grants in Last Fiscal Year

<TABLE>
<CAPTION>
                                            Individual Grants
                             --------------------------------------------

                              Number of        Percent of
                             Securities       Total Options      Exercise
                             Underlying        Granted to         or Base
                               Options        Employees in         Price         Expiration        Present
Name                         Granted (#)       Fiscal Year         ($/Sh)            Date         Value $(2)
------------------------------------------------------------------------------------------------------------
<S>                          <C>                  <C>               <C>               <C>             <C>
Todd Riddell                      --                 --               --              --              --
Michael S. Irwin                  --                 --               --              --              --
Paul A. D'Alesio                  --                 --               --              --              --
Michael T. Spagnuolo              --                 --               --              --              --
Michael D. Klein             200,000(1)           44.20%            1.06              --              --
Michael D. Klein             200,000(1)           44.20%            2.00              --              --
</TABLE>

(1)   These options were terminated pursuant to the option agreement October 27,
      2000 because of Michael Klein's resignation on July 28, 2000.

(2)   The weighted average fair value of each option has been estimated on the
      date of grant using the Black-Scholes options pricing model with the
      following weighted average assumptions used for grants in 1999; no
      dividend yield; expected volatility of 90%; risk-free interest rate of
      5.65% to 6.61%; and expected lives ranging from approximately 4.5 to 5
      years. Weighted averages are used because of varying assumed exercise
      dates.

                 Aggregated Option Exercises in Last Fiscal Year
                        And Fiscal Year End Option Values

<TABLE>
<CAPTION>
                                                     Number of Securities          Value of Unexercised
                                                    Underlying Unexercised         in-the-money options
                                                       Options at Fiscal            at Fiscal Year End
                                                          Year End (#)                    (#) (1)

                      Shares Acquired    Value
   Name                 on Exercise     Realized   Exercisable   Unexercisable   Exercisable  Unexercisable
   --------------------------------------------------------------------------------------------------------
<S>                          <C>           <C>       <C>             <C>              <C>           <C>
Todd Riddell                 0             0          25,000         25,000           0             0
Michael S. Irwin             0             0           7,500          7,500           0             0
Paul A. D'Alesio             0             0           3,750         11,250           0             0
Michael T. Spagnuolo         0             0          12,500         12,500           0             0
Michael D. Klein             0             0               0              0           0             0
D. Michael Deignan           0             0         247,170              0           0             0
</TABLE>

(1)   Market value of underlying securities at year end minus the exercise
      price.

                              Severance Agreements

      The Company had a severance agreement with Mr. Deignan who resigned as
President and Chief Executive Officer on January 8, 1999. The agreement called
for payment of his base salary and benefits for a period of one year ending
January 7, 2000. Pursuant to the agreement, the Company paid $160,718 and $8,115
to Mr. Deignan in 2000 and 1999, respectively, and contributed $2,329 to the
401K Plan in 1999.

      The Company had a severance agreement with Mr. Spagnuolo whose position
was eliminated on August 7, 2000. The agreement called for payment of his base
salary and benefits for a period of six months ended February 9, 2001. Pursuant
to the agreement, the Company paid $51,377 to Mr. Spagnuolo in 2000.


                                       17
<PAGE>

                            Compensation of Directors

      Messrs. Deignan and Whittaker were the only Directors in 2000 who were not
employees of the Company or TFX. Mr. Whittaker resigned as Director in February
2001. Outside Directors are paid an annual fee of $3,000 plus a meeting fee of
$500.

Item 12. Security Ownership of Certain Beneficial Owners and Management

      The following table sets forth, as of March 16, 2001, the beneficial
ownership of the Company's voting securities by (i) each person who, to the
knowledge of the Company, beneficially owned more than 5% of the Company's
voting securities outstanding at such date, (ii) each current Director of the
Company, (iii) each executive officer of the Company and (iv) all current
Directors and executive officers as a group:

<TABLE>
<CAPTION>
                                                      Number of Shares      Percentage of Total
Name and Address (1)                                Beneficially Owned (2)   Voting Securities (3)
----------------                                    -------------------     -------------------
<S>                                                      <C>                       <C>
John J. Sickler (4)                                      17,970,720                85.61%
c/o TFX Equities Incorporated ("TFX")
630 West Germantown Pike
Suite 450
Plymouth Meeting, PA 19462

D. Michael Deignan (5)                                      310,470                 1.57%

Steven K. Chance                                                 --                    *

Douglas P. Gill                                                  --                    *

Todd Riddell (6)                                             25,000                    *

Michael S. Irwin (7)                                         17,500                    *

Paul A. D'Alesio (8)                                         16,250                    *
                                                         ----------                -----

All Executive Officers and Directors
         as a group (9) ............                     18,339,940                86.21%
</TABLE>

----------

(1)   Pursuant to the rules of the SEC, addresses are provided only for 5%
      beneficial owners.

(2)   Except as otherwise noted in the footnotes to this table, each person or
      entity named in the table has sole voting and investment power with
      respect to all shares shown as owned,


                                       18
<PAGE>

      based on information provided to the Company by the persons and entities
      named in the table.

(3)   Total Voting Securities are 19,491,296 shares of Common Stock. Pursuant to
      the rules of the SEC, all outstanding options and warrants which are
      exercisable within 60 days of March 16, 2001 ("Presently Exercisable
      Securities") held by the relevant person or entity are included as
      outstanding Total Voting Securities for purposes of determining that
      person's or entity's Percentage of Total Voting Securities, but are not
      included for purposes of determining any other person's or entity's
      Percentage of Total Voting Securities.

(4)   Consists of 16,385,720 shares of Common Stock and 1,500,000 Presently
      Exercisable Securities held by TFX. Mr. Sickler is President of TFX and
      has voting and investment power over the shares held by TFX. Mr. Sickler
      disclaims beneficial ownership of the shares held by TFX.

(5)   Consists of 63,300 shares of Common Stock owned and 247,170 Presently
      Exercisable Securities.

(6)   Consists of 25,000 Presently Exercisable Securities.

(7)   Consists of 10,000 shares of Common Stock and 7,500 Presently Exercisable
      Securities.

(8)   Consists of 12,500 shares of Common Stock and 3,750 Presently Exercisable
      Securities.

(9)   Consists of 16,556,520 shares of Common Stock and 1,783,420 Presently
      Exercisable Securities.

Item 13. Certain Relationships and Related Transactions

      John J. Sickler, a Director of the Company, is Vice Chairman of Teleflex
and President of TFX, a subsidiary of Teleflex. TFX owns 84.5% of the
outstanding voting securities of SSI.

      Steven K. Chance, a Director and Secretary of the Company, is Vice
President, Secretary and General Counsel of Teleflex.

      Douglas P. Gill, a Director of the Company, is Senior Vice President -
Business Design of TFX Medical Group, a business segment of Teleflex.

Transactions with Management and Others

      On January 11, 1999, the Company consummated a transaction, pursuant to
which it exchanged 13,400,000 shares of Common Stock and warrants to purchase an
aggregate of 1,500,000 shares of Common Stock for all of the issued and
outstanding shares of ESI and all of


                                       19
<PAGE>

the issued and outstanding shares of Common Stock and Preferred Stock, not
already held by the Company, of SSI, a joint venture with TFX.

      In connection with the Company's January 1999 acquisition of ESI and SSI
from TFX, the Company assumed approximately $6,500,000 of financing from
Teleflex. In addition, the Company entered into a revolving credit facility with
Teleflex. The agreement as amended, provides the Company up to $27,500,000 of
unsecured financing. The outstanding principal on this credit facility is due
and payable on April 30, 2003. Interest under this agreement is payable at the
prevailing Prime rate of PNC Bank, plus 1.25 percent. Interest was charged on
the unpaid principal balance during 2000 at a weighted average of 10.5 percent
and at a fixed rate of 8 percent during 1999. Interest charged by TFX amounted
to $1,684,000, $649,000 and $29,000 for the years ended December 31, 2000,
December 26, 1999 and December 31, 1998, respectively.

      The Company purchases from surgical instrument manufacturers the surgical
instruments included in instrument sets that are utilized in providing the
Company's services. Pilling Weck, a national surgical instrument manufacturer
and a subsidiary of Teleflex, has agreed to supply surgical instruments to the
Company. Purchases from Pilling Weck are made on commercial terms. Instrument
purchases from Pilling Weck, including instruments financed under capital lease
obligations, for the years ended December 31, 2000, December 26, 1999 and
December 31, 1998, were approximately $1,308,000, $969,000, and $556,000,
respectively.

      Teleflex also charged the Company fees for executive management, legal,
treasury, tax and other financial services. Fees of $350,000 were charged for
the year ended December 31, 2000.

      The response to this item is incorporated by reference from the Section
titled "Certain Relationships and Related Transactions" in the Registrant's
Proxy Statement for its 2001 Annual Meeting of Shareholders.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

      (a) Exhibits

            (3)(i)(1) Restated Certificate of Incorporation filed May 21, 1999.

            (3)(ii)(1) Amended and Restated By-Laws dated June 2, 1987 - filed
as Exhibit (3)(4) to Annual Report for the year ended December 31,1995 on Form
10-KSB and incorporated herein by reference.

            (10)(1) 1994 Stock Option Plan - filed as Exhibit (10)(a)(1) to
Annual Report for the year ended December 31, 1993 on Form 10-K and incorporated
herein by reference.

            (10)(2) 1996 Stock Option Plan - filed as Exhibit (10)(2) to the
Annual Report for the year ended December 31, 1995 on Form 10-KSB and
incorporated herein by reference.


                                       20
<PAGE>

            (10)(3) Lease dated November 20, 1995 with Barlich Realty, Inc. -
filed as Exhibit (10)(4) to Annual Report for the year ended December 31, 1995
on Form 10-KSB and incorporated herein by reference.

            (10)(4) Acquisition Agreement dated November 19, 1998 between the
Company and TFX Equities Incorporated - filed as Exhibit (1) to Form 8-K dated
January 26, 1999 and incorporated herein by reference. Incorporated.

            (10)(5) Revolving Loan Account Agreement dated December 26, 1999
between the Company and Teleflex Incorporated.

            (10)(6) Revolving Loan Account Agreement dated December 29, 2000
between the Company and Teleflex Incorporated.

            27.1 Financial Data Schedule


                                       21
<PAGE>

                                   SIGNATURES

      In accordance with Section 13 of 15(d) of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

March 30, 2001                          SSI SURGICAL SERVICES, INC.


                                        By: /s/ Todd Riddell
                                           -------------------------------------
                                        Name:   Todd Riddell
                                        Title: President and Chief Executive
                                               Officer

      In accordance with the Securities Exchange Act of 1934, this report was
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

Name and Signature       Title(s)                                     Date
------------------       --------                                     ----


/s/ Todd Riddell         President, Chief Executive Officer      March 30, 2001
----------------------   (principal executive)
Todd Riddell


/s/ Paul A. D'Alesio     Treasurer, Chief Financial Officer      March 30, 2001
----------------------   (principal accounting officer)
Paul A. D'Alesio


/s/ John J. Sickler      Director, Chairman of the Board         March 30, 2001
----------------------
John J. Sickler


/s/ Steven K. Chance     Director and Secretary                  March 30, 2001
----------------------
Steven K. Chance


/s/ D. Michael Deignan   Director                                March 30, 2001
----------------------
D. Michael Deignan


/s/ Douglas P. Gill      Director                                March 30, 2001
----------------------
Douglas P. Gill


                                       22
<PAGE>

SSI Surgical Services, Inc.
Index to the Consolidated Financial Statements
December 31, 2000
--------------------------------------------------------------------------------

                                                                            Page
Financial Statements:

   Report of Independent Accountants                                         F-2

   Consolidated Balance Sheets at December 31, 2000 and December 26, 1999    F-3

   Consolidated Statements of Operations for the years ended December 31,
     2000, December 26, 1999 and December 31, 1998                           F-4

   Consolidated Statements of Shareholders' Equity                           F-5

   Consolidated Statements of Cash Flows                                     F-6

   Notes to the Consolidated Financial Statements                            F-7


                                      F-1
<PAGE>

                        Report of Independent Accountants

To the Board of Directors
of SSI Surgical Services, Inc.

In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of SSI
Surgical Services, Inc. at December 31, 2000 and December 26, 1999, and the
results of their operations and their cash flows for the years ended December
31, 2000, December 26, 1999 and December 31, 1998, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 6, 2001


                                      F-2
<PAGE>

SSI Surgical Services, Inc.
Consolidated Balance Sheets
December 31, 2000 and December 26, 1999
(Dollars in Thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                               Assets                                       2000        1999
<S>                                                                       <C>         <C>
Current assets:
  Cash and cash equivalents                                               $     71    $    254
  Accounts receivable, net of allowance for doubtful accounts
   of $470 and $407                                                          7,831       7,470
  Prepaid expenses and other assets                                          1,512       1,143
                                                                          --------    --------
      Total current assets                                                   9,414       8,867
                                                                          --------    --------
Property and equipment, net                                                 22,795      19,231
Intangibles, net                                                             5,043       5,449
Other assets                                                                   158         140
                                                                          --------    --------
                                                                          $ 37,410    $ 33,687
                                                                          ========    ========

                Liabilities and Shareholders' Equity

Current liabilities:
  Accounts payable and accrued expenses                                   $  3,481    $  3,462
  Obligations under capital leases                                             465         919
                                                                          --------    --------
      Total current liabilities                                              3,946       4,381
                                                                          --------    --------
Obligations under capital leases                                               474       1,084
Payable to affiliates                                                       20,590      13,750
                                                                          --------    --------
      Total liabilities                                                     25,010      19,215
                                                                          --------    --------

Preferred stock:
  Convertible redeemable cumulative preferred stock, par value
    $.01 per share; Series B - authorized 1,000,000 shares,
    issued and outstanding 0 shares in 2000 and 1999                            --          --
                                                                          --------    --------
Shareholders' equity:
  Convertible preferred stock, par value $.01 per share Series C -
    authorized 3,000,000 shares, issued and outstanding 0 shares
    in 2000 and 1999                                                            --          --
  Common stock, par value $.01 per share, authorized 30,000,000 shares,
    issued and outstanding 19,491,216 shares                                   195         195
  Additional paid-in capital                                                23,019      23,019
  Accumulated deficit                                                      (10,814)     (8,742)
                                                                          --------    --------
      Total shareholders' equity                                            12,400      14,472
                                                                          --------    --------
      Total liabilities and shareholders' equity                          $ 37,410    $ 33,687
                                                                          ========    ========
</TABLE>

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


                                      F-3
<PAGE>

SSI Surgical Services, Inc.
Consolidated Statements of Operations
For the Years Ended December 31, 2000, December 26, 1999
and December 31, 1998
(Dollars in Thousands, except per share)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                          2000           1999          1998
<S>                                                   <C>             <C>           <C>
Net revenues                                          $     31,935    $    30,792   $     7,560
                                                      ------------    -----------   -----------
Cost and expenses:
  Operating                                                 25,393         23,888         4,942
  Distribution                                               1,768          1,447           755
  Selling, general and administrative                        6,332          3,691         2,737
  Interest                                                   1,838          1,048           428
                                                      ------------    -----------   -----------
    Total costs and expenses                                35,331         30,074         8,862
                                                      ------------    -----------   -----------
Income (loss) before income taxes                           (3,396)           718        (1,302)
Income taxes                                                (1,324)           197            --
                                                      ------------    -----------   -----------
Net income (loss)                                           (2,072)           521        (1,302)
Preferred stock dividends                                       --             --          (168)
                                                      ------------    -----------   -----------
Net income (loss) applicable to common shareholders   $     (2,072)   $       521   $    (1,470)
                                                      ============    ===========   ===========
Earnings (loss) per common share - basic              $       (.11)   $       .03   $      (.46)
                                                      ============    ===========   ===========
Earnings (loss) per common share - diluted            $       (.11)   $       .03   $      (.46)
                                                      ============    ===========   ===========
Weighted average common shares                          19,491,216     19,491,216     3,170,496
                                                      ============    ===========   ===========
Weighted average dilutive common shares                 19,491,216     19,491,216     3,170,496
                                                      ============    ===========   ===========
</TABLE>

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


                                      F-4
<PAGE>

SSI Surgical Services, Inc.
Consolidated Statements of Shareholders' Equity
For the Years Ended December 31, 2000 and December 26, 1999
(Dollars in Thousands, except per share)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                       Common stock              Preferred stock         Additional
                                  ---------------------     ------------------------       paid-in      Accumulated
                                    Shares       Amount       Shares          Amount       capital       deficit         Total
<S>                               <C>             <C>       <C>              <C>           <C>          <C>            <C>
Balance at December 31, 1998       3,170,496      $ 32       1,945,625       $ 1,946       $ 7,565      $ (9,263)      $    280

  Issuance of common stock        13,400,000       134                                      11,591                       11,725
  Preferred stock conversion       2,920,720        29      (1,945,625)       (1,946)        3,863                        1,946
  Net income for the year                                                                                    521            521
                                  ----------      ----      ----------       -------       -------      --------       --------

Balance at December 26, 1999      19,491,216       195              --            --        23,019        (8,742)        14,472

  Net (loss) for year                                                                                     (2,072)        (2,072)
                                  ----------      ----      ----------       -------       -------      --------       --------
Balance at December 31, 2000      19,491,216      $195              --            --       $23,019      $(10,814)      $ 12,400
                                  ==========      ====      ==========       =======       =======      ========       ========
</TABLE>

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


                                      F-5
<PAGE>

SSI Surgical Services, Inc.
Consolidated Statements of Cash Flow
For the Years Ended December 31, 2000, December 26, 1999
and December 31, 1998
(Dollars in Thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                           2000          1999          1998
<S>                                                      <C>           <C>           <C>
Cash flows from operating activities:
  Net income (loss)                                      $(2,072)      $   521       $(1,302)
  Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:
      Depreciation and amortization                        4,376         3,346           705
      Doubtful debt expense                                  120           166           146
      Loss on asset sales                                     --            --            71
      Changes in operating assets and liabilities:
        Accounts receivable                                 (481)       (1,327)          279
        Prepaid expenses and other assets                   (387)         (400)         (131)
        Accounts payable and accrued liabilities              19           (76)          681
                                                         -------       -------       -------
          Net cash provided by operating activities        1,575         2,230           449
                                                         -------       -------       -------
Cash flows for investing activities:
  Net purchase of property and equipment                  (7,534)       (5,656)       (1,809)
  Proceeds from asset sales                                   --            --         1,181
                                                         -------       -------       -------
          Net cash used in investing activities           (7,534)       (5,656)         (628)
                                                         -------       -------       -------
Cash flows from financing activities:
  Net repayments of revolving line of credit                  --        (1,182)         (218)
  Repayments of long-term debt                                --           (50)         (902)
  Net repayments under capital lease obligations          (1,064)         (877)         (226)
  Proceeds from long-term debt                                --            --         1,550
  Net borrowings from affiliates                           6,840         5,732            --
                                                         -------       -------       -------
          Net cash provided by financing activities        5,776         3,623           204
                                                         -------       -------       -------
Increase/(decrease) in cash and cash equivalents            (183)          197            25
Cash and cash equivalents at beginning of period             254            57            32
                                                         -------       -------       -------
Cash and cash equivalents at end of period               $    71       $   254       $    57
                                                         =======       =======       =======
</TABLE>

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


                                      F-6
<PAGE>

SSI Surgical Services, Inc.
Notes to the Consolidated Financial Statements
December 31, 2000
(Dollars in Thousands, except per share)
--------------------------------------------------------------------------------

1.    Basis of Presentation and Nature of Business

      The Company was incorporated in New York State on May 27, 1982, as Medical
      Sterilization, Inc ("MSI"). Effective January 8, 1999, the Company's
      headquarters and principal place of business was moved to Orlando,
      Florida. Effective May 28, 1999, the Company changed its name to SSI
      Surgical Services, Inc.

      The Company provides both off-site and on-site reprocessing and
      sterilization of surgical instrument sets, gowns and towels, as well as
      certain other items requiring sterilization for healthcare providers,
      hospitals and other medical facilities. In addition the Company provides a
      broad range of surgical instrument management services that includes
      provision of endoscopic instrument sets and other specialty products to
      hospitals and other medical facilities, as well as on-site department
      management, staffing and other consulting services.

2.    Acquisitions and Divestitures

      1999 Acquisitions

      In January, 1999, the Company acquired Endoscopy Specialists, Incorporated
      ("ESI"), a Florida-based surgical instrument management services firm, and
      the remaining 62.5% of the shares of SSI Surgical Services, Inc. ("SSI"),
      a joint venture in which the Company had held a 37.5% interest. Both
      businesses were acquired from TFX Equities, Incorporated ("TFX"), a wholly
      owned subsidiary of Teleflex Incorporated, a diversified publicly held
      company, in exchange for 13.4 million common shares of the Company and
      warrants for an additional 1.5 million common shares. TFX also converted
      the preferred shares it owned into common shares. As a result of this
      transaction, TFX now owns a majority of the outstanding common stock of
      the Company.

      The acquisition was accounted for as a purchase. Net assets of the
      acquired businesses amounted to $13,000 and the acquisition was financed
      through a combination of the equity transactions noted above and the
      assumption of approximately $6,500 of intercompany financing from TFX. The
      excess purchase price over the fair market value of the assets acquired,
      approximately $5,200 was recorded as goodwill and is being amortized to
      expense over 15 years.


                                      F-7
<PAGE>

SSI Surgical Services, Inc.
Notes to the Consolidated Financial Statements
December 31, 2000
(Dollars in Thousands, except per share)
--------------------------------------------------------------------------------

      A summary of the net assets acquired follows:

      Current assets                                             $  5,073
      Current liabilities                                          (2,273)
                                                                 --------
      Working capital                                               2,800
                                                                 --------

      Property and equipment                                       10,640
      Capital lease obligations                                      (401)
                                                                 --------
      Net assets acquired                                          13,039
                                                                 --------
      Affiliate borrowings assumed                                  6,508
      Issuance of common stock                                     11,725
                                                                 --------
      Purchase price                                               18,233
                                                                 --------
      Excess purchase price (goodwill)                           $  5,194
                                                                 ========

      The following represents the unaudited pro forma results of operations as
      if the above noted acquisition had occurred at the beginning of the years
      presented:

                                                                   1998

      Revenues                                                   $ 28,968
      Net income (loss)                                            (1,402)
      Net income (loss) per common share                         $  (0.07)

      1998 Divestitures

      On April 30, 1998, the Company completed divestiture of its electron beam
      accelerator and related equipment for the approximate sum of $1,250. The
      proceeds of the sale were immediately used by the Company to repay the
      entire balance of a bank note against the beam for approximately $402, and
      the residual monies were applied against the Company's financing agreement
      with its commercial lender.

3.    Summary of Significant Accounting Policies

      Fiscal Year

      The Company's fiscal year now ends the last Sunday in December. There were
      53 weeks in fiscal 2000 and 52 weeks in fiscal 1999, and 1998.

      Cash and Cash Equivalents

      All highly liquid investments with maturities of three months or less when
      purchased are classified as cash equivalents.


                                      F-8
<PAGE>

SSI Surgical Services, Inc.
Notes to the Consolidated Financial Statements
December 31, 2000
(Dollars in Thousands, except per share)
--------------------------------------------------------------------------------

      Property and Equipment

      Depreciation and amortization are computed using the straight-line method
      over the estimated useful lives of the related assets (ranging from 5 to
      15 years) and, for leasehold improvements, over the shorter of the useful
      life of the improvement or the term of the lease. Shrinkage-loss of
      surgical instruments and containers is provided based upon incurred
      losses. Maintenance and repairs are charged to expense in the year
      incurred. Expenditures which significantly improve or extend the life of
      the assets are capitalized. Upon disposal, the cost and related
      accumulated depreciation are removed from the respective accounts and any
      resulting gain or loss is included in income.

      Intangibles

      Intangible assets consist principally of goodwill, which is the excess
      purchase price over the fair value of the assets of businesses acquired.
      Intangible assets are amortized on a straight-line basis over their
      estimated useful lives, not exceeding 15 years. Intangibles are stated net
      of accumulated amortization of $1,052 and $646 as of December 31, 2000 and
      December 26, 1999, respectively.

      Accounting for Long-Lived Assets

      On a periodic basis or whenever changes in circumstances indicate that the
      carrying amount of an asset may not be recoverable, impairment is
      evaluated by comparing future cash flows (undiscounted and without
      interest charges) expected to result from the use or sale of the asset and
      its eventual disposition, to the carrying amount of the asset.

      Earnings Per Share Calculation

      In February 1997, the Financial Accounting Standards Board issued
      Statements of Financial Accounting Standards No. 128, "Earnings per
      Share"("SFAS No. 128"), which establishes standards for computing and
      presenting earnings per share. SFAS No. 128 requires presentation of both
      basic and diluted earnings per share. Basic earnings per share is computed
      by dividing net income by the weighted average number of common shares
      outstanding during the period. Diluted earnings per share is computed in a
      similar manner except that the weighted average number of common shares is
      increased for dilutive securities. Potentially dilutive securities have
      been excluded from the 1999 and 1998 computations of diluted earnings per
      share since the result would be anti-dilutive.

      Revenue Recognition

      The Company records revenue for hospital services in accordance with
      contractual terms. Revenues for other sterilization services are recorded
      upon the completion of processing and/or shipment.

      Concentration of Credit Risk

      Trade receivables arise from long-term and short-term contracts with
      healthcare providers. To reduce credit risk, the Company performs credit
      evaluations of its customers but does not generally require collateral.
      Credit risk is affected by conditions within the economy and the
      healthcare industry. The Company establishes an allowance for doubtful
      accounts based upon factors surrounding the credit risk of specific
      customers, historical trends and other information.

      For the fiscal years ended December 31, 2000 and December 26, 1999, 10
      customers represented approximately 50% of the accounts receivable
      balance. The loss of any one customer could have a significant impact on
      the Company's financial position or results of operations.


                                      F-9
<PAGE>

SSI Surgical Services, Inc.
Notes to the Consolidated Financial Statements
December 31, 2000
(Dollars in Thousands, except per share)
--------------------------------------------------------------------------------

      Income Taxes

      The Company accounts for income taxes in accordance with Statement of
      Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
      Taxes", which requires that deferred income taxes be recognized for the
      tax consequences in future years of differences between the tax basis of
      assets and liabilities and their financial reporting amounts at each
      year-end based on enacted tax laws and statutory rates applicable to the
      periods in which the differences are expected to affect taxable income.
      Valuation allowances are established when necessary to reduce deferred tax
      assets to the amount expected to be realized.

      Following the Company's acquisition of SSI and ESI from TFX in January
      1999, the Company's taxable income is included in the consolidated tax
      returns of TFX under a tax sharing arrangement. For purposes of these
      financial statements, income taxes have been determined and allocated to
      the Company on a separate return basis.

      Use of Estimates

      The preparation of financial statements in conformity with generally
      accepted accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities,
      disclosure of contingent assets and liabilities at the date of the
      financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.

      Reclassifications

      Certain items in the 1999 and 1998 financial statements have been
      reclassified to conform with the 2000 presentation of the financial
      statements.

4.    Prepaid Expenses and Other Assets

      The composition of prepaids and other assets is as follows:

                                                       2000           1999

      Consumables and supplies                        $1,180        $  807
      Receivables                                         29           204
      Other                                              303           132
                                                      ------        ------
      Total                                           $1,512        $1,143
                                                      ======        ======


                                      F-10
<PAGE>

SSI Surgical Services, Inc.
Notes to the Consolidated Financial Statements
December 31, 2000
(Dollars in Thousands, except per share)
--------------------------------------------------------------------------------

5.    Property and Equipment

      The composition of property and equipment is as follows:

                                                         2000        1999

      Surgical instruments and gowns                    $23,213    $18,133
      Containers                                          1,973      1,764
      Machinery and equipment                             5,606      5,341
      Leasehold improvements                              3,441      1,802
      Furniture and fixtures                                790        685
                                                        -------    -------
                                                         35,023     27,725
      Accumulated depreciation and amortization          12,228      8,494
                                                        -------    -------
                                                        $22,795    $19,231
                                                        =======    =======

      Depreciation and amortization expense for the years ended December 31,
      2000, December 26, 1999 and December 31, 1998 was $3,970 , $2,940 and
      $705, respectively.

      The composition of assets recorded under capital leases is as follows:

                                                       2000          1999

      Surgical instruments                            $3,232        $3,232
      Machinery and equipment                            685           685
      Containers                                         335           335
                                                      ------        ------
                                                       4,252         4,252
      Accumulated amortization                         2,019         1,118
                                                      ------        ------
                                                      $2,233        $3,134
                                                      ======        ======


                                      F-11
<PAGE>

SSI Surgical Services, Inc.
Notes to the Consolidated Financial Statements
December 31, 2000
(Dollars in Thousands, except per share)
--------------------------------------------------------------------------------

6.    Accounts Payable and Accrued Expenses

      The composition of accounts payable and accrued expenses is as follows:

                                                          2000       1999

      Trade accounts payable                             $2,098     $1,614
      Salary and other compensation benefits                563        848
      Sales and other taxes                                 356        475
      Professional fees                                     147        246
      Other                                                 317        279
                                                         ------     ------
      Total                                              $3,481     $3,462
                                                         ======     ======

7.    Employee Benefit Plans

      The Company has historically maintained a 401(k) defined contribution plan
      which allows participants to make contributions based on a percentage of
      their earnings. During the year employees of the Company became eligible
      to participate in a successor 401(k) plan with TFX. The TFX plan allows
      participants to make pretax contributions which are matched on a
      proportionate basis. The Company's contributions for the fiscal years
      ended December 31, 2000, December 26, 1999 and December 31, 1998 were
      approximately $105, $81 and $26, respectively.

8.    Income Taxes

      The provision for income taxes for the years ended December 31, 2000,
      December 26, 1999 and December 31, 1998, consisted of the following:

                                      2000            1999          1998

      Current:
        Federal                     $(1,189)        $   176        $    --
        State                          (135)             21             --
                                    -------         -------        -------
                                    $(1,324)        $   197        $    --
                                    =======         =======        =======

      Reconciliation between the statutory income tax rate and effective tax
      rate is summarized below:

                                                       2000      1999      1998

Expected federal statutory tax rate (benefit)          (35)%      35%      (35)%
State and local taxes, net                              (4)%       4%       (6)%
Limitation (utilization) of net operating losses        --       (12)%      41%
                                                       ---       ---       ---
Effective tax rate                                     (39)%      27%       --
                                                       ===       ===       ===


                                      F-12
<PAGE>

SSI Surgical Services, Inc.
Notes to the Consolidated Financial Statements
December 31, 2000
(Dollars in Thousands, except per share)
--------------------------------------------------------------------------------

      Following the Company's acquisition of SSI and ESI from TFX in January
      1999, the Company's taxable income is included in the consolidated tax
      returns of TFX under a tax sharing arrangement. For purposes of these
      financial statements, income taxes have been determined and allocated to
      the Company on a separate return basis.

      The use of net operating loss carryforwards generated by the Company prior
      to the 1999 acquisitions of approximately $9 million are subject to annual
      limitations imposed by the Internal Revenue Code. Accordingly, a
      significant portion of the net operating loss carryforwards generated in
      prior years will not be available to the Company because of changes in
      ownership occurring during 1999. Realization of the remaining deferred tax
      assets associated with the net operating loss carryforward is dependent
      upon generating sufficient taxable income prior to their expiration.
      Management believes that there is risk that these operating loss
      carryforwards may expire unused, and, accordingly, has continued to
      maintain a valuation allowance equal to the net deferred tax asset amount.

      The Company's federal net operating loss carryforwards will expire in
      varying amounts from 2000 through 2013.

9.    Obligations Under Capital Leases

      Future minimum payments as of December 31, 2000 under capital leases for
      property and equipment, including surgical instruments, are as follows:

      2001                                                          $  523
      2002                                                             455
      2003                                                              36
                                                                    ------
      Total minimum lease payments                                   1,014
      Less amount representing interest                                 75
                                                                    ------
      Present value of minimum lease payment                           939
      Less current portion                                             465
                                                                    ------
                                                                    $  474
                                                                    ======

10.   Common and Preferred Stock

      On January 8, 1997, TFX, a wholly owned subsidiary of Teleflex, a
      diversified publicly held company, purchased the Series B and Series C
      Convertible Preferred Stock from the previous owners of such stock. This
      Series B Convertible Preferred Stock was convertible at the option of the
      holder into Common Stock or cash, at $2.00 per share maturing December 31,
      1999. Dividends accrued on the Series B Convertible Preferred Stock at the
      rate of 8% per year. These dividends were paid in cash or accrued at the
      option of the Company. If not paid, accrued dividends were added to the
      face amount of the Series B Convertible Preferred Stock at the time of
      conversion. In January 1999, TFX converted the face amount of the Series B
      Convertible Preferred Stock into 975,095 shares of Common Stock.


                                      F-13
<PAGE>

SSI Surgical Services, Inc.
Notes to the Consolidated Financial Statements
December 31, 2000
(Dollars in Thousands, except per share)
--------------------------------------------------------------------------------

      The Series C Convertible Preferred Stock was automatically convertible at
      $1.00 per share into 1,945,625 shares of Common Stock on December 30,
      2004, or earlier at the option of the holder. There were no dividends
      payable nor accrued on the Series C Convertible Preferred Stock. In
      January 1999, TFX converted the Series C Convertible Preferred Stock into
      1,945,625 shares of Common Stock.

      In January 1999, the Company increased the number of shares of authorized
      Common Stock, par value $.01 per share from 10,000,000 shares to
      30,000,000 shares, and issued 13,400,000 shares of Common Stock to TFX in
      connection with an acquisition. See Note 2.

11.   Common Stock Warrants

      From time to time, the Company has issued Common Stock warrants to
      directors, lending institutions, and other third parties. At December 31,
      2000, the Company had aggregate warrants outstanding to purchase 1,525,000
      shares of Common Stock at a price between $1.38 and $2.00 per share with
      expiration dates through December 2005.

12.   Stock Option Plans

      On September 29, 1994, the Board of Directors approved the 1994 Stock
      Option Plan and authorized the issuance of up to 1,000,000 shares of
      Common Stock of the Company upon the exercise of Incentive and
      Non-Qualified Stock Options which may be granted pursuant to the Plan. The
      Plan was approved by the shareholders at a meeting held on July 20, 1995.
      In 1996, the Board of Directors authorized another 500,000 shares of
      Common Stock to be issued under the 1996 Plan, which was approved by
      shareholders on May 25, 1996. On February 24, 2000, the Board of Directors
      authorized 500,000 shares of common stock to be issued under the 2000
      Stock Plan, which was approved by shareholders on May 22, 2000.

      Incentive Stock Options may be granted only to key employees, including
      officers or directors who are employees of the Company, and are
      exercisable immediately or in installments following a period of two (2)
      years after grant but within ten (10) years from the date of grant (five
      (5) years in the case of options granted to holders of more than 10% of
      the Company's voting stock). The exercise price must be at least equal to
      the fair market value of the Company's Common Stock on the date granted
      (110% in the case of 10% shareholders). At December 31, 2000, Incentive
      Stock Options for an aggregate of 340,670 shares of Common Stock at
      exercise prices ranging from $0.56 to $1.28 were outstanding.

      Non-Qualified Stock Options may be granted under the Plans or otherwise to
      officers, directors, consultants and key employees. The exercise price is
      not limited and may be below the fair market value of the Company's Common
      Stock on the date of grant. At December 31, 2000, Non-Qualified Stock
      Options for an aggregate of 675,000 shares of Common Stock at exercise
      prices ranging from $0.56 to $1.50 were outstanding.


                                      F-14
<PAGE>

SSI Surgical Services, Inc.
Notes to the Consolidated Financial Statements
December 31, 2000
(Dollars in Thousands, except per share)
--------------------------------------------------------------------------------

      The Company applies the disclosure-only provisions of SFAS 123 "Accounting
      for Stock-Based Compensation," continuing to measure compensation cost in
      accordance with APB 25 " Accounting for Stock Issued to Employees." Had
      compensation cost been determined based on the fair value at the grant
      date consistent with the provisions of SFAS 123, the Company's pro forma
      net income (loss) and earnings per share for the years ended December 31,
      2000, December 26, 1999 and December 31, 1998 would have been:

                                                    2000        1999      1998

Net income (loss) attributable to common
  shareholders as reported                        $(2,072)     $ 521    $(1,470)

Pro forma income (loss)                           $(2,086)     $ 400    $(1,491)

Earnings per Common share as reported - Diluted   $ (0.11)     $0.02    $ (0.46)

Pro forma Earnings per share - Diluted            $ (0.11)     $0.02    $ (0.46)

      The weighted average fair value of each option has been estimated on the
      date of grant using the Black-Scholes options pricing model with the
      following weighted average assumptions used for grants in 2000, 1999 and
      1998, respectively; no dividend yield; expected volatility of 90%;
      risk-free interest rate of 5.65% to 6.61%: and expected lives ranging from
      approximately 4.5 to 5 years. Weighted averages are used because of
      varying assumed exercise dates.

      A summary of the status of the Company's stock option plans as of December
      31, 2000 and December 26, 1999, and changes during the years ended on
      those dates is presented below.

<TABLE>
<CAPTION>
                                                   2000                     1999
                                       -----------------------   -----------------------
                                                     Weighted                  Weighted
                                                      Average                  Average
                                                     Exercise                  Exercise
                                         Options       Price       Options      Price

<S>                                    <C>             <C>       <C>             <C>
Outstanding at beginning of year        1,129,670      $ .85      1,155,670      $ .87
Granted                                   452,500       1.43        385,000        .91
Exercised                                      --         --             --         --
Canceled/Expired                         (566,500)      1.36       (411,000)       .96
                                       ----------                ----------

Outstanding at end of year              1,015,670        .83      1,129,670        .85
                                       ==========                ==========

Options exercisable at end of year        817,170                   847,670
                                       ==========                ==========

Weighted average fair value of
  options granted during the year      $      .52                $      .51
</TABLE>


                                      F-15
<PAGE>

SSI Surgical Services, Inc.
Notes to the Consolidated Financial Statements
December 31, 2000
(Dollars in Thousands, except per share)
--------------------------------------------------------------------------------

      The following table summarizes information about stock options outstanding
      at December 31, 2000:

                                 Weighted
                                  Average                        Weighted
                                 Remaining                        Average
                   Options      Contractual     Options          Exercise
                  Outstanding      Life       Exercisable         Prices

                    27,500          10               --            $0.56
                   118,000           9           29,500             0.69
                   608,000           4          608,000             0.74
                    30,000           8           30,000             1.00
                   162,170           7           79,670             1.06
                    40,000           7           40,000             1.28
                    30,000           7           30,000             1.50
                 ---------                      -------
                 1,015,670                      817,170

13.   Related Party Transactions

      The Company purchases from surgical instrument manufacturers the surgical
      instruments included in instrument sets that are utilized in providing
      certain of the Company's services. Pilling Weck, a national surgical
      instrument manufacturer and a subsidiary of Teleflex, has agreed to supply
      surgical instruments to the Company. Purchases from Pilling Weck are made
      on commercial terms. Instrument purchases from Pilling Weck, including
      instruments financed under capital lease obligations, for the years ended
      December 31, 2000, December 26, 1999 and December 31, 1998, were
      approximately $1,308, $969, and $556, respectively.

      In connection with the Company's January 1999 acquisition of ESI and SSI
      from TFX, the Company assumed approximately $6,500 of financing from
      Teleflex. In addition, the Company entered into a revolving credit
      facility with Teleflex. The agreement as amended, provides the Company up
      to $27,500 of unsecured financing. The outstanding principal on this
      credit facility is due and payable on April 30, 2003. Interest under this
      agreement is payable at the prevailing Prime rate of PNC Bank, plus 1.25
      percent. Interest was charged on the unpaid principal balance during 2000
      at a weighted average of 10.5% and at a fixed rate of 8% during 1999.
      Interest charged by TFX amounted to $1,684, $649 and $29 for the years
      ended December 31, 2000, December 26, 1999 and December 31, 1998,
      respectively.

      Teleflex also charged the Company fees for executive management, legal,
      treasury, tax and other financial services. Fees of $350 were charged for
      each of the years ended December 31, 2000 and December 26, 1999,
      respectively.

      See Notes 8 and 10 for other related party transactions.


                                      F-16
<PAGE>

SSI Surgical Services, Inc.
Notes to the Consolidated Financial Statements
December 31, 2000
(Dollars in Thousands, except per share)
--------------------------------------------------------------------------------

14.   Commitments and Contingencies:

      Minimum annual rental commitments for non-cancelable operating leases,
      principally for the Company's off-site sterilization facilities, at
      December 31, 2000 are as follows:

      2001                                                         $ 2,026
      2002                                                           1,839
      2003                                                           1,151
      2004                                                             984
      2005                                                             874
      Thereafter                                                     3,753
                                                                   -------
                                                                   $10,627
                                                                   =======

      Rent expense, net of sublease income of approximately $263, $293 and $86,
      was approximately $1,564, $1,521 and $389 for the years ended December 31,
      2000, December 26, 1999 and December 31, 1998, respectively.

      The operating lease commitments summarized above do not include any
      amounts with respect to the Company's commitments to make certain repairs
      at its Syosset, NY facility.

      The Company is subject to a variety of claims and suits that arise from
      time to time out of the ordinary course of its business. The Company does
      not believe that these actions will have a material impact on the
      Company's business, financial condition or results of operations.


                                      F-17