**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

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**FORM 10-Q**

**(MarkOne)**

**x**                              QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

**Forthe quarterly period ended June 30, 2007**

**or**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

**Forthe transition period from                  to                  **

**Commissionfile number:  333-124100**

**VWR FUNDING, INC.**

(Exact name of registrantas specified in its charter)

| **Delaware**                                                     |   | **56-2445503**                        |
|------------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of  incorporation or organization) |   | (I.R.S. Employer  Identification No.) |
| **1310 Goshen Parkway  P.O. Box 2656  West Chester, PA**    |   | **19380**                             |
| (Address of  principal executive offices)                        |   | (Zip code)                            |

 

**(610) 431-1700**

(Registrant’s telephonenumber, including area code)

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. Yes  o  No  x

Indicate by check mark whether the registrant is alarge accelerated filer, an accelerated filer, or a non-accelerated filer. Seedefinition of “accelerated filer and large accelerated filer” in Rule 12b-2of the Exchange Act. (Check one):

| Large accelerated filer  o |   | Accelerated filer  o |   | Non-accelerated filer  x |
|--------------------------------------|--------|--------------------------------|--------|------------------------------------|

 

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o  No  x

Asof June 30, 2007, there was no established public market for theregistrant’s common stock, par value $0.01 per share. The number of shares ofthe registrant’s common stock outstanding at August 14, 2007 was 1,000.

 

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**VWR FUNDING, INC.FORM 10-QFOR THE QUARTER ENDED JUNE 30, 2007INDEX**

**PART I.**   FINANCIALINFORMATION (Predecessor and Successor):

On June 29, 2007,CDRV Investors, Inc. completed a merger (the “Merger”) pursuant to anAgreement and Plan of Merger, dated May 2, 2007 (as amended), by and amongCDRV Investors, Inc., Varietal Distribution Holdings, LLC, a Delawarelimited liability company (“Holdings”), VWR Investors, Inc., a DelawareCorporation and subsidiary of Holdings, and Varietal Distribution Merger Sub, Inc.,a Delaware corporation and subsidiary of Holdings (“Merger Sub”). Pursuant tothe Merger, Merger Sub merged with and into CDRV Investors, Inc., withCDRV Investors, Inc. continuing as the surviving corporation and assumingall of the debt obligations of Merger Sub. In addition, in connection with theMerger, CDRV Investors, Inc. changed its name to VWR Funding, Inc.(as used herein, the “Company” refers to VWR Funding, Inc. and itsconsolidated subsidiaries before and/or after the Merger and the name change,as the context requires).

The following financialstatements of the Company for the periods indicated are included in thisQuarterly Report on Form 10-Q. The term “Successor” refers to theCompany after giving effect to the consummation of the Merger. The term “Predecessor”refers to the Company prior to giving effect to the consummation of the Merger.See the “Basis of Presentation” in Note 1 in “Item 1—Financial Statements” ofthis Quarterly Report on Form 10-Q. 
|                   | ** ** | ** **                                                                                                                                                                                   | **Page No.** |
|-------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------|
| Item 1.           |       | Financial  Statements:                                                                                                                                                                       |              |   |   |
|              |       | Consolidated  Balance Sheets—as of June 30, 2007 (Unaudited) and  December 31, 2006                                                                                           |              | 1 |   |
|              |       | Consolidated  Statements of Operations (Unaudited)—for the periods included  in the three months ended June 30, 2007 and for the three months  ended  June 30, 2006 |              | 2 |   |
|              |       | Consolidated  Statements of Operations (Unaudited)—for the periods included  in the six months ended June 30, 2007 and for the six months  ended  June 30, 2006     |              | 3 |   |
|              |       | Consolidated  Statements of Stockholders’ Equity and Other Comprehensive  Income (Loss) (Unaudited)—for the periods included in the six months  ended June 30, 2007           |              | 4 |   |
|              |       | Consolidated  Statements of Cash Flows (Unaudited)—for the periods included  in the six months ended June 30, 2007 and for the six months ended  June 30, 2006                |              | 5 |   |
|              |       | Notes  to Consolidated Financial Statements (Unaudited)                                                                                                                                      |              | 6 |   |
| Item 2.           |       | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                                                                                                  |              | 29 |   |
| Item 3.           |       | Quantitative  and Qualitative Disclosures about Market Risk                                                                                                                                  |              | 38 |   |
| Item 4.           |       | Controls  and Procedures                                                                                                                                                                     |              | 38 |   |
| **PART II.** | ** ** | **OTHER  INFORMATION:**                                                                                                                                                                      |              |   |   |
| Item 1.           |       | Legal  Proceedings                                                                                                                                                                           |              | 39 |   |
| Item 1A.          |       | Risk Factors                                                                                                                                                                                 |              | 39 |   |
| Item 4.           |       | Submission  of Matters to a Vote of Security Holders                                                                                                                                         |              | 42 |   |
| Item 6.           |       | Exhibits                                                                                                                                                                                     |              | 43 |   |
| Signature         |       | 45                                                                                                                                                                                           |              |

 

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**PART I—FINANCIALINFORMATION**

**Item 1—*Financial Statements***

**VWR FUNDING, INC.Consolidated Balance Sheets(Dollars in millions, except share data)**

| ** **                                                                                                                                                   | ** ** | **Successor**     | ** ** | ** ** | ** ** | **Predecessor**       | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|------------|------------|-----------------------|------------|
| ** **                                                                                                                                                   | ** ** | **June 30,** | ** ** | ** ** | ** ** | **December 31,** | ** ** |
| ** **                                                                                                                                                   | ** ** | **2007**          | ** ** | ** ** | ** ** | **2006**              | ** ** |
| ** **                                                                                                                                                   | ** ** | **(Unaudited)**   | ** ** | ** ** | ** ** | ** **            | ** ** |
| **Assets**                                                                                                                                                   | ** ** |              | ** ** | ** ** |       |                  |       |   | ** ** | ** ** |   |
| Current Assets:                                                                                                                                              |       |              |       |       |       |                  |       |   |   |   |   |
| Cash and cash equivalents                                                                                                                                    |       |              | $          | 77.1       |       |                  |       |   |   | $ | 139.4 |   |   |
| Compensating cash balance                                                                                                                                    |       |              | 279.6      |       |       |                  |       |   | 36.1 |   |   |
| Trade accounts  receivable, less reserves of $9.7 and $9.8, respectively                                                                                     |       |              | 477.7      |       |       |                  |       |   | 452.7 |   |   |
| Other receivables                                                                                                                                            |       |              | 24.7       |       |       |                  |       |   | 30.1 |   |   |
| Inventories                                                                                                                                                  |       |              | 281.8      |       |       |                  |       |   | 260.6 |   |   |
| Other current assets                                                                                                                                         |       |              | 22.1       |       |       |                  |       |   | 20.5 |   |   |
| Total current assets                                                                                                                                         |       |              | 1,163.0    |       |       |                  |       |   | 939.4 |   |   |
| Property and equipment,  net                                                                                                                                 |       |              | 178.3      |       |       |                  |       |   | 156.9 |   |   |
| Investments                                                                                                                                                  |       |              | —     |       |       |                  |       |   | 8.3 |   |   |
| Goodwill                                                                                                                                                     |       |              | 1,897.0    |       |       |                  |       |   | 933.1 |   |   |
| Other intangible assets,  net                                                                                                                                |       |              | 2,426.8    |       |       |                  |       |   | 552.3 |   |   |
| Deferred income taxes                                                                                                                                        |       |              | 12.1       |       |       |                  |       |   | 13.1 |   |   |
| Other assets                                                                                                                                                 |       |              | 76.9       |       |       |                  |       |   | 43.1 |   |   |
| Total assets                                                                                                                                                 |       |              | $          | 5,754.1    |       |                  |       |   |   | $ | 2,646.2 |   |   |
| **Liabilities and Stockholders’ Equity**                                                                                                                |       |              |       |       |       |                  |       |   |   |   |   |
| Current Liabilities:                                                                                                                                         |       |              |       |       |       |                  |       |   |   |   |   |
| Short-term portion of  debt and current portion of capital lease obligations                                                                                 |       |              | $          | 26.5       |       |                  |       |   |   | $ | 21.8 |   |   |
| Accounts payable                                                                                                                                             |       |              | 441.8      |       |       |                  |       |   | 416.9 |   |   |
| Accrued expenses                                                                                                                                             |       |              | 154.8      |       |       |                  |       |   | 170.8 |   |   |
| Accrued expenses related  to the Merger                                                                                                                      |       |              | 210.2      |       |       |                  |       |   | — |   |   |
| Total current liabilities                                                                                                                                    |       |              | 833.3      |       |       |                  |       |   | 609.5 |   |   |
| Long-term debt                                                                                                                                               |       |              | 2,624.5    |       |       |                  |       |   | 1,661.0 |   |   |
| Capital lease obligations                                                                                                                                    |       |              | 4.5        |       |       |                  |       |   | 4.8 |   |   |
| Other long-term  liabilities                                                                                                                                 |       |              | 84.2       |       |       |                  |       |   | 80.5 |   |   |
| Deferred income taxes                                                                                                                                        |       |              | 833.0      |       |       |                  |       |   | 227.0 |   |   |
| Total liabilities                                                                                                                                            |       |              | 4,379.5    |       |       |                  |       |   | 2,582.8 |   |   |
| Predecessor common stock  purchase subject to guarantee agreement                                                                                            |       |              | —     |       |       |                  |       |   | 0.5 |   |   |
| Redeemable equity  units                                                                                                                                     |       |              | 34.5       |       |       |                  |       |   | — |   |   |
| Commitments and contingences                                                                                                                                 |       |              |       |       |       |                  |       |   |   |   |   |
| Stockholders’ equity:                                                                                                                                   |       |              |       |       |       |                  |       |   |   |   |   |
| Common stock  (Succcessor), $0.01 par value; 1,000 shares authorized, issued and  outstanding at June 30, 2007                                          |       |              | —     |       |       |                  |       |   | — |   |   |
| Common stock  (Predecessor), $0.01 par value; 7,000,000 shares authorized, 5,862,892 shares  issued and 5,803,412 outstanding at December 31, 2006 |       |              | —     |       |       |                  |       |   | 0.1 |   |   |
| Additional paid-in  capital                                                                                                                                  |       |              | 1,354.9    |       |       |                  |       |   | 14.5 |   |   |
| (Accumulated deficit) /  retained earnings                                                                                                                   |       |              | (2.9       | )          |       |                  |       |   | 1.7 |   |   |
| Accumulated other  comprehensive (loss) income                                                                                                               |       |              | (11.9      | )          |       |                  |       |   | 50.8 |   |   |
| Treasury stock, at cost,  59,480 shares at December 31, 2006                                                                                            |       |              | —     |       |       |                  |       |   | (4.2 | ) |   |
| Total stockholders’  equity                                                                                                                             |       |              | 1,340.1    |       |       |                  |       |   | 62.9 |   |   |
| Total liabilities and stockholders’ equity                                                                                                              |       |              | $          | 5,754.1    |       |                  |       |   |   | $ | 2,646.2 |   |   |

 

See accompanying notes to consolidated financial statements.

1

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**VWR FUNDING, INC. Consolidated Statements of Operations (Dollars in millions) (Unaudited)**

| ** **                                    | ** ** | **Three Months Ended June 30, 2007**                                                                    | ** ** | **Predecessor** | ** ** |
|-----------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------|------------|-----------------|------------|
| ** **                                    | ** ** | **Successor**                                                                                                                    | ** ** | ** **      | ** ** | **Predecessor** | ** ** | **Three Months** | ** ** |
| ** **                                    | ** ** | **June 30,**                                                                                                                | ** ** | ** **      | ** ** | **April 1 -** | ** ** | **Ended** | ** ** |
| ** **                                    | ** ** | **          2007          ** | ** ** | ** **      | ** ** | **  June 29, 2007  ** | ** ** | **June 30, 2006** | ** ** |
| Net sales                                     |       |                                                                                                                             | $          | —          |       |   |   |   |   | $ | 856.2 |   |   |   | $ | 815.0 |   |   |
| Cost of goods  sold                           |       |                                                                                                                             | —     |            |       |   |   |   | 625.2 |   |   |   | 595.9 |   |   |
| Gross profit                                  |       |                                                                                                                             | —     |            |       |   |   |   | 231.0 |   |   |   | 219.1 |   |   |
| Selling, general  and administrative expenses |       |                                                                                                                             | 0.2        |            |       |   |   |   | 190.0 |   |   |   | 174.4 |   |   |
| Merger expenses                               |       |                                                                                                                             | —     |            |       |   |   |   | 36.4 |   |   |   | — |   |   |
| Restructuring  credits                        |       |                                                                                                                             | —     |            |       |   |   |   | — |   |   |   | (0.8 | ) |   |
| Operating (loss) income                       |       |                                                                                                                             | (0.2       | )               |       |   |   |   | 4.6 |   |   |   | 45.5 |   |   |
| Interest income                               |       |                                                                                                                             | —     |            |       |   |   |   | (1.6 | ) |   |   | (1.5 | ) |   |
| Interest expense                              |       |                                                                                                                             | 4.6        |            |       |   |   |   | 64.4 |   |   |   | 28.2 |   |   |
| Other income, net                             |       |                                                                                                                             | —     |            |       |   |   |   | (3.4 | ) |   |   | (0.4 | ) |   |
| (Loss) income before income taxes             |       |                                                                                                                             | (4.8       | )               |       |   |   |   | (54.8 | ) |   |   | 19.2 |   |   |
| Income tax  (benefit) provision               |       |                                                                                                                             | (1.9       | )               |       |   |   |   | (16.3 | ) |   |   | 5.8 |   |   |
| Net (loss) income                             |       |                                                                                                                             | $          | (2.9            | )          |   |   |   |   | $ | (38.5 | ) |   |   | $ | 13.4 |   |   |

 

See accompanying notes to consolidated financial statements.

2

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**VWR FUNDING, INC. Consolidated Statements of Operations (Continued) (Dollars in millions) (Unaudited)**

 

| ** **                                    | ** ** | **Six Months Ended June 30, 2007**                                                                      | ** ** | **Predecessor** | ** ** |
|-----------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------|------------|-----------------|------------|
| ** **                                    | ** ** | **Successor**                                                                                                                    | ** ** | ** **      | ** ** | **Predecessor** | ** ** | **Six Months** | ** ** |
| ** **                                    | ** ** | **June 30,**                                                                                                                | ** ** | ** **      | ** ** | **January 1 -** | ** ** | **Ended** | ** ** |
| ** **                                    | ** ** | **          2007          ** | ** ** | ** **      | ** ** | **  June 29, 2007  ** | ** ** | **June 30, 2006** | ** ** |
| Net sales                                     |       |                                                                                                                             | $          | —          |       |   |   |   |   | $ | 1,699.3 |   |   |   | $ | 1,610.8 |   |   |
| Cost of goods  sold                           |       |                                                                                                                             | —     |            |       |   |   |   | 1,230.1 |   |   |   | 1,177.3 |   |   |
| Gross profit                                  |       |                                                                                                                             | —     |            |       |   |   |   | 469.2 |   |   |   | 433.5 |   |   |
| Selling, general  and administrative expenses |       |                                                                                                                             | 0.2        |            |       |   |   |   | 371.3 |   |   |   | 342.9 |   |   |
| Merger expenses                               |       |                                                                                                                             | —     |            |       |   |   |   | 36.8 |   |   |   | — |   |   |
| Restructuring  credits                        |       |                                                                                                                             | —     |            |       |   |   |   | — |   |   |   | (1.0 | ) |   |
| Operating (loss) income                       |       |                                                                                                                             | (0.2       | )               |       |   |   |   | 61.1 |   |   |   | 91.6 |   |   |
| Interest income                               |       |                                                                                                                             | —     |            |       |   |   |   | (3.3 | ) |   |   | (2.8 | ) |   |
| Interest expense                              |       |                                                                                                                             | 4.6        |            |       |   |   |   | 101.8 |   |   |   | 56.9 |   |   |
| Other (income)  expense, net                  |       |                                                                                                                             | —     |            |       |   |   |   | (3.5 | ) |   |   | 0.4 |   |   |
| (Loss) income before income taxes             |       |                                                                                                                             | (4.8       | )               |       |   |   |   | (33.9 | ) |   |   | 37.1 |   |   |
| Income tax  (benefit) provision               |       |                                                                                                                             | (1.9       | )               |       |   |   |   | (8.3 | ) |   |   | 12.7 |   |   |
| Net (loss) income                             |       |                                                                                                                             | $          | (2.9            | )          |   |   |   |   | $ | (25.6 | ) |   |   | $ | 24.4 |   |   |

 

See accompanying notes to consolidated financial statements.

3

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**VWR FUNDING, INC.Consolidated Statements of Stockholders’ Equity and Other Comprehensive Income(Loss)(Dollars in millions, except share data)(Unaudited)**

**Forthe period January 1 – June 29, 2007 (Predecessor)**

| ** **                                                                      | ** ** | ** **            | ** ** | ** **  | ** ** | ** **      | ** ** | **Retained**        | ** **  | **Accumulated**  | ** ** | ** **               | ** **             | ** ** | ** ** | ** ** | ** **  |
|---------------------------------------------------------------------------------|------------|-----------------------|------------|-------------|------------|-----------------|------------|---------------------|-------------|------------------|------------|--------------------------|------------------------|------------|------------|------------|-------------|
| ** **                                                                      | ** ** | ** **            | ** ** | ** **  | ** ** | **Additional**  | ** ** | **earnings /** | ** **  | **other**        | ** ** | **Treasury stock,** | ** **             | ** ** | ** ** |
| ** **                                                                      | ** ** | **Common stock** | ** ** | **paid-in** | ** ** | **accumulated** | ** ** | **comprehensive**   | ** **  | **at cost** | ** ** | ** **               | ** **             |
| ** **                                                                      | ** ** | **Shares**            | ** ** | **Amount**  | ** ** | **capital**     | ** ** | **deficit**         | ** **  | **income**       | ** ** | **Shares**               | ** **             | **Amount** | ** ** | **Total**  | ** **  |
| Balance at January 1, 2007                                                 |       | 5,862,892             |       |        | $ 0.1 |            |       |                | $ 14.5 |             |       |                     | $   1.7 |       |       |       | $ 50.8 |   |   | 59,480 |   |   | $ (4.2 | ) |   | $ 62.9 |   |
| Issuance of common stock in connection with our  stock incentive plan |       | 1,757                 |       |        | —     |            |       |                | 0.2         |             |       |                     | —                 |       |       |       | —      |   |   | — |   |   | — |   |   | 0.2 |   |
| Exercise of stock options                                                       |       | 5,900                 |       |        | —     |            |       |                | 0.2         |             |       |                     | —                 |       |       |       | —      |   |   | — |   |   | — |   |   | 0.2 |   |
| Stock-based compensation                                                        |       | —                |       |        | —     |            |       |                | 9.0         |             |       |                     | —                 |       |       |       | —      |   |   | — |   |   | — |   |   | 9.0 |   |
| Tax benefit related to stock options                                            |       | —                |       |        | —     |            |       |                | 0.1         |             |       |                     | —                 |       |       |       | —      |   |   | — |   |   | — |   |   | 0.1 |   |
| Acquisition of treasury  stock                                                  |       | —                |       |        | —     |            |       |                | —      |             |       |                     | —                 |       |       |       | —      |   |   | 7,200 |   |   | (0.7 | ) |   | (0.7 | ) |
| Comprehensive  (loss)  income:                                                  |       |                  |       |        |       |            |       |                |        |             |       |                     |                   |       |       |       |        |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                        |       | —                |       |        | —     |            |       |                | —      |             |       |                     | (25.6                  | )          |       |       | —      |   |   | — |   |   | — |   |   | (25.6 | ) |
| Unrealized loss on derivatives, net of tax                                 |       | —                |       |        | —     |            |       |                | —      |             |       |                     | —                 |       |       |       | (1.1        | ) |   | — |   |   | — |   |   | (1.1 | ) |
| Foreign currency translation adjustment                                         |       | —                |       |        | —     |            |       |                | —      |             |       |                     | —                 |       |       |       | 25.8        |   |   | — |   |   | — |   |   | 25.8 |   |
| Total comprehensive loss                                                        |       |                  |       |        |       |            |       |                |        |             |       |                     |                   |       |       |       |        |   |   |   |   |   |   |   |   | (0.9 | ) |
| Balance at  June 29, 2007                                                  |       | 5,870,549             |       |        | $ 0.1 |            |       |                | $ 24.0 |             |       |                     | $ (23.9           | )          |       |       | $ 75.5 |   |   | 66,680 |   |   | $ (4.9 | ) |   | $ 70.8 |   |

 

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**June 30,2007 (Successor)**

| ** **                                                             | ** ** | ** **            | ** ** | ** **  | ** ** | ** **      | ** **    | ** **        | ** ** | **Accumulated** | ** **                                              | ** ** | ** ** |
|------------------------------------------------------------------------|------------|-----------------------|------------|-------------|------------|-----------------|---------------|-------------------|------------|-----------------|---------------------------------------------------------|------------|------------|
| ** **                                                             | ** ** | ** **            | ** ** | ** **  | ** ** | **Additional**  | ** **    | ** **        | ** ** | **other**       | ** **                                              | ** ** | ** ** |
| ** **                                                             | ** ** | **Common stock** | ** ** | **paid-in** | ** ** | **Accumulated** | ** **    | **comprehensive** | ** ** | ** **      | ** **                                              |
| ** **                                                             | ** ** | **Shares**            | ** ** | **Amount**  | ** ** | **capital**     | ** **    | **deficit**       | ** ** | **loss**        | ** **                                              | **Total**  | ** ** |
| Opening balance at  June 30, 2007                                 |       |                  | —     |        |       |            | $ — |              |       |            | $        — |       |       |   | $  — |   |   |   | $    — |   |   | $        — |   |
| Issuance of common  stock, net of expenses and redeemable equity units |       |                  | 1,000      |        |       |            | —        |              |       |            | 1,354.9                                                 |       |       |   | — |   |   |   | — |   |   | 1,354.9 |   |
| Realized loss on derivatives                                           |       |                  | —     |        |       |            | —        |              |       |            | —                                                  |       |       |   | — |   |   |   | (11.9 | ) |   | (11.9 | ) |
| Comprehensive loss:                                                    |       |                  |       |        |       |            |          |              |       |            |                                                    |       |       |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                               |       |                  | —     |        |       |            | —        |              |       |            | —                                                  |       |       |   | (2.9 | ) |   |   | — |   |   | (2.9 | ) |
| Total comprehensive loss                                               |       |                  |       |        |       |            |          |              |       |            |                                                    |       |       |   |   |   |   |   |   |   |   | (2.9 | ) |
| Balance at June 30, 2007                                          |       |                  | 1,000      |        |       |            | $ — |              |       |            | $ 1,354.9                                          |       |       |   | $ (2.9 | ) |   |   | $ (11.9 | ) |   | $ 1,340.1 |   |

 

See accompanying notes to consolidated financial statements.

4

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**VWR FUNDING, INC.Consolidated Statements of Cash Flows(Dollars in millions)(Unaudited)**

| ** **                                                                                                | ** ** | **Six Months Ended  June 30, 2007** | ** ** | **Predecessor** | ** ** |
|-----------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------|------------|-----------------|------------|
| ** **                                                                                                | ** ** | **Successor**                                           | ** ** | ** **      | ** ** | **Predecessor** | ** ** | **Six Months** | ** ** |
| ** **                                                                                                | ** ** | **June 30,**                                       | ** ** | ** **      | ** ** | **January 1 -** | ** ** | **Ended** | ** ** |
| ** **                                                                                                | ** ** | **2007**                                                | ** ** | ** **      | ** ** | **June 29, 2007** | ** ** | **June 30, 2006** | ** ** |
| Cash flows from operating activities:                                                                     |       |                                                    |       |            |       |   |   |   |   |   |   |   |   |   |   |
| Net (loss) income                                                                                         |       |                                                    | $          | (2.9            | )          |   |   |   |   | $ | (25.6 | ) |   |   | $ | 24.4 |   |   |
| Adjustments to reconcile  net (loss) income to net cash (used in) provided by operating  activities: |       |                                                    |       |            |       |   |   |   |   |   |   |   |   |   |   |
| Depreciation and  amortization                                                                            |       |                                                    | 0.2        |            |       |   |   |   | 19.4 |   |   |   | 16.2 |   |   |
| Loss (gain) on  sale of assets                                                                            |       |                                                    | —     |            |       |   |   |   | 0.5 |   |   |   | (0.7 | ) |   |
| Non-cash interest  accretion                                                                              |       |                                                    | —     |            |       |   |   |   | 17.5 |   |   |   | 15.9 |   |   |
| Non-cash credit  for restructuring                                                                        |       |                                                    | —     |            |       |   |   |   | — |   |   |   | (1.0 | ) |   |
| Non-cash equity  compensation expense                                                                     |       |                                                    | —     |            |       |   |   |   | 9.0 |   |   |   | 2.4 |   |   |
| Amortization and  write-off of debt issuance costs                                                        |       |                                                    | —     |            |       |   |   |   | 31.0 |   |   |   | 2.8 |   |   |
| Deferred income  tax benefit                                                                              |       |                                                    | (1.9       | )               |       |   |   |   | (10.4 | ) |   |   | (1.3 | ) |   |
| Provision for  doubtful accounts                                                                          |       |                                                    | —     |            |       |   |   |   | 1.0 |   |   |   | 3.1 |   |   |
| Changes in working  capital, net of effect of business acquisitions                                       |       |                                                    |       |            |       |   |   |   |   |   |   |   |   |   |   |
| Trade accounts  receivable                                                                                |       |                                                    | —     |            |       |   |   |   | (14.1 | ) |   |   | (27.4 | ) |   |
| Other receivables                                                                                         |       |                                                    | —     |            |       |   |   |   | 6.0 |   |   |   | 8.5 |   |   |
| Inventories                                                                                               |       |                                                    | —     |            |       |   |   |   | (9.7 | ) |   |   | 18.9 |   |   |
| Other assets                                                                                              |       |                                                    | —     |            |       |   |   |   | 0.9 |   |   |   | (3.8 | ) |   |
| Accounts payable                                                                                          |       |                                                    | —     |            |       |   |   |   | 15.2 |   |   |   | 11.8 |   |   |
| Accrued expenses  and other long-term liabilities                                                         |       |                                                    | 1.2        |            |       |   |   |   | 16.3 |   |   |   | 12.2 |   |   |
| Net cash (used in)  provided by operating activities                                                      |       |                                                    | (3.4       | )               |       |   |   |   | 57.0 |   |   |   | 82.0 |   |   |
| Cash flows from investing activities:                                                                     |       |                                                    |       |            |       |   |   |   |   |   |   |   |   |   |   |
| Merger  consideration, net of cash acquired of $135.8 (Note 6(a))                                         |       |                                                    | (3,592.7   | )               |       |   |   |   | — |   |   |   | — |   |   |
| Net change in  compensating cash balance—investing                                                   |       |                                                    | (210.2     | )               |       |   |   |   | — |   |   |   | — |   |   |
| Capital  expenditures                                                                                     |       |                                                    | —     |            |       |   |   |   | (15.7 | ) |   |   | (10.0 | ) |   |
| Acquisition of  other businesses and transaction costs                                                    |       |                                                    | —     |            |       |   |   |   | (19.4 | ) |   |   | (0.8 | ) |   |
| Proceeds from  sales of property and equipment                                                            |       |                                                    | —     |            |       |   |   |   | 2.2 |   |   |   | 5.1 |   |   |
| Net cash used in  investing activities                                                                    |       |                                                    | (3,802.9   | )               |       |   |   |   | (32.9 | ) |   |   | (5.7 | ) |   |
| Cash flows from financing  activities:                                                                    |       |                                                    |       |            |       |   |   |   |   |   |   |   |   |   |   |
| Proceeds from debt                                                                                        |       |                                                    | 2,613.8    |            |       |   |   |   | 0.1 |   |   |   | 0.2 |   |   |
| Repayment of debt                                                                                         |       |                                                    | —     |            |       |   |   |   | (21.4 | ) |   |   | (45.5 | ) |   |
| Issuance of common  stock, net of expenses                                                           |       |                                                    | 1,353.8    |            |       |   |   |   | — |   |   |   | — |   |   |
| Net change in bank  overdrafts                                                                            |       |                                                    | —     |            |       |   |   |   | 0.5 |   |   |   | (26.1 | ) |   |
| Net change in  compensating cash balance—financing                                                   |       |                                                    | (25.5      | )               |       |   |   |   | (7.8 | ) |   |   | 8.1 |   |   |
| Proceeds from  stock incentive plan                                                                       |       |                                                    | —     |            |       |   |   |   | 0.2 |   |   |   | 4.0 |   |   |
| Acquisition of  treasury stock                                                                            |       |                                                    | —     |            |       |   |   |   | (0.7 | ) |   |   | (2.1 | ) |   |
| Cash paid for debt  issuance costs                                                                        |       |                                                    | (58.7      | )               |       |   |   |   | (0.6 | ) |   |   | — |   |   |
| Net cash provided  by (used in) financing activities                                                      |       |                                                    | 3,883.4    |            |       |   |   |   | (29.7 | ) |   |   | (61.4 | ) |   |
| Effect of exchange  rate changes on cash                                                                  |       |                                                    | —     |            |       |   |   |   | 2.0 |   |   |   | 2.2 |   |   |
| Net increase in  cash and cash equivalents                                                                |       |                                                    | 77.1       |            |       |   |   |   | (3.6 | ) |   |   | 17.1 |   |   |
| Cash and cash  equivalents beginning of period                                                            |       |                                                    | —     |            |       |   |   |   | 139.4 |   |   |   | 126.1 |   |   |
| Cash and cash  equivalents end of period                                                                  |       |                                                    | $          | 77.1            |       |   |   |   |   | $ | 135.8 |   |   |   | $ | 143.2 |   |   |
| Supplemental disclosures  of cash flow information:                                                       |       |                                                    |       |            |       |   |   |   |   |   |   |   |   |   |   |
| Cash paid during  the period for:                                                                         |       |                                                    |       |            |       |   |   |   |   |   |   |   |   |   |   |
| Interest                                                                                                  |       |                                                    | $          | 3.4             |       |   |   |   |   | $ | 51.8 |   |   |   | $ | 38.4 |   |   |
| Income taxes paid,  net                                                                                   |       |                                                    | $          | —          |       |   |   |   |   | $ | 14.1 |   |   |   | $ | 3.0 |   |   |

 

See accompanying notes to consolidated financial statements.

5

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Dollars in millions, except share data) (Unaudited)**

**(1)**          TheMerger, Nature of Operations and Basis of Presentation

***(a)****         TheMerger*

Until June 29, 2007,CDRV Investors, Inc. (“CDRV”) was controlled by a private equity fundmanaged by Clayton, Dubilier & Rice, Inc. (“CD&R”). On June 29,2007, CDRV completed a merger (the “Merger”) pursuant to an Agreement and Planof Merger, dated May 2, 2007 (as amended, the “Merger Agreement”), by andamong CDRV, Varietal Distribution Holdings, LLC, a Delaware limited liabilitycompany (“Holdings”), VWR Investors, Inc., a Delaware Corporation andsubsidiary of Holdings, and Varietal Distribution Merger Sub, Inc., aDelaware corporation and subsidiary of Holdings (“Merger Sub”). Pursuant to theMerger, Merger Sub merged with and into CDRV, with CDRV continuing as thesurviving corporation and assuming all of the debt obligations of Merger Sub. Inaddition, in connection with the Merger, CDRV changed its name to VWR Funding, Inc.(as used herein, the “Company,” “we,” “us” or “our” refers to VWR Funding, Inc.and its consolidated subsidiaries before and/or after the Merger and the namechange, as the context requires).

After giving effect to theMerger and related transactions, the Company became a direct wholly ownedsubsidiary of VWR Investors, Inc., which is a direct wholly ownedsubsidiary of Holdings. Private equity funds managed by Madison DearbornPartners, LLC (“Madison Dearborn”) own approximately 92% of the ownershipinterests of Holdings on a fully-diluted basis.

The Merger, including theredemption of previous debt and the payment of related fees and expenses, wasfinanced by equity contributions of approximately $1,425.0, the issuance of$675.0 aggregate principal amount of unsecured senior notes due 2015 (“10.25%/11.25%Senior Notes”), the issuance of $353.3 and €125.0million ($169.0 on a U.S. dollar equivalent basis as of June 30, 2006)aggregate principal amount of 10.75% unsecured senior subordinated notes due2017 (“10.75% Senior Subordinated Notes”) and the incurrence of senior securedterm loan borrowings under a senior secured credit facility of $615.0 and €600.0million ($811.2 on a U.S. dollar equivalent basis as of June 30, 2007)(the “Senior Secured Credit Facility”).

For financial reportingpurposes, the Merger was deemed to occur as of the close of business on June 29,2007. As a result of the Merger, the Successor period is presented on adifferent cost basis than the Predecessor period financial statements and,therefore, is not comparable. The Company’s financial position at June 30,2007 includes material impacts from the Merger as well as the application of preliminarypurchase accounting determinations. 

At June 30, 2007, ourcompensating cash balance totaled $279.6, of which $235.7 was disbursed in July 2007to liquidate liabilities related to the Merger and to pay residual amounts ontendered debt balances. The remaining $43.9 at June 30, 2007 and thebalance at December 31, 2006 represents the global cash poolingarrangement discussed in Note 1(c).

In addition, our assetsand liabilities were adjusted to their respective preliminary estimated fairvalue at June 30, 2007. This resulted in a significant increase to thevalue of our identified intangible assets, including goodwill. We also revaluedour pension obligations and related investments as of the balance sheet date.In connection with certain purchase accounting adjustments, we also recordedsignificant deferred tax liabilities and certain deferred tax assets describedbelow. In addition, as discussed above and in Note 7, we incurred substantialadditional indebtedness.

6

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

***(b)****          Natureof Operations*

We distribute scientificsupplies, chemicals, and equipment and provide services, primarily in NorthAmerica and Europe. The business is diversified across products, geographicregions and customer segments. We report financial results on the basis of thefollowing three business segments: North American laboratory distribution (“NorthAmerican Lab”), European laboratory distribution (“European Lab”) and ScienceEducation. Both the North American Lab and European Lab segments are comprisedof the distribution of supplies to customers in the pharmaceutical,biotechnology, chemical, technology, food processing and consumer productsindustries, as well as governmental agencies, universities and researchinstitutes, and environmental organizations. Science Education is comprised ofthe manufacture and distribution of scientific supplies and specialized kits toprimary and secondary schools.

***(c)****           Basisof Presentation*

The financial statementsreflecting the results of operations and cash flows of the Company through theclose of business on June 29, 2007 (prior to giving effect to theconsummation of the Merger) are designated as “Predecessor” financialstatements. The Merger has been reflected as of June 30, 2007 and thefinancial statements reflecting the financial position of the Company at June 30,2007 and the results of operations and cash flows for the one day period ended June 30,2007 (after giving effect to the consummation of the Merger) are designated as “Successor”financial statements.

The accompanyingconsolidated financial statements include the accounts of the Company afterelimination of all intercompany balances and transactions. The financialstatements included herein have been prepared by the Company without audit,pursuant to the rules and regulations of the Securities and ExchangeCommission. Certain information and footnote disclosures normally included infinancial statements prepared in accordance with accounting principlesgenerally accepted in the United States of America have been condensed oromitted pursuant to such rules and regulations. The December 31, 2006balance sheet is the balance sheet included in the audited financial statementsas shown in the Company’s Annual Report on Form 10-K for the yearended December 31, 2006 (“Form 10-K”). The Company believesthat the disclosures included herein are adequate to make the informationpresented not misleading in any material respect when read in conjunction withthe financial statements, footnotes and related disclosures included in the Form 10-K.

The financial informationpresented herein reflects all adjustments (consisting only of normal-recurringadjustments) that are, in the opinion of management, necessary for a fairpresentation of the****results forthe interim periods presented. The results for interim periods are notnecessarily indicative of the results to be expected for the full year.

The preparation offinancial statements in conformity with accounting principles generallyaccepted in the U.S. requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements andthe reported amounts of revenues and expenses during the reporting period.While actual results could differ from those estimates, management believesthat the estimates are reasonable.

The presentation ofcertain amounts from prior periods have been revised. We have reassessed ourglobal cash pooling arrangement pursuant to the requirements of FinancialAccounting Standards Board (“FASB”) Interpretation No. 39,*Offsetting of Amounts Related to Certain Contracts,an interpretation of*

7

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

*APB Opinion No. 10 and FASB  Statement No. 105.*While our cash pooling arrangement is with a single financial institution withspecific provisions for the right to offset positive and negative cashbalances, we believe it is unlikely that we would offset the underlying cashdeficit with a cash surplus from another country.

Accordingly, we haveincreased compensating cash balance and accounts payable  by $36.1 in the accompanying December 31,2006 consolidated balance sheet to account for this arrangement on a grossbasis. Our consolidated statement of cash flows for the six months ended June 30,2006 has been corrected to include $8.1 in net change in compensating cashbalance—financing and an additional ($8.1) in net change in bank overdrafts. Inno period did working capital, stockholders’ equity, operating cash flow,investing cash flow, financing cash flow or the income statement change as aresult of this correction. The correction will increase compensating cash balanceand accounts payable in all quarterly and annual financial statements for theperiods March 31, 2005 through March 31, 2007. We believe that theeffects of the above correction are not material to our financial position,results of operations or liquidity for any period presented.

**(2)**          NewAccounting Standards

The following accountingstandards were adopted during 2007.

During July 2006, theFASB issued Interpretation No. 48, *Accountingfor Uncertainty in Income Taxes* (“FIN 48”). This Interpretationclarifies the accounting for uncertainty in income taxes recognized inaccordance with Statement of Financial Accounting Standards (“SFAS”) No. 109,*Accounting for Income Taxes.*FIN48 provides guidance on the financial statement recognition and measurement ofa tax position taken or expected to be taken in a tax return, derecognition,classification, interest and penalties, accounting in interim periods,disclosures, and transition. FIN 48 is effective for fiscal years beginningafter December 15, 2006. We adopted FIN 48 effective January 1, 2007.See Note 3(a) for further information related to our adoption of FIN 48.

During July 2006, theFASB issued Emerging Issues Task Force Issue No. 06-3, How TaxesCollected from Customers and Remitted to Governmental Authorities Should BePresented in the Income Statement (That Is, Gross versus Net Presentation) (“EITF06-3”), which discusses the presentation of certain taxes in the incomestatement on either a gross or net basis. We adopted EITF 06-3effective January 1, 2007. We record such taxes within the scope of EITF06-3 on a net basis. The adoption of EITF 06-3 did not resultin a change in our accounting policy and, accordingly, did not have a materialeffect on the Company’s financial position or results of operations.

The following accountingstandards will be adopted in the future.

During September 2006,the FASB issued SFAS No. 157, *FairValue Measurements* (“SFAS 157”). This Statement defines fair value,establishes a framework for measuring fair value and expands disclosures aboutfair value measurements required under other accounting pronouncements, butdoes not change existing guidance as to whether or not an instrument is carriedat fair value. SFAS 157 is effective for fiscal years beginning after November 15,2007. We are currently evaluating the impact this Statement will have on ourconsolidated financial statements.

8

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

During February 2007,the FASB issued SFAS No. 159, *The FairValue Option for Financial Assets and Financial Liabilities including anAmendment of SFAS No. 115* (“SFAS 159”). This Statement permitsentities to choose, at specified election dates, to measure eligible items atfair value and its objective is to improve financial reporting by providingentities with the opportunity to mitigate volatility in reported earningscaused by measuring related assets and liabilities differently without havingto apply complex hedge accounting provisions. SFAS 159 is effective for fiscalyears beginning after November 15, 2007. We are currently evaluating theimpact this Statement will have on our consolidated financial statements.

**(3)**          IncomeTaxes

***(a)****         Adoptionof FIN 48*

FIN 48 requires us torecognize a liability for uncertain tax positions in our consolidated financialstatements, the impact of a tax position if that tax position is not morelikely than not to be sustained upon examination, based on technical merits. Asof January 1, 2007, we had uncertain tax positions of approximately $7.0.Of the total, $2.1 would affect our effective tax rate and the remaining $4.9would result in an adjustment to goodwill. In addition, as of January 1,2007, we had accrued interest related to our uncertain tax positions ofapproximately $1.3. Interest and penalties related to uncertain tax positionsare included in income tax expense.

We conduct businessglobally and, as a result, the Company or one or more of our subsidiaries, filesincome tax returns in the U.S. federal jurisdiction and various state andforeign jurisdictions. In the normal course of business, we are subject toexamination by taxing authorities mainly throughout North America and Europe,including such major jurisdictions as Germany, France, the UK, Belgium, Swedenand the U.S.

We have concluded all U.S.federal income tax matters for years through 2003. Our U.S. federal income taxreturns for 2004 and 2005 are currently under examination. Substantially allincome tax matters in the major foreign jurisdictions that we operate have beenconcluded for years through 2000. Examinations are currently in process inBelgium and Germany. Except for one uncertain tax position, that has beenreserved, substantially all material state and local income tax matters havebeen finalized through 2001. Based on the status of examinations, it is notreasonably possible that these examinations will be concluded in the nexttwelve months, and accordingly, it is not possible to estimate the impact in2007, if any, to the reserve for uncertain tax positions. There have been nosignificant changes to the status of the examinations during the six monthsended June 30, 2007.

At the date of adoption,we identified $2.2 relating to the recognition of the indirect tax effect ofthe federal benefit on tax uncertainties. This benefit was partially offset byother net tax uncertainties, primarily related to state taxes, of $0.6. Thesetax uncertainties relate to contingencies that existed prior to the acquisitionby CD&R in April 2004; and, as such, the Company increased deferredtax assets by $1.3, decreased goodwill by $1.6 and decreased our reserves foruncertain tax positions by $0.3.

In connection with theMerger, the Company recognized a liability for uncertain tax positions of $4.2million that we believe are not more likely than not to be sustained uponexamination. The liability for uncertain tax positions was recorded as anadjustment to goodwill. 

9

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

No portion of the reversalof the total liability for uncertain tax positions of $11.2 million will havean impact on the Company’s effective income tax rate.

***(b)****          Effectsof the Merger*

In connection with certainpurchase accounting adjustments we have recorded deferred tax liabilities anddeferred tax assets. The establishment of the deferred taxes primarily resultfrom the basis difference associated with intangible assets and net operatingloss carryforwards primarily as a result of the Merger. At June 30, 2007,we have approximately $127.0 of deferred tax assets related to U.S. federal andstate tax net operating loss carryforwards which are primarily related to thesettlement of share-based compensation under the CDRV Investors, Inc. StockIncentive Plan (the “Stock Plan”) and debt pre-payment penalties. We believethat it is more likely than not that these tax loss carryforwards will berealized in the future. None of these adjustments impacted our effective taxrate.

**(4)**          Share-BasedCompensation

***(a)  Predecessor Stock Plan***

The Company had certainshare-based compensation programs under the Stock Plan which includedshares, options and restricted stock units. Refer to Note 15 in the Form 10-Kfor information on the valuation and accounting for these programs.

During the first quarterof 2007, we granted 1,000 options to one of our employees and 3,500 restrictedstock units to certain of our officers. During the first quarter of 2006, wegranted 58,929 options to our President and Chief Executive Officer.

During the second quarterof 2006, we offered 85 of our officers and employees the option to purchase40,166 shares at $75.00 per share. The fair value of this purchase option of$1.3 was charged to operations in the second quarter of 2006. We closed theoffering with 51 of our officers and employees for the purchase of 25,070shares in the second quarter of 2006 and granted 50 of these officers andemployees 49,140 options during the third quarter of 2006.

During the period April 1–June 29,2007 and the second quarter of 2006, no options were granted.

Thefair value of each option was estimated using the Black-Scholes option-pricingmodel. The weighted average fair value of options granted and the assumptionsused for each of the reporting periods when options were granted are asfollows:

| ** **                     | ** ** | ** **                  | ** ** | **Six Months**         | ** ** |
|--------------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| ** **                     | ** ** | **January 1 –**   | ** ** | **Ended**                   | ** ** |
| ** **                     | ** ** | **June 29, 2007** | ** ** | **June 30, 2006** | ** ** |
| Fair value of  options granted |       |                        | $          | 42.96                       |       |   |   | $ | 33.61 |   |   |
| Risk-free  interest rate       |       |                        | 4.53       | %                           |       |   | 4.76 | % |   |
| Expected life of  options      |       |                        | 6.5 years  |                        |       |   | 6.5 years |   |   |
| Volatility                     |       |                        | 34         | %                           |       |   | 35 | % |   |
| Expected dividend yield        |       |                        | 0.0        | %                           |       |   | 0.0 | % |   |

 

10

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

In accordance with theterms of the Stock Plan, all unvested options and restricted stock units vestedas a result of the change in control caused by the Merger. Therefore, weexpensed the unamortized grant date fair value of all unvested options andrestricted stock units in the period April 1 – June 29, 2007.

Share-based compensationcharged to selling, general and administrative (“SG&A”) expenses was $8.4and $9.0 for the periods April 1–June 29, 2007 and January 1–June 29,2007, respectively. Share-based compensation charged to SG&A expenses,including the charge for the purchase option of $1.3 discussed above, was $1.9and $2.4 for the three and six months ended June 30, 2006, respectively.

***(b)  Successor Equity Plan***

In connection with theMerger, certain members of management were provided the opportunity topurchase, pursuant to the terms of the 2007 Securities Purchase Plan and ManagementUnit Purchase Agreement (the Equity Plan), equity units of Holdings. Managementinvested funds totaling $35.6 which were allocated to the purchase of PreferredUnits, Common Units, and Founders Units.

The Preferred Units, whichare fully vested upon issuance, are non-voting units that have a liquidationvalue equal to the amount of any unreturned capital contributions with respectto such units plus the amount of any accrued and unpaid yield. The yield on thePreferred Units accrues at a rate of 8.0% per annum on a daily basis,compounded quarterly, on the amount of unreturned capital with respect to suchPreferred Units.

The Common Units, whichare fully vested upon issuance, each have one vote per unit. The Common Unitsare subordinate to the Preferred Units, including the unpaid yield. Holderswill be entitled to participate in distributions in respect to the Common Units,if and when approved by Holdings’ Board of Managers, ratably on a per-unitbasis.

The Founders Units vestpro rata on a daily basis during the four-year vesting period followingissuance, subject to accelerated vesting upon the occurrence of certain events.The Founders Units are subordinate to the Preferred Units, including the unpaidyield. Holders will be entitled to participate in distributions in respect tothe vested Founder Unit, if and when approved by Holdings’ Board of Managers, ratablyon a per-unit basis. The Founders Units may have a fair market value in excessof their original cost at the time of their issuance in connection with the June 29,2007 transaction. Since the Founders Units contain a vesting requirementpredicated upon an employee’s future service with the Company, we would berequired to recognize compensation cost, represented as the fair value of theFounders Units over the original cost of the units through the vesting period.We are in the process of obtaining an independent appraisal of the FoundersUnits as of the closing date of the Merger.

In the event of aseparation in employment of a management investor, the terms of the Equity Planprovide certain repurchase options to Holdings and certain of its affiliatesand a put option to the separated management investor.  Upon the separation of a management investor,Holdings would first have an option to repurchase the management investor’sPreferred Units, Common Units and Founders Units. If Holdings or its affiliatesdo not exercise such option, then the applicable separated management investorhas the right to put to Holdings the Preferred Units, the Common Units andFounders Units. Under the put to Holdings, payment would be made in cash forthe Preferred Units and via the issuance of a subordinated promissory note tothe separated management investor for the Common Units and Founder Units.

11

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

Under the repurchaseoption or put option discussed above, the repurchase price of the Common Unitsand the vested Founders Units would be at fair market value, unless theemployee termination is for Cause (as defined), which would require the vestedFounders Units to instead be repurchased at the lower of fair market value ororiginal cost. Unvested Founders Units would be repurchased at the lower offair market value or original cost. Preferred units would be repurchased atcost plus any unpaid accrued yield. In addition, should any units berepurchased by Holdings under the Equity Plan, we may be required to fund thoserepurchases.

Since units issuedpursuant to the Equity Plan are subject to repurchase due to events outside ofour control, we are required to classify the management owned vested EquityPlan units outside of permanent equity on our consolidated balance sheet atfair market value. Accordingly, as of June 30, 2007 we have $34.5 recordedas redeemable equity units on our consolidated balance sheet that representedthe management owned Preferred Units and Common Units, all of which were fullyvested upon issuance. The Founders Units are unvested as of June 30, 2007.On a quarterly basis, we will adjust the reported value by marking themanagement owned Equity Plan units to market, which will result in anadjustment to additional paid-in capital for the Preferred Units, Common Unitsand vested Founders Units.

**(5)**          RestructuringActivities

***(a)****         Restructuringactivities related to Predecessor purchase accounting*

Thefollowing table sets forth the activity for the six months ended June 30,2007 associated with the Company’s liabilities for restructuring related toPredecessor purchase accounting.

| ** **                       | ** ** | **Severance**   | ** ** | ** **     | ** ** | ** ** | ** ** |
|----------------------------------|------------|-----------------|------------|----------------|------------|------------|------------|
| ** **                       | ** ** | **and**         | ** ** | ** **     | ** ** | ** ** | ** ** |
| ** **                       | ** ** | **termination** | ** ** | **Facilities** | ** ** | ** ** | ** ** |
| ** **                       | ** ** | **benefits**    | ** ** | **related**    | ** ** | **Total**  | ** ** |
| Balance at  January 1, 2007 |       |            | $          | 3.6            |       |       |       | $ | 4.7 |   |   | $ | 8.3 |   |
| Accruals charged to Goodwill     |       |            | 1.9        |           |       |       | 1.3        |   |   | 3.2 |   |
| Cash payments/other              |       |            | (0.9       | )              |       |       | (0.4       | ) |   | (1.3 | ) |
| Currency translation changes     |       |            | 0.1        |           |       |       | 0.1        |   |   | 0.2 |   |
| Balance at June 30,  2007   |       |            | $          | 4.7            |       |       |       | $ | 5.7 |   |   | $ | 10.4 |   |

 

During the second quarterof 2007, we implemented a restructuring program to integrate KMF LaborchemieHandels GmbH (“KMF”) into our existing operations. Accordingly, we recordedrestructuring accruals of approximately $3.2, which have been recorded asadjustments to acquisition costs (increases to goodwill). These chargesprimarily reflect severance costs and facility closure costs. See Note 6(b) forfurther information regarding the acquisition of KMF.

***(b)****          OtherPredecessor restructuring activities*

We initiated cost reduction programs in response torelatively static market conditions and implemented reductions in force andother cost containment measures during 2005. In connection with these actions,we recorded accruals and charges to operations related to severance andfacility exit costs of $20.6 during 2005.

12

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

Thefollowing tables set forth the activity for the three and six months ended June 30,2007 and 2006 associated with the Company’s liabilities for these costreduction programs.

| ** **                               | ** ** | **Three Months Ended June 30,** | ** ** |
|------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                               | ** ** | **2007**                                            | ** ** | **2006** | ** ** |
| ** **                               | ** ** | **Severance**                                       | ** ** | ** ** | ** ** | ** ** | ** ** | **Severance** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                               | ** ** | **and**                                             | ** ** | ** ** | ** ** | ** ** | ** ** | **and** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                               | ** ** | **termination**                                     | ** ** | **Facilities** | ** ** | ** ** | ** ** | **termination** | ** ** | **Facilities** | ** ** | ** ** | ** ** |
| ** **                               | ** ** | **benefits**                                        | ** ** | **related** | ** ** | **Total** | ** ** | **benefits** | ** ** | **related** | ** ** | **Total** | ** ** |
| Balance at  beginning of period          |       |                                                | $          | 1.3 |   |   |   | $ | — |   |   | $ | 1.3 |   |   | $ | 4.2 |   |   |   | $ | 0.1 |   |   | $ | 4.3 |   |
| Accruals credited to earnings by segment |       |                                                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| North American Lab                       |       |                                                | —     |   |   |   | — |   |   | — |   |   | (0.8 | ) |   |   | — |   |   | (0.8 | ) |
| Cash payments/other                      |       |                                                | (0.1       | ) |   |   | — |   |   | (0.1 | ) |   | (1.2 | ) |   |   | — |   |   | (1.2 | ) |
| Currency translation changes             |       |                                                | —     |   |   |   | — |   |   | — |   |   | 0.1 |   |   |   | — |   |   | 0.1 |   |
| Balance at end of period                 |       |                                                | $          | 1.2 |   |   |   | $ | — |   |   | $ | 1.2 |   |   | $ | 2.3 |   |   |   | $ | 0.1 |   |   | $ | 2.4 |   |

 

| ** **                               | ** ** | **Six Months Ended June 30,** | ** ** |
|------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                               | ** ** | **2007**                                          | ** ** | **2006** | ** ** |
| ** **                               | ** ** | **Severance**                                     | ** ** | ** ** | ** ** | ** ** | ** ** | **Severance** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                               | ** ** | **and**                                           | ** ** | ** ** | ** ** | ** ** | ** ** | **and** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                               | ** ** | **termination**                                   | ** ** | **Facilities** | ** ** | ** ** | ** ** | **termination** | ** ** | **Facilities** | ** ** | ** ** | ** ** |
| ** **                               | ** ** | **benefits**                                      | ** ** | **related** | ** ** | **Total** | ** ** | **benefits** | ** ** | **related** | ** ** | **Total** | ** ** |
| Balance at beginning  of period          |       |                                              | $          | 1.6 |   |   |   | $ | — |   |   | $ | 1.6 |   |   | $ | 9.8 |   |   |   | $ | 0.3 |   |   | $ | 10.1 |   |
| Accruals credited to earnings by segment |       |                                              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| North American Lab                       |       |                                              | —     |   |   |   | — |   |   | — |   |   | (1.0 | ) |   |   | — |   |   | (1.0 | ) |
| Cash payments/other                      |       |                                              | (0.4       | ) |   |   | — |   |   | (0.4 | ) |   | (6.6 | ) |   |   | (0.2 | ) |   | (6.8 | ) |
| Currency translation changes             |       |                                              | —     |   |   |   | — |   |   | — |   |   | 0.1 |   |   |   | — |   |   | 0.1 |   |
| Balance at end of period                 |       |                                              | $          | 1.2 |   |   |   | $ | — |   |   | $ | 1.2 |   |   | $ | 2.3 |   |   |   | $ | 0.1 |   |   | $ | 2.4 |   |

 

As of June 30, 2007,$6.0 of our aggregate restructuring liabilities are included in accruedexpenses and $5.6 are included in other long-term liabilities. As of December 31,2006, $4.1 of our aggregate restructuring liabilities are included in accruedexpenses and $5.8 are included in other long-term liabilities.

**(6)**          Accountingfor Goodwill and Other Intangible Assets

***(a)***   The Merger

The Merger was accounted for under the purchase methodof accounting. Under purchase accounting, tangible and identifiable intangibleassets acquired and liabilities assumed will be recorded at their respectivefair values. The third party valuations and other studies which will providethe basis for such an allocation have not progressed to a stage where there issufficient information to make a final allocation in the accompanying Successorfinancial statements. Accordingly, our purchase accounting adjustments as of June 30,2007 are preliminary. Once the final allocation is determined, any remainingexcess purchase price will be adjusted through goodwill.

13

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

The excess purchase price over thepreliminary estimates of the fair market value of the identifiable tangible andintangible assets and liabilities of the Company is reflected as goodwill inthe accompanying unaudited consolidated balance sheet as of June 30, 2007.The following table summarizes the preliminary allocation of the purchase price:

| Merger  consideration, including estimated transaction costs of $109.3 |   | $        | 4,002.3 |   |
|------------------------------------------------------------------------|--------|----------|---------|--------|
| Net liabilities  assumed                                               |   | 321.7    |    |
| Intangible assets  acquired                                            |   | (2,427.0 | )       |
| Goodwill                                                               |   | $        | 1,897.0 |   |

 

Merger consideration on the consolidated statement ofcash flows of $3,592.7 excludes cash and cash equivalents acquired of $135.8,management equity in the predecessor of $35.6 exchanged for equity in Holdings,and payments made in July 2007 related to the Predecessor’s Stock Plan of$182.2, residual equity amounts due the Predecessor’s stockholders of $27.8,the pay off of debt and interest of $25.7 and other liabilities of $2.5.

Included in merger consideration are pre-paymentpenalties and tender offer premiums of approximately $93.0 related to debtobligations of the Company that were redeemed in connection with the Merger.

Thefollowing unaudited pro-forma financial information presents a summary ofconsolidated results of operations of the Company as if the Merger had occurredas of January 1, 2006.

| ** **                | ** ** | **Six Months** | ** ** | ** **            | ** ** |
|---------------------------|------------|---------------------|------------|-----------------------|------------|
| ** **                | ** ** | **Ended**           | ** ** | **Year Ended**   | ** ** |
| ** **                | ** ** | **June 30,**   | ** ** | **December 31,** | ** ** |
| ** **                | ** ** | **2007**            | ** ** | **2006**              | ** ** |
| Net sales                 |       |                | $          | 1,699.3               |       |   |   | $ | 3,257.6 |   |   |
| Loss before  income taxes |       |                | (38.5      | )                     |       |   | (97.9 | ) |   |
| Net loss                  |       |                | (24.8      | )                     |       |   | (63.1 | ) |   |

 

These unaudited pro-formaresults have been prepared for comparative purposes only and primarily includeadjustments for interest expense, depreciation, amortization, income taxes andexclude share-based compensation related to the Predecessor Stock Plan and the Mergerexpenses. These results do not purport to be indicative of the results ofoperations which actually would have resulted had the Merger occurred at thebeginning of 2006, or of the future results of operations of the Company.

***(b)***   KMFAcquisition

We had a 24% investment in KMF, which was accountedfor using the equity method. On April 2, 2007, we acquired the remaining76% interest in KMF for approximately $21.4, offset by approximately $2.2 ofacquired cash (the “KMF Acquisition”). KMF is a German-based scientificlaboratory supply distribution firm that offers highly diversified chemicalsand consumable products to the laboratory industry in Germany. The results ofKMF have been included in the European Lab segment from the date of acquisitionon a consolidated basis.

14

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

The excess purchase priceover the estimates of the fair market value of the identifiable tangible assetsand liabilities for the KMF Acquisition is preliminary and will be adjusted inthe third quarter. Had the KMF Acquisition occurred at the beginning of 2006,the pro-forma consolidated statements of operations would not have beenmaterially different from the amounts reported.

***(c)***   Goodwilland Other Intangible Assets

Theamounts assigned to goodwill and other intangible assets in connection with theMerger are preliminary as of June 30, 2007. Changes in the carrying amountof goodwill by segment for the period January 1—June 29, 2007 are asfollows:

| ** **                                                              | ** ** | **North  American Lab** | ** ** | **European  Lab** | ** ** | **Science  Education** | ** ** | **Total** | ** ** |
|-------------------------------------------------------------------------|------------|------------------------------|------------|-------------------|------------|------------------------|------------|-----------|------------|
| Balance at  January 1, 2007                                        |       |                         | $          | 648.6             |       |                   |       | $         | 216.8      |   |   |   | $ | 67.7 | ** ** |   | $ | 933.1 |   |
| Adjustment related to adoption of FIN 48 (See Note 3(a))           |       |                         | (1.6       | )                 |       |                   | —     |      |       |   | — | ** ** |   | (1.6 | ) |
| Additional consideration for Sino Chemical Company  (Pte.) Limited |       |                         | 0.1        |              |       |                   | —     |      |       |   | — | ** ** |   | 0.1 |   |
| Initial KMF allocation                                                  |       |                         | —     |              |       |                   | 29.8       |      |       |   | — | ** ** |   | 29.8 |   |
| Other                                                                   |       |                         | (0.2       | )                 |       |                   | (0.4       | )         |       |   | 0.1 | ** ** |   | (0.5 | ) |
| Currency translation changes                                            |       |                         | 16.0       |              |       |                   | 5.5        |      |       |   | — | ** ** |   | 21.5 |   |
| Balance at  June 29, 2007                                          |       |                         | $          | 662.9             |       |                   |       | $         | 251.7      |   |   |   | $ | 67.8 | ** ** |   | 982.4 |   |
| Preliminary increase due to Merger                                      |       |                         |       |              |       |                   |       |      |       |   |   | ** ** |   | 914.6 |   |
| Balance at June 30,  2007                                          |       |                         |       |              |       |                   |       |      |       |   |   | ** ** |   | $ | 1,897.0 |   |

 

15

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

Otherintangible assets, net for each of the reporting periods is shown in the tablebelow:

| ** **                                                                                                 | ** ** | ** **        | ** ** | **Predecessor**  | ** ** |
|------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|------------------|------------|
| ** **                                                                                                 | ** ** | ** **        | ** ** | **Weighted**     | ** ** | ** ** | ** ** |
| ** **                                                                                                 | ** ** | ** **        | ** ** | **Average**      | ** ** | ** ** | ** ** |
| ** **                                                                                                 | ** ** | **Successor**     | ** ** | **Amortization** | ** ** | ** ** | ** ** |
| ** **                                                                                                 | ** ** | **June 30,** | ** ** | **Period**       | ** ** | **December 31,** | ** ** |
| ** **                                                                                                 | ** ** | **2007**          | ** ** | **(Years)**      | ** ** | **2006** | ** ** |
| Amortizable  intangible assets:                                                                            |       |              |       |             |       |   |   |   |   |   |   |
| Customer relationships in North America (net of  accumulated amortization of $0.1 and $20.5, respectively) |       | $                 | 938.9      |             |       | 32.8 |   |   |   | $ | 225.4 |   |   |
| Customer relationships in Europe (net of accumulated amortization  of $0.1 and $11.4, respectively)   |       | 494.9             |       |             | 20.3       |   |   |   | 74.6 |   |   |
| Chemical supply agreements (net of accumulated  amortization of $0.0 and $9.1, respectively)               |       | 52.0              |       |             | 10.0       |   |   |   | 23.6 |   |   |
| Other (net of accumulated amortization of $0.0 and  $1.0, respectively)                                    |       | 18.0              |       |             | 4.3        |   |   |   | 0.2 |   |   |
| Total amortizable intangible assets (net of  accumulated amortization of $0.2 and $42.0, respectively)     |       | 1,503.8           |       |             |       |   |   |   | 323.8 |   |   |
| Indefinite-lived  intangible assets:                                                                       |       |              |       |             |       |   |   |   |   |   |   |
| Trademarks and tradenames                                                                                  |       | 923.0             |       |             |       |   |   |   | 228.5 |   |   |
| Total intangible  assets, net                                                                              |       | $                 | 2,426.8    |             |       |   |   |   |   | $ | 552.3 |   |   |

 

The amounts assigned to amortizable andindefinite-lived intangible assets as a result of the Merger are preliminaryand amortization periods used for the Successor’s amortizable intangible assetsare preliminary as of June 30, 2007.

Amortizationexpense for each of the reporting periods is shown in the table below:

| **Three Months Ended June 30, 2007** | ** ** | **Predecessor**             | ** ** | **Six Months Ended June 30, 2007** | ** ** | **Predecessor**   |
|---------------------------------------------------------------|------------|-----------------------------|------------|-------------------------------------------------------------|------------|-------------------|
| **Successor**                                                 | ** ** | **Predecessor**             | ** ** | **Three Months**                                       | ** ** | **Successor**     | ** ** | **Predecessor** | ** ** | **Six Months** |
| **June 30,**                                             | ** ** | **April 1 -**     | ** ** | **Ended**                                                   | ** ** | **June 30,** | ** ** | **January 1 -** | ** ** | **Ended** |
| **2007**                                                      | ** ** | **June 29, 2007** | ** ** | **June 30, 2006**                                 | ** ** | **2007**          | ** ** | **June 29, 2007** | ** ** | **June 30, 2006** |
| $0.2                                                          |       | $3.9                        |       | $3.9                                                        |       | $0.2              |   | $7.8 |   | $7.8 |

 

16

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

Theestimated amortization expense for each of the five succeeding years andthereafter is as follows:

| Years ended  December 31: |   |    |    |
|--------------------------------|--------|---------|---------|
| 2007(1)                        |   | $       | 39.2    |   |
| 2008                           |   | 78.4    |    |
| 2009                           |   | 78.4    |    |
| 2010                           |   | 78.4    |    |
| 2011                           |   | 78.4    |    |
| Thereafter                     |   | 1,151.0 |    |
|                           |   | $       | 1,503.8 |   |

 

----

(1)          Amountrepresents estimated amortization expense for the remaining six months ending December 31,2007.

**(7)**          Debt

**Thefollowing is a summary**of our debtobligations:

| ** **                                           | ** ** | **Successor**     | ** ** | **Predecessor**       | ** ** |
|------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                           | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
| ** **                                           | ** ** | **2007**          | ** ** | **2006**              | ** ** |
| Senior Secured  Credit Facility                      |       | $                 | 1,426.2    |                  |       | $ | — |   |   |
| 10.25%/11.25%  Unsecured Senior Notes due 2015       |       | 675.0             |       |                  | —     |   |   |
| 10.75% Unsecured  Senior Subordinated Notes due 2017 |       | 522.3             |       |                  | —     |   |   |
| Prior Senior  Secured Credit Facility                |       | —            |       |                  | 448.7      |   |   |
| 6.875% Unsecured  Senior Notes due 2012              |       | —            |       |                  | 200.0      |   |   |
| 8% Unsecured  Senior Subordinated Notes due 2014     |       | 1.0               |       |                  | 320.0      |   |   |
| 9.625% Senior  Discount Notes due 2015               |       | —            |       |                  | 362.8      |   |   |
| Senior Floating  Rate Notes due 2011                 |       | 25.5              |       |                  | 350.0      |   |   |
| Bank loans                                           |       | —            |       |                  | 0.3        |   |   |
| Capital leases                                       |       | 5.5               |       |                  | 5.8        |   |   |
| Total debt                                           |       | 2,655.5           |       |                  | 1,687.6    |   |   |
| Less short-term  portion                             |       | (26.5             | )          |                  | (21.8      | ) |   |
| Total long  term-portion                             |       | $                 | 2,629.0    |                  |       | $ | 1,665.8 |   |   |

 

17

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

In connection with the financing of the Merger, MergerSub incurred the following debt obligations: (1) the 10.25%/11.25% SeniorNotes, (2) the 10.75% Senior Subordinated Notes, and (3) the SeniorSecured Credit Facility. In connection with the Merger, the Company assumed allof these debt obligations pursuant to joinder agreements.

***(a) Senior Secured Credit Facility***

The Senior Secured Credit Facility is with a syndicateof lenders and provides for aggregate maximum borrowings consisting of (1) termloans denominated in Euros in an aggregate principal amount currentlyoutstanding of $811.2, (2) term loans denominated in U.S. dollars in anaggregate principal amount currently outstanding of $615.0, and (3) amulti-currency revolving loan facility, providing for an equivalent in U.S.dollars of up to $250.0 in multi-currency revolving loans (including, withoutlimitation, swingline borrowings and letters of credit, in each case, subjectto certain sublimits). The multi-currency revolving loan facility permits oneor more of our foreign subsidiaries to become foreign borrowers under suchfacility upon the satisfaction of certain conditions.

The Company may at any time or from time to timerequest additional tranches of term loans or increases in the amount ofcommitments under the multi-currency revolving loan facility. The total amountoutstanding may not exceed in aggregate the lesser of $300.0 or an amount whichwould cause the Company’s pro-forma total net leverage ratio (as defined in thecredit agreement for the Senior Secured Credit Facility) to exceed 9.50:1.00. Theaggregate commitments under the multi-currency revolving loan facility cannotexceed 1.00x of the Company’s EBITDA (as defined in the credit agreement forthe Senior Secured Credit Facility) as of the financial statement date.

As of June 30, 2007,no amounts were outstanding under the multi-currency revolving loan facility,and we had $9.8 of undrawn letters of credit and up to $240.2 of additionaldebt that could be borrowed as revolving loans.

***Maturity; Prepayments***

The term loans mature in 2014 and the multi-currencyrevolving loan facility matures in 2013. Subject to any mandatory or optionalprepayments, the principal amounts of the term loans require quarterlyamortization payments commencing on September 30, 2009 equal to 0.25% oftheir respective original principal amounts drawn, with the final amortizationpayments due at maturity.

Subject to certainexceptions, the term loans are subject to mandatory prepayment in an amountequal to:

·       100%of the net cash proceeds received by the Company or any of its restrictedsubsidiaries in connection with (1) certain asset sales or (2) insurancerecoveries and/or condemnation awards greater than $25.0 in any fiscal year orgreater than $50.0 during any five fiscal year period, with that percentagebeing reduced to 50% or to 0% if certain net leverage ratios are met, subjectin each case to reinvestment rights if certain conditions are met; and

·       100%of the net cash proceeds received by the Company or any of its restrictedsubsidiaries in connection with the issuance of indebtedness other than certainpermitted indebtedness; and

18

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

·       beginningwith fiscal year 2008, 50% of the excess cash flow generated by the U.S.operations of the Company and its domestic subsidiaries, dividends (net ofassociated taxes payable upon the repatriation of any such amounts) fromcertain foreign subsidiaries and repayments (net of associated taxes payableupon the repatriation of any such amounts) of intercompany debt outstanding atclosing of the Merger (but excluding repayment amounts which are used to repayrevolving loans made on the closing date), minus certain capital expenditures,investments, restricted payments and mandatory repayments of term loans, withsuch percentage being to reduced to 25% or to 0% if certain net leverage ratiosare met.

***Security; Guarantees***

The obligations under the Senior Secured CreditFacility are guaranteed by VWR Investors, Inc., the Company’s directparent, and each of the Company’s direct and indirect wholly owned domesticrestricted subsidiaries (other than (i) unrestricted subsidiaries, (ii) immaterialsubsidiaries, (iii) any direct or indirect U.S. subsidiary of a direct orindirect foreign subsidiary, (iv) captive insurance subsidiaries, (v) non-profitsubsidiaries, (vi) any receivables subsidiary, (vii) special purposesentities, (viii) subsidiaries prohibited by law or contract fromguaranteeing the Senior Secured Credit Facility, (ix) certain subsidiariesacquired after the closing date of the Merger and (x) other subsidiariesfor which the costs or other consequences of providing a guarantee areexcessive in relation to the benefits to be obtained by the lenders)(collectively, the “Subsidiary Guarantors”). In addition, the Senior SecuredCredit Facility and the guarantees thereunder are secured by security interestsin and pledges of or liens on substantially all of the tangible and intangibleassets of the Company and the guarantors, including pledges of all the capitalstock of all direct and indirect U.S. subsidiaries of the Company and of up to65% of the capital stock of each first-tier foreign subsidiary and foreignsubsidiary holding company (collectively, the “Collateral”).

In the event that anyforeign subsidiary of the Company satisfies the conditions necessary to borrowunder the multi-currency revolving loan facility, its borrowings would beguaranteed by the Company and the Subsidiary Guarantors. The obligations of aforeign subsidiary borrower would be secured by substantially all of thetangible and intangible assets of such foreign subsidiary borrower, includingthe capital stock of certain subsidiaries of the foreign subsidiary borrower.The guarantees of the Company and the Subsidiary Guarantors of the foreignsubsidiary borrower’s obligations would be secured by the same collateraldescribed in the previous paragraph, but would include 100% of the capitalstock of certain foreign subsidiaries of the Company and the SubsidiaryGuarantors.

***Interest***

At our election, theinterest rates on all U.S. dollar loans other than swingline loans maygenerally be based on either (1) the then applicable British BankersAssociation London Interbank Offered Rate (commonly known as U.S. Libor) plus avariable margin, or (2) the then applicable alternate base rate (definedas the greater of the U.S. Prime lending rate or the Federal Funds effectiverate plus 0.5%) plus a variable margin. Swingline loans shall be denominatedonly in U.S. dollars and based on the alternate base rate plus a variablemargin.

All loans denominated inCanadian dollars may generally be based on either (1) the then applicableCanadian prime interest rate plus a variable margin, or (2) the thenapplicable average offered interest rate for Canadian bankers’ acceptances plusa variable margin.

19

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

All loans denominated inEuros shall generally be based on the then applicable interest rate determinedby the Banking Federation of the European Union (commonly known as the Euriborrate) plus a variable margin.

All loans denominated incurrencies other than U.S. dollars, Canadian dollars and Euros shall generally bebased on the then applicable London Interbank Offered Rate for each respectiveloan and currency of denomination plus a variable margin.

As of June 30, 2007,the interest rates on the U.S. dollar-denominated and Euro-denominated termloans were 7.86% and 6.66%, respectively.

Merger Sub entered intotwo interest rate swaps that mature on December 31, 2012 with notionalprincipal amounts of $425.0 (the “U.S. Dollar Swap”) and 300.0 million Euros(the “Euro Swap”), respectively. Beginning on December 31, 2007, thenotional value of the U.S. Dollar Swap declines over its term in annualdecrements of $25.0 through December 29, 2011 and is set at $160.0 for theperiod from December 30, 2011 through December 30, 2012, in whichFunding will receive interest at a variable rate equal to three-month U.S.LIBORand pay interest at a fixed rate of 5.47%. Beginning on December 31, 2007,the notional value of the Euro Swap declines over its term in annual decrementsof 20.0 million Euros through December 29, 2011 and is set at 110.0million Euros for the period from December 30, 2011 throughDecember 30, 2012, during which Funding will receive interest at a variablerate equal to three-month EURIBOR and pay interest at a fixed rate of 4.68%.

The aforementionedinterest rate swaps result in a fixed rate of interest for approximately 55% ofour Senior Secured Credit Facility. Accordingly, approximately 45% of theSenior Secured Credit Facility will be subject to interest at variable rates.The fair value of these swaps as of June 30, 2007 was a liability of $2.1and is reflected in other long-term liabilities, with a correspondingadjustment to accumulated other comprehensive loss, which will be amortized tointerest expense over the life of the term loans.

In June 2007, inconnection with the anticipated issuance of Euro denominated debt, Merger Subentered into a series of foreign currency forward agreements with notional amountstotaling 680.0 million Euros. These foreign currency forward agreements,designated as cash-flow hedges, were used to hedge exposure to possible changesin foreign exchange rates between the Euro and U.S dollar. These agreementswere settled upon the issuance of the Euro denominated debt with acorresponding adjustment of $9.8 to accumulated other comprehensive loss, whichwill be amortized to interest expense over the life of the underlying Eurodenominated debt.

***Fees***

The Company pays quarterly fees with respect to theSenior Secured Credit Facility, including (1) an unused commitment feeequal to 0.50% (subject to two step downs if certain net leverage ratios aremet) per year on the unused portion of the multi-currencyrevolving loan facility, and (2) letter of credit fees consistingof a participation fee (equal to the then applicable Eurodollar variable marginon the multi-currency revolving loanfacility times any outstanding letters of credit), a fronting fee (equalto 0.125% on the outstanding undrawn letters of credit paid to the issuingbank) and administrative fees.

20

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

***Representations and Warranties***

The Senior Secured CreditFacility contains customary representation and warranties, including, withoutlimitation, corporate status; legal, valid and binding documentation; noconsents; accuracy of financial statements, confidential information memorandumand other information; no material adverse change with respect to each fundingunder the multi-currency revolving loan facility; absence of undisclosedliabilities, litigation and investigations; no violation of agreements orinstruments; compliance with laws; payment of taxes; ownership of properties;inapplicability of the Investment Company Act; solvency; effectiveness ofgovernmental approvals; labor matters; environmental and other regulatorymatters; and validity, priority and perfection of security interests in theCollateral.

***Covenants***

The Senior Secured Credit Facility contains a numberof customary affirmative and negative covenants that, among other things, limitor otherwise restrict the ability of the Company and its restrictedsubsidiaries to incur or create certain additional indebtedness, issue certaintypes of common and preferred stock, create liens on assets of the Company andits restricted subsidiaries, make certain restricted payments, make certaindispositions outside the ordinary course of business, execute certain affiliatetransactions, enter into certain types of restrictive agreements, materiallychange the lines of business of the Company and its restricted subsidiariestaken as a whole, modify securities junior to the Senior Secured CreditFacility in any manner materially adverse to the interests of the lenders andmake a change to our fiscal year. As of June 30, 2007, the Company was incompliance with all covenants.

The Senior Secured CreditFacility does not contain any financial maintenance covenants that require theCompany to comply with specified financial ratios or tests, such as a minimuminterest expense coverage ratio or a maximum leverage ratio, unless the Companywishes to incur additional indebtedness associated with acquisitions or makecertain restricted payments.

***Events of Default***

The Senior Secured CreditFacility contains customary events of default including non-payment ofprincipal, interest or fees, failure to comply with covenants, inaccuracy ofrepresentations or warranties in any material respect, cross default to certainother indebtedness, impairment of security interests in collateral orinvalidity of guarantees or security documents, material judgments, change ofownership or control, and certain bankruptcy or insolvency events.

***(b)***   The10.25%/11.25% Senior Notes and 10.75% Senior Subordinated Notes

The 10.25%/11.25% SeniorNotes and the 10.75% Senior Subordinated Notes were issued pursuant torespective indentures, dated as of the closing date of the Merger, by and amongMerger Sub, the Company and the Subsidiary Guarantors.

21

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

***Ranking***

The 10.25%/11.25% Senior Notes, and relatedguarantees, are unsecured obligations of the Company and are subordinate to allof the Company’s and the Subsidiary Guarantors’ obligations under all securedindebtedness, including any borrowings under the Senior Secured Credit Facilityto the extent of the value of the assets securing such obligations, and aresubordinate to all obligations of each of the Company’s subsidiaries that isnot a guarantor of the 10.25%/11.25% Senior Notes. The 10.25%/11.25% SeniorNotes, and related guarantees, rank equally in right of payment with all of theCompany’s and the Subsidiary Guarantors’ existing and future unsecured seniorindebtedness and rank senior in right of payment to all of the Company’s andthe Subsidiary Guarantors’ existing and future subordinated indebtedness,including the 10.75% Senior Subordinated Notes.

The 10.75% SeniorSubordinated Notes, and related guarantees, are subordinate to all of theCompany’s and the Subsidiary Guarantors’ existing and future securedindebtedness to the extent of the value of the assets securing suchindebtedness and effectively subordinate to all obligations of each of theCompany’s subsidiaries that is not a guarantor of the of the 10.75% SeniorSubordinated Notes. The 10.75% Senior Subordinated Notes, and the relatedguarantees, rank junior in right of payment to all of the Company’s and theSubsidiary Guarantors’ existing and future senior indebtedness, including the10.25%/11.25% Senior Notes and any borrowings under the Senior Secured CreditFacility, rank equally in right of payment with all of the Company’s and theSubsidiary Guarantors’ future unsecured, senior subordinated indebtedness andrank senior in right of payment to all of the Company’s and the SubsidiaryGuarantors’ future indebtedness that is expressly subordinated in right ofpayment to the 10.75% Senior Subordinated Notes.

***Maturity; Interest Payments***

The 10.25%/11.25% Senior Notes will mature on July 15,2015. Interest on the 10.25%/11.25% Senior Notes will be payable twice a year,on each January 15 and July 15, beginning January 15, 2008.Until July 15, 2011, the Company may elect to pay interest on the10.25%/11.25% Senior Notes (1) entirely in cash (“Cash Interest”), (2) entirelyby increasing the principal amount of the 10.25%/11.25% Senior Notes (“PIKInterest”) or (3) 50% as Cash Interest and 50% as PIK Interest. PIKInterest will accrue on the 10.25%/11.25% Senior Notes at a rate per annumequal to the cash interest rate of 10.25% plus 100 basis points.

The 10.75% SeniorSubordinated Notes consist of terms loans denominated in Euros in an aggregateprincipal amount currently outstanding of $169.0 as of June 30, 2007 and term loans denominated inU.S. dollars in an aggregate principal amount currently outstanding of $353.3.The 10.75% Senior Subordinated Notes will mature on June 30, 2017.Interest on the 10.75% Senior Subordinated Notes will be payable quarterly on March 31,June 30, September 30 and December 31 of each year, beginning onSeptember 30, 2007. On any interest payment date on or prior to the thirdanniversary of the issuance of the 10.75% Senior Subordinated Notes, theCompany will have the option to capitalize up to approximately 28% per annum ofthe interest payable on such date by capitalizing such interest and adding itto the then outstanding principal amount of the 10.75% Senior SubordinatedNotes.

22

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

***Redemption***

The Company may redeem some or all of the10.25%/11.25% Senior Notes at any time prior to July 15, 2011 at a priceequal to 100% of the principal amount, plus any accrued and unpaid interest tothe date of redemption, plus a “make whole” premium. Before July 15, 2011,the Company may redeem up to 35% of the original aggregate principal amount ofthe 10.25%/11.25% Senior Notes at a redemption price equal to 110.250% of theiraggregate principal amount, plus accrued interest, with the net cash proceedsof certain equity offerings. In addition, on or after July 15, 2011, theCompany may redeem some or all of the 10.25%/11.25% Senior Notes at any time atredemption prices that start at 105.125% of their aggregate principal amount.The Company is required to offer to purchase the 10.25%/11.25% Senior Notes at101% of their aggregate principal amount, plus accrued interest to therepurchase date, if it experiences specific kinds of changes in control.

The Company may redeemsome or all of the 10.75% Senior Subordinated Notes at any time prior to June 30,2012 at a price equal to 100% of the principal amount, plus any accrued andunpaid interest to the date of redemption, plus a “make whole” premium. Before June 30,2012, the Company may redeem up to 40% of the original aggregate principalamount of the 10.75% Senior Subordinated Notes at a redemption price equal to110.750% of their aggregate principal amount, plus accrued interest, with thenet cash proceeds of certain equity offerings. In addition, on or after June 30,2012, the Company may redeem some or all of the 10.75% Senior SubordinatedNotes at any time at redemption prices that start at 105.375% of theiraggregate principal amount. The Company is required to offer to purchase the10.75% Senior Subordinated Notes at 101% of their aggregate principal amount,plus accrued interest to the repurchase date, if it experiences specific kindsof changes in control.

***Covenants***

The indentures governing the 10.25%/11.25% SeniorNotes and the 10.75% Senior Subordinated Notes contain covenants that, amongother things, limit the Company’s ability and that of its restrictedsubsidiaries to make restricted payments, pay dividends, incur or createadditional indebtedness, issue certain types of common and preferred stock,make certain dispositions outside the ordinary course of business, executecertain affiliate transactions, create liens on assets of the Company andrestricted subsidiaries, and materially change our lines of business. As of June 30,2007, the Company was in compliance with the indenture covenants.

The Company may, at itsoption, redeem some or all of the 10.25%/11.25% Senior Notes and the 10.75%Senior Subordinated Notes according to the terms set forth in the indentures.If the Company experiences certain types of change of control, the Company isrequired to make an offer to purchase all or any part of such outstanding notesbased on terms set forth in the indentures.

***Events of Default***

The indentures governingthe 10.25%/11.25% Senior Notes and the 10.75% Senior Subordinated Notes providefor customary events of default including non-payment of principal or interest,failure to comply with covenants, cross-acceleration to certain otherindebtedness, material judgments and certain bankruptcy or insolvency events.

23

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

***Registration Rights***

The Company entered into a Registration RightsAgreement with respect to the 10.25%/11.25% Senior Notes (the “Senior NotesRegistration Rights Agreement”). The Company is obligated to (1) file anduse its commercially reasonable efforts to cause to become effective aregistration statement for the 10.25%/11.25% Senior Notes for other freelytradable notes issued by the Company that have substantially identical terms,and (2) file with the SEC and use its commercially reasonable efforts tocause to become effective a shelf registration statement relating to theresales of the 10.25%/11.25% Senior Notes if the Company is not able to effectthe exchange offer. The Company will be obligated to pay additional interest onthe 10.25%/11.25% Senior Notes in certain instances, including if it does notfile the registration statement within 180 days following the Merger orcomplete the related exchange offer within 30 days of the effective date of theregistration statement. If the Company fails to satisfy certain of theregistration obligations under the Senior Notes Registration Rights Agreement,it will be subject to a registration default and the annual interest on the10.25%/11.25% Senior Notes will increase by 0.25% and by an additional 0.25%for each subsequent 90-day period during which the registration defaultcontinues, up to a maximum additional interest rate of 1.0% per annum.

The Company entered into a Registration RightsAgreement with respect to the 10.75% Senior Subordinated Notes (the “SubordinatedNotes Registration Rights Agreements”). The Subordinated Notes RegistrationRights Agreement contains substantially similar terms to the Senior NotesRegistration Rights Agreement, except that the Company and the SubsidiaryGuarantors are not obligated to file a registration statement with respect toan offer to exchange the 10.75% Senior Subordinated Notes for other freelytradable securities until holders of a majority in principal amount of the10.75% Senior Subordinated Notes request that such a filing and offer be made.If such a request is made, the Company and the Subsidiary Guarantors must filesuch a registration statement with 90 days of the request.

The Company intends tocomplete the aforementioned exchange offer within the time frame stipulated inthe Senior Notes Registration Rights Agreement with respect to the10.25%/11.25% Senior Notes.

***(c)***   PredecessorDebt

Substantially all of the debt obligations of theCompany outstanding prior to the consummation of the Merger were redeemed inconnection with the Merger primarily with the proceeds of the debt obligationsdescribed in Note 7(a) and (b) above. Refer to Note 12 in the Form 10-Kfor further information on the terms and conditions related to those debtobligations. The interest rates on the U.S. dollar-denominated andEuro-denominated term loans under the Company’s prior Senior Secured CreditFacility were 7.61% and 6.25%, respectively, as of June 29, 2007. The cashinterest rate on the senior floating rate notes due 2011 (“Senior Floating RateNotes”) was 9.86% as of June 30, 2007.

On May 30, 2007, Merger Sub commenced tenderoffers and consent solicitations in connection with the Merger for any and allof the following debt securities outstanding prior to the consummation of theMerger: (i) the Senior Floating Rate Notes, (ii) the 9.625% seniordiscount notes due 2015 (“Senior Discount Notes”), (iii) the 8% unsecuredsenior subordinated notes due 2014 (“Senior Subordinated Notes”), and (iv) the6.875% unsecured senior notes due 2012 (“Senior Notes”), in each case, on theterms 

24

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

and subject to theconditions set forth in Merger Sub’s Offer to Purchase and Consent SolicitationStatement.

On the closing date of the Merger, Merger Sub acceptedand paid for the following notes tendered into the tender offers: (i) 100%of the outstanding Senior Notes; (ii) approximately 99.69% of theoutstanding Senior Subordinated Notes; (iii) 100% of the outstandingSenior Discount Notes; and (iv) approximately 92.72% of the outstandingSenior Floating Rate Notes. On July 2, 2007, the Company redeemed theremaining outstanding Senior Floating Rate Notes. Effective on the closing dateof the Merger, the indenture relating to the Senior Subordinated Notes wasamended pursuant to a supplemental indenture, which eliminated substantiallyall of the restrictive covenants and certain events of default and relatedprovisions in the indenture.

The Company entered into a bridge loan commitmentarrangement to secure funding for the Merger. This bridge loan was not utilizedbecause the Company issued the 10.25%/11.25% Senior Notes. The bridge loan feeof $3.4 was paid at closing and charged to interest expense in the Successorfinancial statements.

The unamortized deferredfinancing costs of approximately $27.8 related to the debt obligations of theCompany that were redeemed in connection with the Merger were written off andcharged to interest expense in the Predecessor financial statements.

**(8)**          DefinedBenefit Plans

The Company sponsors various retirement plans for mostfull-time employees. Pension plan benefits for the defined benefit plans arebased primarily on participants’ compensation and years of credited service. Ithas been the Company’s policy to fund the minimum amount required by localregulations.

Effective June 1, 2005, the U.S. plan wascurtailed and future benefits were frozen effective May 31, 2005 for mostparticipants. Accordingly, most participants will earn no further benefitsunder the plan after that date.

At the date of acquisition, we have preliminarilyremeasured the unfunded status of our pension obligations. As a result ofpreliminary changes to the projected benefit obligations and the assumedinterest rate our unfunded status has been decreased by approximately $14.0.Other assumptions from the December 31, 2006 pension plan disclosuresremained substantially the same at June 30, 2007.

Netperiodic pension cost for our U.S. plan and our significant Non-U.S. plans inGermany, France and the UK for each of the reporting periods include thefollowing components:

| ** **                      | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|---------------------------------|------------|-----------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                      | ** ** | ** **                                          | ** ** | ** **                                        | ** ** | **German, French** | ** ** | ** ** | ** ** | ** ** | ** ** | **German, French** | ** ** |
| ** **                      | ** ** | **U.S. Plan**                                  | ** ** | **and UK Plans**                        | ** ** | **U.S. Plan** | ** ** | **and UK Plans** | ** ** |
| ** **                      | ** ** | **2007**                                            | ** ** | **2006**                                          | ** ** | **2007** | ** ** | **2006** | ** ** | **2007** | ** ** | **2006** | ** ** | **2007** | ** ** | **2006** | ** ** |
| Service cost                    |       | $                                                   | 0.5        |                                              | $          | 0.7 |   | $ | 0.7 |   | $ | 0.7 |   | $ | 1.0 |   | $ | 1.4 |   | $ | 1.4 |   | $ | 1.4 |   |
| Interest cost                   |       | 2.2                                                 |       | 2.1                                               |       | 1.3 |   | 1.1 |   | 4.4 |   | 4.2 |   | 2.5 |   | 2.0 |   |
| Expected return  on plan assets |       | (2.7                                                | )          | (2.2                                              | )          | (1.2 | ) | (0.9 | ) | (5.4 | ) | (4.5 | ) | (2.4 | ) | (1.8 | ) |
| Recognized net  actuarial loss  |       | —                                              |       | 0.1                                               |       | 0.1 |   | 0.1 |   | — |   | 0.2 |   | 0.2 |   | 0.2 |   |
| Net periodic  pension cost      |       | $                                                   | —     |                                              | $          | 0.7 |   | $ | 0.9 |   | $ | 1.0 |   | $ | — |   | $ | 1.3 |   | $ | 1.7 |   | $ | 1.8 |   |

 

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

The Company madecontributions to these plans of approximately $3.5 for the six months ended June 30,2007, and expects to make additional contributions to these plans ofapproximately $6.3 during the remainder of 2007.

**(9)**          Comprehensive(Loss) Income

Comprehensive(loss) income is determined as follows:

| ** **                               | ** ** | **Three Months Ended June 30,  2007** | ** ** | **Predecessor**                                                 | ** ** |
|------------------------------------------|------------|-----------------------------------------------------------|------------|-----------------------------------------------------------------|------------|
| ** **                               | ** ** | **Successor**                                             | ** ** | **Predecessor**                                                 | ** ** | **Three Months** | ** ** |
| ** **                               | ** ** | **June 30,**                                         | ** ** | **April 1 -**                                         | ** ** | **Ended** | ** ** |
| ** **                               | ** ** | **2007**                                                  | ** ** | **   June 29, 2007   ** | ** ** | **   June 30, 2006   ** | ** ** |
| Net (loss) income                        |       |                                                      | $          | (2.9                                                            | )          |   |   | $ | (38.5 | ) |   |   | $ | 13.4 |   |   |
| Other  comprehensive (loss) income:      |       |                                                      |       |                                                            |       |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustments |       |                                                      | —     |                                                            |       |   | 19.8 |   |   |   | 20.8 |   |   |
| Unrealized loss on derivatives           |       |                                                      | —     |                                                            |       |   | (1.1 | ) |   |   | (1.0 | ) |   |
| Comprehensive (loss)  income             |       |                                                      | $          | (2.9                                                            | )          |   |   | $ | (19.8 | ) |   |   | $ | 33.2 |   |   |

 

| ** **                               | ** ** | **Six Months Ended June 30,  2007** | ** ** | **Predecessor**                                     | ** ** |
|------------------------------------------|------------|---------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                               | ** ** | **Successor**                                           | ** ** | **Predecessor**                                     | ** ** | **Six Months** | ** ** |
| ** **                               | ** ** | **June 30,**                                       | ** ** | **January 1 -**                           | ** ** | **Ended** | ** ** |
| ** **                               | ** ** | **2007**                                                | ** ** | **  June 29, 2007  ** | ** ** | **  June 30, 2006  ** | ** ** |
| Net (loss) income                        |       |                                                    | $          | (2.9                                                | )          |   |   | $ | (25.6 | ) |   |   | $ | 24.4 |   |   |
| Other  comprehensive (loss) income:      |       |                                                    |       |                                                |       |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustments |       |                                                    | —     |                                                |       |   | 25.8 |   |   |   | 27.0 |   |   |
| Unrealized loss on derivatives           |       |                                                    | —     |                                                |       |   | (1.1 | ) |   |   | (0.5 | ) |   |
| Comprehensive (loss)  income             |       |                                                    | $          | (2.9                                                | )          |   |   | $ | (0.9 | ) |   |   | $ | 50.9 |   |   |

 

**(10)**   Commitmentsand Contingencies

The Company is involved in various environmental,contractual and product liability cases and claims and assessments which areconsidered routine to our business and from time to time we are named as adefendant in cases as a result of our distribution of scientific supplies,including litigation resulting from the alleged distribution of productscontaining asbestos by us and certain of our predecessors. While the impact ofthis litigation has typically been immaterial, there can be no assurance thatthe impact of pending cases, including those described below, and any futureclaims will not be material to our business, financial condition and results ofoperations in the future.

During 2005, the German Federal Cartel Officeinitiated an investigation with regard to our European Distribution Agreementwith Merck KGaA. The purpose of the investigation is to determine whether thisagreement violates or otherwise infringes the general prohibition ofanti-competitive agreements under either German or EU rules. The Companysubmitted information to the German Federal Cartel Office in response to itsinitial request. During 2007, the German Federal Cartel Office requestedadditional information that we have provided. We cannot assess the likelyoutcome of the investigation or potential economic impact associated with anadverse ruling. In connection with the 

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

Merger, we recordedintangible assets related to our European Distribution Agreement with MerckKGaA of approximately $52.0 as of June 30, 2007.

On March 28, 2006,the Company was served with a complaint filed in the United States DistrictCourt, Western District of New York, by Corning Incorporated (“Corning”)alleging a breach of contract and unliquidated damages. In April 2006,Corning amended its complaint to allege trademark and unfair competitionclaims. In November 2006, the Court dismissed Corning’s breach of contractclaim, but in March 2007, reconsidered its ruling and has now permittedCorning to proceed with the claim. In January 2007, the Company filedcounterclaims for breach of rebate obligation, unfair competition and tortiousinterference. The Company believes Corning’s claims are without merit and willvigorously defend itself against those claims and pursue its counterclaims.

**(11)**   Transactionswith Related Parties

***(a)****         Transactionswith Debevoise & Plimpton LLP*

The Company was providedlegal services by Debevoise & Plimpton LLP related to the Merger. A seniormember of that law firm is related to an individual that was a former member ofour Board of Directors and a principal of CD&R. Fees for services renderedin connection with the Merger of $2.5 are included in Merger expenses.

***(b)****          Transactionswith Madison Dearborn*

On the closing date of theMerger, an affiliate of Madison Dearborn received a fee of $35.6 fortransaction services rendered in connection with the Merger pursuant to anagreement entered into on the closing date of the Merger between the Companyand this affiliate (the “Management Services Agreement”). This fee was recordedas a reduction to additional paid-in capital since it related to the equityissuance of the Company. In addition, pursuant to the Management ServicesAgreement, this affiliate will provide the Company with management andconsulting services and financial and other advisory services and will be paidan aggregate annual management fee of $2.0 in connection with the provision ofsuch services as well as board level services. The Management ServicesAgreement shall remain in effect until the date on which none of MadisonDearborn or its affiliates hold directly or indirectly any equity securities ofthe ultimate parent of the Company or its successors.

**(12)**   SegmentFinancial Information

The Company reportsfinancial results on the basis of the following three business segments: NorthAmerican Lab, European Lab and Science Education. The Company’s operatingsegments have been identified giving consideration to both geographic areas andthe nature of products among businesses within its geographic area.

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**VWR FUNDING, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions, except share data) (Unaudited)**

Selectedsegment financial information and reconciliation of reported operating incomeby segment to income before income taxes are presented below. Inter-segmentactivity has been eliminated. Therefore, revenues reported for each operatingsegment are substantially all from external customers.

| ** **                          | ** ** | **Three Months Ended June 30, 2007**             | ** ** | **Predecessor** | ** ** | **Six Months Ended June 30, 2007**                 | ** ** | **Predecessor**             | ** ** |
|-------------------------------------|------------|---------------------------------------------------------------------------|------------|-----------------|------------|-----------------------------------------------------------------------------|------------|-----------------------------|------------|
| ** **                          | ** ** | **     Successor     ** | ** ** | ** **      | ** ** | **     Predecessor     ** | ** ** | **Three Months**       | ** ** | **     Successor     ** | ** ** | ** ** | ** ** | **     Predecessor     ** | ** ** | **Six Months** | ** ** |
| ** **                          | ** ** | **June 30,**                                                         | ** ** | ** **      | ** ** | **April 1 -**                                                     | ** ** | **Ended**                   | ** ** | **June 30,** | ** ** | ** ** | ** ** | **January 1 -** | ** ** | **Ended** | ** ** |
| ** **                          | ** ** | **2007**                                                                  | ** ** | ** **      | ** ** | **June 29, 2007**                                                 | ** ** | **June 30, 2006** | ** ** | **2007** | ** ** | ** ** | ** ** | **June 29, 2007** | ** ** | **June 30, 2006** | ** ** |
| **Net Sales**                       | ** ** |                                                                      | ** ** | ** **      |       |                                                                        |       |                        | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| North American Lab                  |       |                                                                      | $          | —          |       |                                                                        |       |                        |       | $ | 502.3 |   |   |   | $ | 500.3 |   |   |   | $ | — |   |   |   |   |   | $ | 1,003.7 |   |   |   | $ | 992.5 |   |   |
| European Lab                        |       |                                                                      | —     |            |       |                                                                        |       |                        | 316.8      |   |   |   | 277.6 |   |   |   | — |   |   |   |   |   | 630.4 |   |   |   | 550.5 |   |   |
| Science Education                   |       |                                                                      | —     |            |       |                                                                        |       |                        | 37.1       |   |   |   | 37.1 |   |   |   | — |   |   |   |   |   | 65.2 |   |   |   | 67.8 |   |   |
| Total                               |       |                                                                      | $          | —          |       |                                                                        |       |                        |       | $ | 856.2 |   |   |   | $ | 815.0 |   |   |   | $ | — |   |   |   |   |   | $ | 1,699.3 |   |   |   | $ | 1,610.8 |   |   |
| **Operating (Loss) Income**         | ** ** |                                                                      | ** ** | ** **      |       |                                                                        |       |                        | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| North American Lab                  |       |                                                                      | $          | (0.1            | )          |                                                                        |       |                        |       | $ | (17.6 | ) |   |   | $ | 27.2 |   |   |   | $ | (0.1 | ) |   |   |   |   | $ | 15.0 |   |   |   | $ | 56.6 |   |   |
| European Lab                        |       |                                                                      | (0.1       | )               |       |                                                                        |       |                        | 18.9       |   |   |   | 14.4 |   |   |   | (0.1 | ) |   |   |   |   | 41.8 |   |   |   | 28.7 |   |   |
| Science Education                   |       |                                                                      | —     |            |       |                                                                        |       |                        | 3.3        |   |   |   | 3.9 |   |   |   | — |   |   |   |   |   | 4.3 |   |   |   | 6.3 |   |   |
| Total                               |       |                                                                      | (0.2       | )               |       |                                                                        |       |                        | 4.6        |   |   |   | 45.5 |   |   |   | (0.2 | ) |   |   |   |   | 61.1 |   |   |   | 91.6 |   |   |
| Interest income                     |       |                                                                      | —     |            |       |                                                                        |       |                        | (1.6       | ) |   |   | (1.5 | ) |   |   | — |   |   |   |   |   | (3.3 | ) |   |   | (2.8 | ) |   |
| Interest expense                    |       |                                                                      | 4.6        |            |       |                                                                        |       |                        | 64.4       |   |   |   | 28.2 |   |   |   | 4.6 |   |   |   |   |   | 101.8 |   |   |   | 56.9 |   |   |
| Other (income) expense, net         |       |                                                                      | —     |            |       |                                                                        |       |                        | (3.4       | ) |   |   | (0.4 | ) |   |   | — |   |   |   |   |   | (3.5 | ) |   |   | 0.4 |   |   |
| (Loss) income  before income  taxes |       |                                                                      | $          | (4.8            | )          |                                                                        |       |                        |       | $ | (54.8 | ) |   |   | $ | 19.2 |   |   |   | $ | (4.8 | ) |   |   |   |   | $ | (33.9 | ) |   |   | $ | 37.1 |   |   |

 

**(13)**   SubsequentEvent

On July 2, 2007, we acquired Bie &Berntsen A-S, which is a Danish scientific laboratory supply distributor. The purchaseprice was funded from cash and cash equivalents on hand.

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**Item 2—*Management’s Discussion and Analysis of Financial Condition and Resultsof Operations***

**Forward-LookingStatements**

This Form 10-Q contains forward-lookingstatements within the meaning of Section 27A of the Securities Act, and Section 21Eof the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Allstatements other than statements of historical fact included in this Form 10-Qmay constitute forward-looking statements. We have based these forward-lookingstatements on our current expectations and projections about future events.Although we believe that our assumptions made in connection with theforward-looking statements are reasonable, there can be no assurances that theassumptions and expectations will prove to be correct.

Forward-lookingstatements are inherently subject to risks, uncertainties and assumptions.Forward-looking statements are not guarantees of performance. You should notplace undue reliance on these statements. You should understand that thefollowing important factors, in addition to those discussed in “Item 1A—RiskFactors” in the Form 10-K and elsewhere in the Form 10-K and inthis Form 10-Q, could affect our future results and could causethose results or other outcomes to differ materially from those expressed orimplied in our forward-looking statements:

·       actionsby, and our ability to maintain our relationships with, manufacturers,customers, carriers and other third parties;

·       lossof our key executive officers;

·       ourability to consummate and integrate potential acquisitions;

·       theeffect of political and economic conditions, inflation and interest ratesworldwide;

·       theeffect of changes in laws and regulations, including changes in accountingstandards, trade, tax, price controls and other regulatory matters;

·       increasedcompetition from other companies in our industry and our ability to retain orincrease our market shares in the principal geographical areas in which weoperate; and

·       ourability to generate sufficient funds to meet our debt service obligations,capital expenditure program requirements, ongoing operating costs and workingcapital needs.

All forward-lookingstatements attributable to us or persons acting on our behalf are expresslyqualified in their entirety by the foregoing cautionary statements. You arecautioned not to place undue reliance on the forward-looking statements, whichspeak only as of the date of this Quarterly Report on Form 10-Q. Weundertake no obligations to update or revise publicly any forward-lookingstatements, whether as a result of new information, future events or otherwise.

**Overview**

Our net sales are derived primarily from the sale ofscientific supplies, including chemicals, glassware, instruments, protectiveclothing, production supplies and other assorted laboratory products and theprovision of services, including technical services, on-site storeroomservices, warehousing and furniture design, supply and installation. Freightcosts that are billed to our customers are also included in net sales.

Our cost of sales consists primarily of the cost ofinventory shipped and the cost of labor for services. Cost of sales alsoincludes freight expenses incurred to deliver products to customers as well ascredits for rebates earned from suppliers.

SG&A expensesprimarily reflect the costs of operations dedicated to generating new sales,maintaining existing customer relationships, enhancing technology capabilities,receiving and processing 

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customerorders and maintaining our distribution center facilities. These expenses alsoinclude depreciation and amortization.

**Basis of FinancialStatement Presentation**

Until June 29, 2007,we were controlled by CD&R. As a result of the Merger, affiliates ofMadison Dearborn acquired control of the Company on June 29, 2007.Accordingly, the financial statements reflect the results of operations, cashflows, and statements of stockholders’ equity and other comprehensive income(loss) using predecessor and successor time periods. In order to provide ameaningful basis of comparing our results of operations and cash flows for thesix months ended June 30, 2007, the results of operations for the “predecessor”period (January 1, 2007 through June 29, 2007) have been combinedwith the results of operations for the one day “successor” period (June 30,2007). All intercompany accounts and transactions have been eliminated. 

**Effects of theMerger**

The Merger has been accounted for using the purchasemethod of accounting. As such, our assets and liabilities were adjusted totheir respective fair values. This resulted in an increased value assigned toidentified intangible assets relating to customer relationships, trademarks andtradenames, certain adjustments to pension and post-retirement liabilities forexisting plans, the recognition of other fair value adjustments and the impactof the new debt and equity structure. These purchase accounting adjustments arepreliminary. 

The recognition of thefair value of assets acquired will result in higher net non-cash depreciationand amortization expense. The new debt incurred in connection with the Mergerwill result in a significant increase in interest expense. See Note 7 in “Item1—Financial Statements” of this Quarterly Report on Form 10-Q formore information regarding these debt obligations.

**Business Segments**

We report our financialresults on the basis of the following three business segments: North AmericanLab, European Lab and Science Education. Both the North American Lab andEuropean Lab segments are comprised of the distribution of supplies tocustomers in the pharmaceutical, biotechnology, chemical, technology, foodprocessing and consumer products industries, as well as governmental agencies,universities and research institutes, and environmental organizations. ScienceEducation is comprised of the manufacture and distribution of scientificsupplies and specialized kits to primary and secondary schools.

**Constant CurrencyAnalysis**

We maintain operations primarily in North America andin Europe. Approximately 45% of our net sales originated in currencies otherthan the U.S. dollar, principally the Euro, the British pound sterling and theCanadian dollar. As a result, changes in our reported revenues and operatingprofits include the impact of changes in foreign currency exchange rates. Weprovide “constant currency” assessments in the following discussion andanalysis to remove the impact of the fluctuation in foreign exchange rates andutilize constant currency results in our analysis of segment performance.

We believe that ourconstant currency assessments are a useful measure, indicating the actualgrowth and profitability of our operations. Earnings from our subsidiaries arenot generally repatriated to the United States; therefore, we do not incursignificant gains or losses on foreign currency transactions with oursubsidiaries. Therefore, changes in foreign currency exchange rates primarilyimpact only reported earnings and not our actual cash flow.

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**Compliance with theSarbanes-Oxley Act**

In 2006, we completed aprogram to address the requirements of Section 404 of the Sarbanes-OxleyAct prior to the mandatory compliance date of December 31, 2007.Compliance with these requirements required significant incremental internalresources and financial investments, including, but not limited to, use ofoutside advisors, additional audit fees, and changes in systems design,security and structure. We plan to continue our compliance programsprospectively. 

**Results ofOperations**

***Net Sales***

Thefollowing table presents net sales and changes in net sales by reportablesegment for the three and six months ended June 30, 2007 and 2006 (dollarsin millions):

| ** **          | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|---------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **          | ** ** | **2007**                                        | ** ** | **% Change**                             | ** ** | **2006** | ** ** | **2007** | ** ** | **% Change** | ** ** | **2006** | ** ** |
| North American  Lab |       | $                                               | 502.3      |                                          |       | 0.4 | % |   | $ | 500.3 |   | $ | 1,003.7 |   |   | 1.1 | % |   | $ | 992.5 |   |
| European Lab        |       | 316.8                                           |       |                                          | 14.1       | % |   | 277.6 |   | 630.4 |   |   | 14.5 | % |   | 550.5 |   |
| Science Education   |       | 37.1                                            |       |                                          | 0.0        | % |   | 37.1 |   | 65.2 |   |   | (3.8 | )% |   | 67.8 |   |
| Total               |       | $                                               | 856.2      |                                          |       | 5.1 | % |   | $ | 815.0 |   | $ | 1,699.3 |   |   | 5.5 | % |   | $ | 1,610.8 |   |

 

Net sales for the three and six months ended June 30,2007 increased $41.2 million and $88.5 million, respectively, over thecomparable periods of 2006. Foreign currency and the acquisition of KMF in April 2007increased net sales by $33.0 million and $58.7 million for the three and sixmonths ended June 30, 2007, respectively. Net sales increased by $8.2million or 1.0% and $29.8 million or 1.9% for the three and six months ended June 30,2007, respectively, over the comparable periods of 2006, related to ongoingcomparable operations.

Net sales in our North American Lab segment for thethree and six months ended June 30, 2007 increased $2.0 million and $11.2million, respectively, over the comparable periods of 2006. Foreign currencyincreased net sales by $1.3 million and $0.4 million for the three and sixmonths ended June 30, 2007, respectively. Net sales increased by $0.7million or 0.1% and $10.8 million or 1.1% for the three and six months ended June 30,2007, respectively, over the comparable periods of 2006, related to ongoingcomparable operations. Revenue growth in our North American Lab segmentreflects increases in our product pricing. However, product sales werenegatively affected due to lower demand for production supplies as a result ofcertain facility closures and cost reduction actions in some of our largeaccounts. This was particularly evident in the second quarter of 2007. 

Net sales in our European Lab segment for the threeand six months ended June 30, 2007 increased $39.2 million and $79.9million, respectively, over the comparable periods of 2006. Foreign currencyand the acquisition of KMF in April 2007 increased net sales by $31.7 millionand $58.3 million for the three and six months ended June 30, 2007,respectively. Net sales increased by $7.5 million or 2.7% and $21.6 million or3.9% for the three and six months ended June 30, 2007, respectively, overthe comparable periods of 2006, related to ongoing comparable operations. Ourfavorable revenue trends in our European Lab segment reflect both favorablepricing and increases in product demand across virtually all product lines.

Net sales in our ScienceEducation segment for the three months ended June 30, 2007 were unchangedat $37.1 million from the comparable period of 2006. For the six months endedJune 30, 2007 net sales decreased $2.6 million or 3.8% from the comparableperiod of 2006. This decrease was primarily a result of a decline in our salesof published materials and Canadian based sales.

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***Gross Profit***

Thefollowing table presents gross profit and gross profit as a percentage of netsales for the three and six months ended June 30, 2007 and 2006 (dollarsin millions):

| ** **                              | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-----------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                              | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                              | ** ** | **2007**                         | ** ** | **2006**                       | ** ** | **2007** | ** ** | **2006** | ** ** |
| Gross profit                            |       | $                                | 231.0      |                           | $          | 219.1 |   | $ | 469.2 |   | $ | 433.5 |   |
| Percentage of net sales  (gross margin) |       | 27.0                             | %          | 26.9                           | %          | 27.6 | % | 26.9 | % |
|                                         |            |                                  |            |                                |            |  |  |  |  |  |  |  |  |

 

Gross profit for the threeand six months ended June 30, 2007 increased $11.9 million and $35.7 million,respectively, over the comparable periods of 2006. Foreign currency and theacquisition of KMF in April 2007 increased gross profit by $9.7 millionand $18.2 million for the three and six months ended June 30, 2007,respectively. Gross profit increased $2.2 million or 1.0% and $17.5 million or4.0% for the three and six months ended June 30, 2007, respectively, fromthe comparable periods of 2006, related to ongoing comparable operations. Theincrease in gross profit in our North American Lab segment is primarily a resultof favorable pricing and improved product mix, as well as modest improvement inrecovery of freight costs. The increase in gross profit in our European Labsegment is primarily a result of favorable pricing, increased volume, improvedproduct mix, as well as improvement in recovery of freight costs.

***Selling, General, and Administrative Expenses***

Thefollowing table presents SG&A expenses and SG&A expenses as apercentage of net sales forthe three and six months ended June 30, 2007 and 2006 (dollars in millions):

| ** **                                    | ** ** | **Three Months Ended**             | ** ** | **Six Months Ended**               | ** ** |
|-----------------------------------------------|------------|----------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                    | ** ** | **June 30,**                            | ** ** | **June 30,**                            | ** ** |
| ** **                                    | ** ** | **   2007   ** | ** ** | **   2006   ** | ** ** | **2007** | ** ** | **2006** | ** ** |
| Selling, general  and administrative expenses |       |                                         | $          | 190.2                                        |       |   |   | $ | 174.4 |   |   | $ | 371.5 |   | $ | 342.9 |   |
| Percentage of net sales                       |       |                                         | 22.2       | %                                            |       |   | 21.4 | % |   | 21.9 | % | 21.3 | % |
|                                               |            |                                              |            |                                              |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

SG&A for the three andsix months ended June 30, 2007 increased $15.8 million and $28.6 million,respectively, over the comparable periods of 2006. Foreign currency and theacquisition of KMF in April 2007 increased SG&A by $8.6 million and$15.2 million for the three and six months ended June 30, 2007,respectively. SG&A increased $7.2 million or 4.1% and $13.4 million or 3.9%for the three and six months ended June 30, 2007, respectively, from thecomparable periods of 2006, related to ongoing comparable operations. Theincrease in SG&A is primarily a result of incremental expense of $6.5million in the second quarter of 2007 related to the acceleration of unvestedoptions and restricted stock units due to the Merger, as well as inflation andincreased costs related to our global sourcing/category management initiativesand on-going expansion in Asia Pacific. In addition, the Company has incurredcosts in the expanded and on-going training of its general and specialist salesforce. Partially offsetting these increases are cost savings derived fromimproved efficiencies in our service and distribution centers, particularly inour North American Lab segment.

***Merger Expenses***

Predecessor expensesassociated with the Merger amounted to $36.4 million and $36.8 million for thethree and six months ended June 30, 2007. These expenses consist ofinvestment banking, legal, accounting and other advisory fees.

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***Operating Income***

Thefollowing table presents operating income and operating income as a percentageof net sales by reportable segment for the three and six months ended June 30,2007 and 2006 (dollars in millions):

| ** **          | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|---------------------|------------|-----------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **          | ** ** | ** **                                          | ** ** | **% of**                                     | ** ** | ** ** | ** ** | **% of** | ** ** | ** ** | ** ** | **% of** | ** ** | ** ** | ** ** | **% of** | ** ** |
| ** **          | ** ** | **2007**                                            | ** ** | **Net Sales**                                | ** ** | **2006** | ** ** | **Net Sales** | ** ** | **2007** | ** ** | **Net Sales** | ** ** | **2006** | ** ** | **Net Sales** | ** ** |
| North American  Lab |       | $                                                   | (17.7      | )                                                 |       | (3.5 | )% |   | $ | 27.2 |   |   | 5.4 | % |   | $ | 14.9 |   |   | 1.5 | % |   | $ | 56.6 |   |   | 5.7 | % |   |
| European Lab        |       | 18.8                                                |       |                                              | 5.9        | % |   | 14.4 |   |   | 5.2 | % |   | 41.7 |   |   | 6.6 | % |   | 28.7 |   |   | 5.2 | % |   |
| Science Education   |       | 3.3                                                 |       |                                              | 8.9        | % |   | 3.9 |   |   | 10.5 | % |   | 4.3 |   |   | 6.6 | % |   | 6.3 |   |   | 9.3 | % |   |
| Total               |       | $                                                   | 4.4        |                                              |       | 0.5 | % |   | $ | 45.5 |   |   | 5.6 | % |   | $ | 60.9 |   |   | 3.6 | % |   | $ | 91.6 |   |   | 5.7 | % |   |

 

Operating income for the three and six months ended June 30,2007 decreased $41.1 million and $30.7 million, respectively, over the comparable periods of 2006.Foreign currency and the acquisition of KMF in April 2007 increasedoperating income by $1.1 million and $3.0 million for the three and six months ended June 30, 2007. Inaddition, operating income was adversely impacted in 2007 by Merger expenses of$36.4 million and $36.8 million for the three and six months ended June 30,2007, respectively. Operating income decreased $5.8 million or 12.7% for the three months ended June 30,2007 and increased $3.1 million or 3.4%for the six months ended June 30, 2007, from the comparable periodsof 2006, related to ongoing comparable operations. The decrease for the three months ended June 30, 2007 wasprimarily the result of a gross profit increase of $2.2 million, offset by anSG&A increase of $7.2 million. Theincrease for the six months ended June 30, 2007 was primarily theresult of a gross profit increase of $17.5 million, partially offset by anSG&A increase of $13.4 million.

Operating income in ourNorth American Lab segment forthe three and six months ended June 30, 2007 decreased $44.9million and $41.7 million, respectively, over the comparable periods of 2006. Foreign currency had no impacton operating income for the three and six months ended June 30, 2007. Operatingincome was adversely impacted in 2007 by Merger expenses of $36.4 million and$36.8 million for the three and six months ended June 30, 2007,respectively. Operating income decreased$8.5 million or 31.3% and $4.9 million or 8.7% for the three and sixmonths ended June 30, 2007, respectively, from the comparable periods of2006, related to ongoing comparable operations. The decrease for the three months ended June 30, 2007 wasprimarily the result of a gross profit decrease of $2.2 million and an SG&Aincrease of $5.5 million. The decreasefor the six months ended June 30, 2007 was primarily the result ofa gross profit increase of $4.8 million, offset by an SG&A increase of $8.7million primarily due to the incremental expense related to the acceleration ofunvested options and restricted stock units due to the Merger.

Operating income in ourEuropean Lab segment forthe three and six months ended June 30, 2007 increased $4.4 millionand $13.0 million, respectively, overthe comparable periods of 2006. Foreign currency and the acquisition ofKMF in April 2007 increased operating income by $1.1 million and $3.0 millionfor the three and six months ended June 30, 2007, respectively. Operatingincome increased $3.3 million or 22.9%and $10.0 million or 34.8% for the three and six months ended June 30,2007, respectively, from the comparable periods of 2006, related to ongoingcomparable operations. The increase forthe three months ended June 30, 2007 was primarily the result of agross profit increase of $5.0 million, partially offset by an SG&A increaseof $1.7 million. The increase for thesix months ended June 30, 2007 was primarily the result of a grossprofit increase of $14.4 million, partially offset by an SG&A increase of$4.4 million.

Operating income in ourScience Education segment for the three and six months ended June 30, 2007decreased $0.6 million and $2.0 million, respectively, from the comparableperiods of 2006. The decrease for the three months ended June 30, 2007 wasthe result of a gross profit decrease of $0.6 million. The decrease for the sixmonths ended June 30, 2007 was the result of a gross profit decrease of$1.7 million and an SG&A increase of $0.3 million.

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***Interest Expense,net of Interest Income***

Interest expense, net ofinterest income, for the three and six months ended June 30, 2007increased to $67.4 million and $103.1 million, respectively, from $26.7 millionand $54.1 million for the comparable periods of 2006. The increase is due to (1) thewrite-off of unamortized deferred financing costs of approximately $27.8million related to the debt obligations of the Company that were refinanced inconnection with the Merger, (2) a commitment fee for the bridge loan of$3.4 million, (3) incremental interest on the debt issued in connectionwith the Merger of $1.2 million, (4) interest on the Senior Floating RateNotes issued in December 2006 of $17.1, and (5) higher variableinterest rates on the Company’s prior Senior Secured Credit Facility term loansin 2007, partially offset by decreased amounts outstanding under the priorSenior Secured Credit Facility term loans due to prepayments made.

***Other (income)expense, net***

Other (income) expense,net was ($3.4) million for the three months ended June 30, 2007 comparedto ($0.4) million for the comparable period of 2006. Other (income) expense,net was ($3.5) million for the six months ended June 30, 2007 compared to$0.4 million for the comparable period of 2006. Other income, net for the sixmonths ended June 30, 2007 includes equity income of ($0.4) million andnet exchange gains of ($3.1) million. Other expense, net for the six monthsended June 30, 2006 includes net exchange losses of $0.7 million,partially offset by equity income of ($0.3) million.

***Income Taxes***

The effective income taxrates applied to the losses for periods April 1–June 29, 2007 and January 1–June 29,2007 were 29.7% and 24.6%, respectively, compared to 30.2% and 34.2% applied tothe earnings for the three and six months ended June 30, 2006,respectively. The change in the 2007 rates is primarily a result of severalone-time adjustments related to the Merger that do not receive state taxbenefit and in some instances are non-deductible. Additionally, the 2006 rates werefavorably impacted by a one-time benefit associated with a reduction in the Canadiantax rate in the second quarter of 2006.

**Liquidity and Capital Resources**

We broadly defineliquidity as our ability to generate sufficient funds from both internal andexternal sources to meet our obligations and commitments. In addition,liquidity includes the ability to obtain appropriate debt and equity financing.Therefore, liquidity cannot be considered separately from capital resourcesthat consist of current or potentially available funds for use in achievinglong-range objectives and meeting debt service commitments.

As a result of the Merger,our debt obligations have increased significantly. Our significant liquidityand capital funding needs relate to our new debt obligations, on-going workingcapital, operating expenses and capital expenditures. Based on currentoperations and expectations as to future growth, we believe that cash generatedfrom operations, together with amounts available under the $250.0 millionmulti-currency revolving loan facility, which is a component of the SeniorSecured Credit Facility, will be adequate to permit us to meet our debt serviceobligations, capital expenditure program requirements, ongoing operating costsand working capital needs, although no assurance can be given in this regard.

Working capital; excludingcash, debt and the obligations associated with the Merger; was $253.6 millionand $212.3 million at June 30, 2007 and December 31, 2006,respectively. Trade receivables, inventories and accounts payable, threeimportant elements of working capital, are discussed below.

***Trade Accounts Receivable.***   Dayssales outstanding in accounts receivable were 50.8 days and 50.2 days forthe quarterly periods ended June 30, 2007 and December 31, 2006,respectively. The increase in days sales outstanding reflects a seasonal buildup of accounts receivable at mid-year in contrast to lower receivables atyear-end due to improved customer payments.

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***Inventories.***   Dayssupply of inventory were 41.0**daysand 39.8 days for the quarterly periods ended June 30, 2007 and December 31,2006, respectively. This increase primarily reflects the seasonal increase ininventory by our Science Education segment in preparation for the seasonalsales associated with the third quarter.

***Accounts Payable.***   Dayspayables outstanding were 64.3**daysand 63.6 days for the quarterly periods ended June 30, 2007 and December 31,2006, respectively. Trade accounts payable are primarily with suppliers whoseproducts we distribute. Payment terms are negotiated and in cases whereeconomic early payment discounts are offered, we typically time our payments toearn the discounts. Days payables outstanding are generally higher in Europedue to the extended payment practices in certain countries in which we operate.Depending on the timing of payments and inventory purchases, trade accountspayable can vary each quarter and from year to year.

**Historical Cash Flows**

Thefollowing table presents cash flow from operations before investing andfinancing activities related to operations and working capital (dollars inmillions):

| ** **                                            | ** ** | **Six Months Ended**   | ** ** |
|-------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                            | ** ** | **June 30,**                | ** ** |
| ** **                                            | ** ** | **  2007  ** | ** ** | **  2006  ** | ** ** |
| Cash flow from  operations, excluding working capital |       |                             | $          | 37.8 |   |   |   | $ | 61.8 |   |   |
| Cash flow from  working capital changes, net          |       |                             | 15.8       |   |   |   | 20.2 |   |   |
| Cash flow from  operations                            |       |                             | $          | 53.6 |   |   |   | $ | 82.0 |   |   |

 

Cash flow from operationsdeclined $28.4 million during the six months ended June 30, 2007 from thecomparable period of 2006. The primary reason for the decline is higher cashpaid for interest of $16.8 million due to interest payments on the SeniorFloating Rate Notes that were issued in December 2006 and a bridge loancommitment fee incurred in connection with the Merger, partially offset bylower interest due to decreased amounts outstanding under the prior SeniorSecured Credit Facility term loans due to ongoing principal prepayments.Further, we generated less cash from working capital during the first half of2007 in comparison to 2006 as we significantly reduced inventories in the firsthalf of 2006 as a result of a focused inventory reduction program. 2007operating cash flows also reflect the seasonal inventory build up to supportour Science Education business.

Net cash used in investingactivities was $3,835.8 million for the six months ended June 30, 2007 comparedto $5.7 million for the comparable period of 2006. This increase is a primarilythe result of the Merger and the KMF Acquisition.

Net cash provided byfinancing activities was $3,853.7 million for the six months ended June 30,2007 primarily as a result of the Merger and the new capital structure. Netcash used in financing activities was $61.4 million for the six months ended June 30,2006 primarily as a result of net debt payments of $45.3 million and netchange in bank overdrafts of $26.1 million.

As of June 30, 2007,we had outstanding indebtedness of $2,655.5 million, which consists primarilyof $675.0 million of 10.25%/11.25% Senior Notes, $522.3 million of 10.75%Senior Subordinated Notes, $615.0 million U.S. dollar-denominated term loans,and $811.2 million Euro-denominated term loans.

As of June 30, 2007,we had $9.8 million of outstanding but undrawn letters of credit and ourremaining borrowing availability under the $250.0 million multi-currencyrevolving loan facility forming part of the Senior Secured Credit Facility was$240.2 million. Undrawn amounts under the multi-currency revolving loanfacility will be available to meet future working capital and our businessneeds. Any potential borrowings under the multi-currency revolving loanfacility bear interest at variable rates; interest expense for any suchborrowings would fluctuate as well.

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Based upon currentoperating levels and expectations as to future growth, we believe that cash onhand, cash generated from operations and amounts available under our $250.0million multi-currency revolving loan facility will be adequate to permit us tomeet our debt service obligations, capital expenditure requirements, ongoingoperating costs and working capital needs, although no assurance can be givenin this regard. Our future financial and operating performance, ability toservice or refinance our debt and ability to comply with covenants andrestrictions contained in our debt agreements will be subject to futureeconomic conditions and to financial, business and other factors, many of whichare beyond our control and will be substantially dependent on the globaleconomy, demand for our products, and our ability to successfully implement ouroverall business and profitability strategies. As of June 30, 2007, we had$77.1 million of cash and cash equivalents on hand and our compensating cash balance totaled $279.6,of which $235.7 was disbursed in July 2007 to liquidate accruedliabilities related to the Merger and to pay residual amounts on tendered debtbalances.

**Schedule ofContractual Obligations**

Thefollowing table details the payment schedule for debt, capital leases andoperating leases as of June 30, 2007 (dollars in millions):

| ** **                                           | ** ** | **<1 year** | ** ** | **1-3 years** | ** ** | **4-5 years** | ** ** | **>5 years** | ** ** | **Total** | ** ** |
|------------------------------------------------------|------------|---------------------|------------|--------------------|------------|--------------------|------------|----------------------|------------|-----------|------------|
| Senior Secured  Credit Facility                      |       | $                   | —     |               |       | $                  | 28.5       |                 |       |      | $          | 28.5 |   |   | $ | 1,369.2 |   | $ | 1,426.2 |   |
| 10.25%/11.25%  Unsecured Senior Notes due 2015       |       | —              |       |               | —     |               |       |                 | —     |      |       | 675.0 |   | 675.0 |   |
| 10.75% Unsecured  Senior Subordinated Notes due 2017 |       | —              |       |               | —     |               |       |                 | —     |      |       | 522.3 |   | 522.3 |   |
| 8% Unsecured  Senior Subordinated Notes due 2014     |       | —              |       |               | —     |               |       |                 | —     |      |       | 1.0 |   | 1.0 |   |
| Senior Floating  Rate Notes due 2011                 |       | 25.5                |       |               | —     |               |       |                 | —     |      |       | — |   | 25.5 |   |
| Interest                                             |       | 198.3               |       |               | 686.1      |               |       |                 | 443.7      |      |       | 555.5 |   | 1,883.6 |   |
| Capital leases                                       |       | 1.0                 |       |               | 1.5        |               |       |                 | 1.3        |      |       | 1.7 |   | 5.5 |   |
| Operating leases                                     |       | 26.5                |       |               | 41.1       |               |       |                 | 28.5       |      |       | 33.4 |   | 129.5 |   |
| Total                                                |       | $                   | 251.3      |               |       | $                  | 757.2      |                 |       |      | $          | 502.0 |   |   | $ | 3,158.1 |   | $ | 4,668.6 |   |

 

For purposes ofcalculating interest above, interest rates and effects of foreign currency onthe Senior Secured Credit Facility were assumed unchanged from June 30,2007 and we assumed cash interest will be paid on the 10.25%/11.25% SeniorNotes and 10.75% Senior Subordinated Notes until maturity.

**Indebtedness**

***Inconnection with the Merger, substantially all of the outstanding indebtednessprior to the Merger was redeemed, including the 6.875% Senior Notes, 8% SeniorSubordinated Notes, Senior Discount Notes, Senior Floating Rate Notes, indebtednessunder the Company’s prior Senior Secured Credit Facility and certain other ofour indebtedness. Refer to***Note 12 in the Form 10-Kfor further information regarding terms and conditions of each indebtedness.These debt obligations were refinanced primarily with the debt obligationsdescribed below.

***Senior SecuredCredit Facility.  ***The Senior Secured CreditFacility provides for aggregate maximum borrowings consisting of (1) termloans denominated in Euros in an aggregate principal amount currentlyoutstanding of $811.2 million, (2) term loans denominated in U.S. dollarsin an aggregate principal amount currently outstanding of $615.0 million, and (3) amulti-currency revolving loan facility, providing for an equivalent in U.S.dollars of up to $250.0 million in multi-currency revolving loans (including,without limitation, swingline borrowings and letters of credit, in each case,subject to certain sublimits).

Borrowings under the Senior Secured Credit Facilityare a key source of our liquidity. The Company’s ability to borrow under theSenior Secured Credit Facility is dependent upon, among other things, the 

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Company’s compliance withcovenants that limit the ability of the Company and its restricted subsidiariesto incur or create certain additional indebtedness, issue certain types ofcommon and preferred stock, create liens on assets of the Company and itsrestricted subsidiaries, make certain restricted payments, make certaindispositions outside the ordinary course of business, execute certain affiliatetransactions, enter into certain types of restrictive agreements, materially changethe lines of business of the Company and its restricted subsidiaries taken as awhole, modify securities junior to the Senior Secured Credit Facility in anymanner materially adverse to the interests of the lenders and make a change toour fiscal year.

The Senior Secured Credit Facility does not containany financial maintenance covenants that require the Company to comply withspecified financial ratios or tests, such as a minimum interest expensecoverage ratio or a maximum leverage ratio, unless the Company wishes to incuradditional indebtedness associated with acquisitions or make certain restrictedpayments.

On June 20, 2007, Merger Sub entered into twointerest rate swaps that became effective on June 29, 2007. The interestrate swaps mature on December 31, 2012 with notional principal amounts of$425.0 million U.S. dollars (the “U.S. Dollar Swap”) and 300.0 million Euros(the “Euro Swap”), respectively. Beginning on December 31, 2007, thenotional value of the U.S. Dollar Swap declines over its term in annualdecrements of $25.0 million through December 29, 2011 and is set at $160.0 millionfor the period from December 30, 2011 through December 30, 2012, inwhich Funding will receive interest at a variable rate equal to three-monthU.S.LIBOR and pay interest at a fixed rate of 5.47%. Beginning on December 31,2007, the notional value of the Euro Swap declines over its term in annualdecrements of 20.0 million Euros through December 29, 2011 and is set at110.0 million Euros for the period from December 30, 2011 through December 30,2012, in which Funding will receive interest at a variable rate equal tothree-month EURIBOR and pay interest at a fixed rate of 4.68%.

The aforementioned interest rate swaps result in afixed rate of interest for approximately 55% of our Senior Secured CreditFacility. Accordingly, approximately 45% of the Senior Secured Credit Facilitywill be subject to interest at variable rates.

***10.25%/11.25%Senior Notes and 10.75% Senior Subordinated Notes.******  ***The10.25%/11.25% Senior Notes will mature on July 15, 2015 in aggregateprincipal amount of $675.0 million. The 10.75% Senior Subordinated Notes willmature on June 30, 2017 and consist of a tranche denominated in Euros inan aggregate principal amount currently outstanding of $169.0 million as of June 30, 2007 and a tranche denominated inU.S. dollars in an aggregate principal amount currently outstanding of $353.3million.

The indentures governing the 10.25%/11.25% SeniorNotes and the 10.25%/11.25% Senior Notes contain covenants that, among otherthings, limit the Company’s ability and that of its restricted subsidiaries tomake restricted payments, pay dividends, incur or create additionalindebtedness, issue certain types of common and preferred stock, make certaindispositions outside the ordinary course of business, execute certain affiliatetransactions, create liens on assets of the Company and restrictedsubsidiaries, and materially change our lines of business.

***Foreign Subsidiaries.***   Ourforeign subsidiaries operate from time to time with and without formal lines ofcredit with local banks. The borrowings available to and drawn from time totime by our foreign subsidiaries are limited in aggregate by certain covenantscontained within the Senior Secured Credit Facility, 10.25%/11.25% Senior Notesand 10.75% Senior Subordinated Notes.

**Critical AccountingPolicies**

The discussion andanalysis of our financial condition and results of operations are based on ourfinancial statements, which have been prepared in accordance with accountingprinciples generally accepted in the United States of America. The preparationof these financial statements requires us to 

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makeestimates and assumptions that affect the reported amounts of assets andliabilities and the disclosure of contingent assets and liabilities at the dateof the financial statements and the reported amounts of revenues and expensesduring the reporting period. On an ongoing basis, management evaluates itsestimates and judgments, including, among others, those related toenvironmental liabilities, reserves for accounts receivable and inventories,impairment of goodwill and intangible assets, pension plans, rebates fromsuppliers, agreements with customers, and product liability. Those estimates andassumptions are based on our historical experience, our observance of trends inthe industry, and various other factors that are believed to be reasonableunder the circumstances and form the basis for making judgments about thecarrying values of assets and liabilities that are not readily apparent fromother sources. Actual results may differ from these estimates under differentassumptions or conditions. Refer to “Item 7—Management’s Discussion andAnalysis of Financial Condition and Results of Operations” in the Form 10-Kfor the Company’s critical accounting policies. As a result of the Merger, theCompany also considers accounting for business combinations as a criticalaccounting policy.

**Item 3—*Quantitative and Qualitative Disclosures about Market Risk***

***Interest Rates.******  ***As a result ofthe Merger and related increase in the Company’s debt obligations, we willincur significant increases in our interest costs. Our Senior Secured CreditFacility contains variable interest rates, which exposes the Company tofluctuating rates of interest. In order to partially mitigate such potentialvariations in rates, the Company has entered into interest rate swaps. A 100basis point (or 1.00%) change in the variable rate for the Senior SecuredCredit Facility would, on an annualized basis, decrease net income byapproximately $3.6 million.

**Item 4—*Controls and Procedures***

The Company’s management, with the participation ofthe Company’s Chief Executive Officer and Chief Financial Officer, evaluatedthe effectiveness of the Company’s disclosure controls and procedures as of June 30,2007. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and15d-15(e) under the Exchange Act, means controls and otherprocedures of a company that are designed to ensure that information requiredto be disclosed by a company in the reports that it files or submits under theExchange Act is recorded, processed, summarized and reported, within the timeperiods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, withoutlimitation, controls and procedures designed to ensure that informationrequired to be disclosed by a company in the reports that it files or submitsunder the Exchange Act is accumulated and communicated to the company’smanagement, including its principal executive and principal financial officers,as appropriate to allow timely decisions regarding required disclosure.

Management recognizes that any controls andprocedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving their objectives and management necessarilyapplies its judgment in evaluating the cost-benefit relationship of possiblecontrols and procedures. Based on the evaluation of the Company’sdisclosure controls and procedures as of June 30, 2007, the Company’sChief Executive Officer and Chief Financial Officer concluded that, as of suchdate, the Company’s disclosure controls and procedures were effective at thereasonable assurance level.

There have been no changesin the Company’s internal control over financial reporting (as defined inExchange Act Rules 13a-15(f) and 15d-15(f)) during thefiscal quarter ended June 30, 2007, that have materially affected or arereasonably likely to materially affect the Company’s internal control overfinancial reporting.

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**Part II—OTHERINFORMATION**

**Item 1—*Legal Proceedings***

For information regardinglegal proceedings, see Note 10 in “Item 1—Financial Statements” of thisQuarterly Report on Form 10-Q, which information is incorporatedherein by reference into this item.

**Item 1A—*Risk Factors***

As a result of the Mergerthat was consummated on June 29, 2007 and the related transactions thatalso were consummated on that date to finance the Merger, our ownership changedand we incurred a substantial amount of additional indebtedness. See Note 1(a) andNote 7 in “Item 1—Financial Statements” of this Quarterly Report on Form 10-Qfor a discussion of the Merger and indebtedness that we incurred in connectionwith the financing of the Merger, respectively. Accordingly, set forth beloware risk factors that update the risk factors regarding our capital structureand ownership from “Item 1A—Risk Factors” in the Form 10-K. Thereare no other material changes to the risk factors set forth in the Form 10-K.

**Risks Related toOur Capital Structure**

***Our substantialindebtedness could have a material adverse effect on our financial conditionand prevent us from fulfilling our debt obligations.***

As of June 30, 2007, we had an aggregateprincipal amount of debt outstanding of $2,655.5 million.

Subject to thelimits contained in the indentures governing the 10.25%/11.25% Senior Notes andthe 10.75% Senior Subordinated Notes and the covenants governing the Senior SecuredCredit Facility, we may be able to incur additional debt from time to time,including drawing on the Senior Secured Credit Facility, to finance workingcapital, capital expenditures, investments or acquisitions, or for othergeneral corporate purposes. If we do so, the risks related to our businessassociated with our high level of debt could intensify. Specifically, our highlevel of debt could have important consequences to us that would put us at acompetitive disadvantage compared to any of our less leveraged competitors,including the following:

·       makingit more difficult for us to satisfy our debt obligations and comply withcovenants;

·       requiringus to dedicate a substantial portion of our cash flow from operations to debtservice payments on our and our subsidiaries’ debt, which would reduce thefunds available for working capital, capital expenditures, investments oracquisitions and other general corporate purposes;

·       limitingour flexibility in planning for, or reacting to, changes in the industry inwhich we operate;

·       increasingour vulnerability to both general and industry-specific adverse economicconditions; and

·       limitingour ability to obtain additional financing to fund future working capital,capital expenditures, acquisitions or other general corporate requirements andincreasing our cost of borrowing.

We and/or our subsidiariesmay be able to incur substantial additional debt in the future in addition tothe 10.25%/11.25% Senior Notes, the 10.75% Senior Subordinated Notes and theSenior Secured Credit Facility. The addition of further debt to our currentdebt levels could intensify the leverage-related risks that we now face.

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***Our debt agreementscontain restrictions on our ability to operate our business and to pursue ourbusiness strategies, and our failure to comply with these covenants couldresult in an acceleration of our indebtedness.***

The creditagreement governing our Senior Secured Credit Facility and the indenturesgoverning the 10.25%/11.25% Senior Notes and the 10.75% Senior SubordinatedNotes, and agreements governing future debt issuances contain covenants thatmay restrict our ability to finance future operations or capital needs, torespond to changing business and economic conditions or to engage in othertransactions or business activities that may be important to our growthstrategy or otherwise important to us. The credit agreement and the indenturesrestrict, among other things, our ability and the ability of our subsidiariesto:

·       incuradditional indebtedness;

·       paydividends or make distributions in respect of our capital stock or to makecertain other restricted payments or investments;

·       purchaseor redeem stock;

·       makeinvestments or other specified restricted payments;

·       createliens;

·       sellassets and subsidiary stock;

·       enterinto transactions with affiliates; and

·       enterinto mergers, consolidations and sales of substantially all assets.

In addition, the credit agreement related to theSenior Secured Credit Facility requires us to repay outstanding borrowings undersuch facility with proceeds we receive from certain sales of property or assetsand specified future debt offerings. We cannot assure you that we will be ableto maintain compliance with such covenants in the future and, if we fail to doso, that we will be able to obtain waivers from the lenders and/or amend thecovenants.

Any breach of thecovenants in the credit agreement or the indentures could result in a defaultof the obligations under such debt and cause a default under other debt. Ifthere were an event of default under the credit agreement related to our SeniorSecured Credit Facility that was not cured or waived, the lenders under ourSenior Secured Credit Facility could cause all amounts outstanding with respectto the borrowings under the Senior Secured Credit Facility to be due andpayable immediately. Our assets and cash flow may not be sufficient to fullyrepay borrowings under our Senior Secured Credit Facility and our obligationsunder the 10.25%/11.25% Senior Notes and the 10.75% Senior Subordinated Notesif accelerated upon an event of default. If, as or when required, we are unableto repay, refinance or restructure our indebtedness under, or amend thecovenants contained in, our Senior Secured Credit Facility, the lenders underour Senior Secured Credit Facility could institute foreclosure proceedingsagainst the assets securing borrowings under the Senior Secured CreditFacility.

***We may not be able to generate sufficient cash flowsto meet our debt service obligations.***

Our ability to make payments on and to refinance ourindebtedness and to fund planned capital expenditures depends on our ability togenerate cash from our future operations. This, to a certain extent, is subjectto general economic, financial, competitive, legislative, regulatory and otherfactors that are beyond our control.

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Our business may not generate sufficient cash flowfrom operations, or future borrowings under our Senior Secured Credit Facility,or from other sources, may not be available to us in an amount sufficient, toenable us to repay our indebtedness or to fund our other liquidity needs,including capital expenditure requirements. If we cannot service ourindebtedness, we may have to take actions such as selling assets, seekingadditional equity or reducing or delaying capital expenditures, strategicacquisitions, investments or alliances. Our Senior Secured Credit Facility andthe indentures governing the 10.25%/11.25% Senior Notes and the 10.75% SeniorSubordinated Notes will restrict our ability to sell assets and use theproceeds from such sales. Additionally, we may not be able to refinance any ofour indebtedness on commercially reasonable terms, or at all. If we cannotservice our indebtedness, it could impede the implementation of our businessstrategy or prevent us from entering into transactions that would otherwisebenefit our business.

Our subsidiaries’ability to make scheduled payments or to refinance their and our obligationswith respect to their and our debt will depend on our subsidiaries’ financialand operating performance, which, in turn, is subject to prevailing economicand competitive conditions and to the following financial and business factors,some of which may be beyond our control:

·       operatingdifficulties;

·       increasedoperating costs;

·       decreaseddemand for our products;

·       marketcyclicality;

·       productprices;

·       theresponse of competitors;

·       regulatorydevelopments;

·       failureto successfully integrate acquisitions; and

·       delays in implementingstrategic projects.

***Our ability to makepayments on our debt obligations depends on our ability to receive dividends orother distributions from our subsidiaries.***

We are a holding companyand our business is operated principally through VWR International, LLC andcertain of its subsidiaries. As a result, we are substantially dependent ondividends or other distributions from VWR International, LLC to make paymentson the 10.25%/11.25% Senior Notes, the 10.75% Senior Subordinated Notes andborrowings under the Senior Secured Credit Facility. The ability of the VWRInternational, LLC to pay such dividends may be restricted by law or theinstruments governing its indebtedness.

**Risks Related toOur Business**

***The interests of our controlling stockholders mayconflict with your interests.***

Private equity fundsmanaged by Madison Dearborn indirectly own a substantial majority of our commonstock. The interests of these funds as equity holders may conflict with yourinterests. The controlling stockholders may have an incentive to increase thevalue of their investment or cause us to distribute funds at the expense of ourfinancial condition and affect our ability to make payments on our debtobligations. In addition, these funds will have the power to elect a majorityof our Board of Directors and appoint new officers and management and,therefore, effectively will control many other major decisions regarding ouroperations. Additionally, our controlling stockholders are in the business of 

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makinginvestments in companies and may, from time to time, acquire and hold interestsin businesses that compete directly or indirectly with us. Our controllingstockholders may also pursue acquisition opportunities that may becomplementary to our business and, as a result, those acquisitionsopportunities may not be available to us. We have not instituted any formalplans to address any conflicts of interests that may arise.

**Item4—*Submission of Matters to a Vote of Security Holders***

***Merger and MergerAgreement***

The Merger and the MergerAgreement were approved and adopted by a vote of the Board of Directors of theCompany at a special meeting held on May 2, 2007. Immediately followingthe Company’s entry into the Merger Agreement on May 2, 2007, the holdersof shares of common stock representing approximately 85% of the voting power ofthe outstanding shares of common stock of the Company approved the MergerAgreement and the Merger by written consent in lieu of a meeting.

The Board of Directors ofthe Company also approved the Company’s entry into the First Amendment and theSecond Amendment to the Merger Agreement pursuant to written consent in lieu ofa meeting. Subsequently, the holders of shares of common stock representingapproximately 85% of the voting power of the outstanding shares of common stockof the Company also approved and adopted the First Amendment and the SecondAmendment by written consent in lieu of a meeting as of June 11, 2007. TheFirst Amendment permitted Holdings to enter into more favorable debt financingarrangements in connection with the Merger. The Second Amendment revised themutual closing condition with respect to certain European antitrust approvalsto reflect the fact that European Commission filing thresholds were not metand, as a result, the Merger was subject to the review of certain authoritiesof individual European countries. The Second Amendment also, among otherthings, addressed certain modifications to Holdings’ debt financing sources andallowed for a rollover of the Company’s common stock by certain employees ofthe Company into equity in Holdings.

***280G StockholderConsent***

Holders of shares ofcommon stock representing approximately 79% of the voting power of theoutstanding shares of common stock of the Company approved certain payments toJohn M. Ballbach, the Company’s President and Chief Executive Officer, inconnection with the Merger to avoid adverse tax consequences under Sections280G and 4999 of the United States Internal Revenue Code, as amended. Thisapproval was effected pursuant to written consent in lieu of a meeting as of June 11,2007. The payments in question related to compensatory or “deemed” paymentsunder existing agreements or arrangements between Mr. Ballbach and theCompany (and/or one or more of its subsidiaries), including stock option andother equity-based award agreements and his employment agreement, that would betriggered by the consummation of the Merger.

***Elections ofDirectors***

Upon consummation of theMerger, in accordance with the Merger Agreement, each of B. Charles Ames,Charles A. Banks, Robert L. Barchi, Alan W. Dunton, Joseph F. Eckroth, Jr.,Lewis S. Edelheit, George K. Jaquette, Brian P. Kelley, Richard J. Schnall,Carl T. Stocker and Robert Zollars, resigned from their positions as members ofthe Board of Directors of the Company.

As a result of the Merger,all of the equity securities of the Company are owned by VWR Investors, Inc.,which is a wholly owned subsidiary of Holdings. Upon consummation of the Mergerand immediately after the effectiveness of the resignations described above,VWR Investors, Inc. elected Timothy P. Sullivan, Nicholas W. Alexos, HarryM. Jansen Kraemer, Jr. and Timothy D. Sheehan as members of the Company’sBoard of Directors, pursuant to written consent in lieu of a meeting. John M.Ballbach has remained on the Board and was appointed the Chairman.

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**Item6—*Exhibits***
| Exhibit   Number | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | ** ** | **Description   of Documents** | ** ** | **Method of   Filing** |
|------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------|------------|------------------------|
| 4.4              |       | Supplemental Indenture,  effective as of June 29, 2007, to Indenture, dated as of April 7,  2004, by and among CDRV Acquisition Corporation, as Issuer (the rights and  obligations of which were assumed by VWR International, LLC (formerly VWR  International, Inc.)), the Subsidiary Guarantors from time to time  parties thereto, as Subsidiary Guarantors and Wells Fargo Bank, National  Association, as Trustee, relating to the 8% Senior Subordinated Notes due  2014 of CDRV Acquisition Corporation |       | Filed herewith.                |
| 4.5(a)           |       | Credit Agreement,  dated as of June 29, 2007, among VWR Funding, Inc., the Foreign  Subsidiary Borrowers from time to time parties thereto, the Lenders from time  to time parties thereto, Bank of America, N.A., as Administrative Agent and  Collateral Agent, and the Arrangers and other Agents named therein                                                                                                                                                                                                    |       | Filed herewith.                |
| 4.5(b)           |       | Guarantee and  Collateral Agreement, dated as of June 29, 2007, among VWR  Investors, Inc., VWR Funding, Inc., the Subsidiaries from time to  time parties thereto, and Bank of America, N.A., as Collateral Agent                                                                                                                                                                                                                                                                                               |       | Filed herewith.                |
| 4.6(a)           |       | Indenture, dated  as of June 29, 2007, by and among VWR Funding, Inc., the Guarantors  from time to time parties thereto, and Law Debenture Trust Company of New  York, as Trustee, relating to 10.25% Senior Notes due 2015 (including form of  Note attached as an exhibit thereto)                                                                                                                                                                                                                                 |       | Filed herewith.                |
| 4.6(b)           |       | Purchase  Agreement, dated as of June 26, 2007, by and among VWR  Funding, Inc. and the Representatives of the Purchasers named therein,  relating to 10.25% Senior Notes due 2015                                                                                                                                                                                                                                                                                                                                    |       | Filed herewith.                |
| 4.6(c)           |       | Exchange and  Registration Rights Agreement, dated as of June 29, 2007, among VWR  Funding, Inc., the Guarantors from time to time parties thereto, and the  Representatives of the Purchasers named therein                                                                                                                                                                                                                                                                                                          |       | Filed herewith.                |
| 4.7(a)           |       | Indenture, dated  as of June 29, 2007, by and among VWR Funding, Inc., the Guarantors  from time to time parties thereto, and Law Debenture Trust Company of New  York, as Trustee, relating to 10.75% Senior Subordinated Notes due 2017  (including forms of Notes attached as an exhibit thereto)                                                                                                                                                                                                                  |       | Filed herewith.                |
| 4.7(b)           |       | Purchase  Agreement, dated as of June 27, 2007, by and among VWR Funding, Inc.  and the Purchasers named therein, relating to 10.75% Senior Subordinated  Notes due 2017                                                                                                                                                                                                                                                                                                                                              |       | Filed herewith.                |
| 4.7(c)           |       | Exchange and  Registration Rights Agreement, dated as of June 29, 2007, among VWR  Funding, Inc., the Guarantors from time to time parties thereto, and the  Purchasers named therein                                                                                                                                                                                                                                                                                                                                 |       | Filed herewith.                |
| 10.1(a)          |       | Agreement and  Plan of Merger, dated May 2, 2007, among Varietal Distribution Holdings,  LLC, Varietal Distribution Merger Sub, Inc., and VWR Funding, Inc.  (formerly CDRV Investors, Inc.)                                                                                                                                                                                                                                                                                                                |       | Filed herewith.                |

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| 10.1(b) |   | First Amendment  to said Merger Agreement, dated May 7, 2007                                                                                              |   | Filed herewith.      |
|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|
| 10.1(c) |   | Second Amendment  to said Merger Agreement, dated May 30, 2007                                                                                            |   | Filed herewith.      |
| 10.2    |   | Management  Services Agreement, dated as of June 29, 2007, between VWR  Funding, Inc. and Madison Dearborn Partners V-B, L.P.                        |   | Filed herewith.      |
| 10.3(a) |   | Varietal  Distribution Holdings, LLC 2007 Securities Purchase Plan                                                                                             |   | Filed herewith.      |
| 10.3(b) |   | Limited Liability  Company Agreement, dated June 29, 2007, among Varietal Distribution  Holdings, LLC and the unitholders named therein from time to time |   | Filed herewith.      |
| 10.3(c) |   | Securityholders  Agreement, dated June 29, 2007, among Varietal Distribution Holdings,  LLC and the other parties named therein from time to time         |   | Filed herewith.      |
| 10.3(d) |   | Form of  Management Unit Purchase Agreement (with schedule of Named Executive Officer  Invested Amounts)                                                  |   | Filed herewith.      |
| 10.4    |   | Employment  Letter, dated June 29, 2007, between VWR International, LLC and John M.  Ballbach                                                             |   | Filed herewith.      |
| 10.5    |   | Employment  Letter, dated June 29, 2007, between VWR International, LLC and Jack L.  Wyszomierski                                                         |   | Filed herewith.      |
| 10.6    |   | Employment  Letter, dated June 29, 2007, between VWR International, LLC and George  Van Kula                                                              |   | Filed herewith.      |
| 10.7(a) |   | Employment  Letter, dated June 29, 2007, between VWR International, LLC and Theodore  C. Pulkownik                                                        |   | Filed herewith.      |
| 10.7(b) |   | Supplemental  Employment Letter, dated July 25, 2007, between VWR International, LLC  and Theodore C. Pulkownik                                           |   | Filed herewith.      |
| 10.8    |   | Severance  Agreement and General Release, dated July 30, 2007, between VWR  International, LLC and Charles F. Canfield                                    |   | Filed herewith.      |
| 31.1    |   | Certification of  Principal Executive Officer pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002                                                  |   | Filed herewith.      |
| 31.2    |   | Certification of  Principal Financial Officer pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002                                                  |   | Filed herewith.      |
| 32.1    |   | Certificate of  Principal Executive Officer pursuant to 18 U.S.C. 1350 (Section 906 of  the Sarbanes-Oxley Act of 2002)                                   |   | Furnished  herewith. |
| 32.2    |   | Certificate of Principal  Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of the  Sarbanes-Oxley Act of 2002)                                   |   | Furnished herewith.  |

 

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**SIGNATURE**

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.
|                 | Vwr FUNDING, INC. |
|-----------------|-------------------|
|            | By:               | /s/ GREGORY L. COWAN |
|            |              | Name: | Gregory L. Cowan |
|            |              | Title: | *Vice President and Corporate Controller (Chief  Accounting Officer and Duly Authorized Officer)* |
| August 14, 2007 |              |

 

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