**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**

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**FORM 10-K**

| **x**                                                | ** ** | **ANNUAL REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE**     |
|------------------------------------------------------|------------|-------------------------------------------------------------------------|
| ** **                                           | ** ** | **SECURITIES EXCHANGE ACT OF 1934**                                     |
| **For the Fiscal Year Ended December 31, 2006** |
| **or**                                               |
| **o**                                                | ** ** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE** |
| ** **                                           | ** ** | **SECURITIES EXCHANGE ACT OF 1934**                                     |

 

**Forto the transition periodfrom                    to                    **

**Commission file number:  333-118658**

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**VWR INTERNATIONAL,INC.**

(Exact name of registrant asspecified in its charter)

| **Delaware**                                                     |   | **91-1319190**                        |
|------------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of  incorporation or organization) |   | (I.R.S. Employer  Identification No.) |
| **1310 Goshen Parkway**                                          |   | ** **                            |
| **PO. Box  2656**                                                |   | ** **                            |
| **West  Chester, PA**                                            |   | **19380**                             |
| (Address of principal  executive offices)                        |   | (Zip code)                            |

 

**Registrant’s telephone number,including area code:** (610) 431-1700

**Securities registered pursuant toSection 12(b) of the Act:** None

**Securities registered pursuant toSection 12(g) of the Act:** None

Indicate by check mark ifthe registrant is a well-known seasoned issuer, as defined in Rule 405 ofthe Securities Act. Yes o  No x

Indicate by check mark ifthe registrant is not required to file reports pursuant to Section 13 or15(d) of the Act.Yes x  No o

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

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K is notcontained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment tothis Form 10-K. x

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer. See definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large acceleratedfiler o            Acceleratedfiler o               Non-acceleratedfiler x

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2of the Act). Yes oNo x

As of December 31,2006, there was no established public market for the registrant’s common stock,par value $0.01 per share. The number of shares of the registrant’s commonstock outstanding at March 16, 2007 was 100.

**DOCUMENTSINCORPORATED BY REFERENCE**

**None**

 

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**TABLEOF CONTENTS**

| ** ** | ** ** | ** **                                                                                      | ** ** | **Page** | ** ** |
|------------|------------|-------------------------------------------------------------------------------------------------|------------|----------|------------|
|       |       | PART I                                                                                     |       |     |       |   |   |
| ITEM 1.    |       | BUSINESS                                                                                        |       |     | 1          |   |   |
| ITEM 1A.   |       | RISK FACTORS                                                                                    |       |     | 10         |   |   |
| ITEM 1B.   |       | UNRESOLVED STAFF COMMENTS                                                                       |       |     | 17         |   |   |
| ITEM 2.    |       | PROPERTIES                                                                                      |       |     | 18         |   |   |
| ITEM 3.    |       | LEGAL PROCEEDINGS                                                                               |       |     | 18         |   |   |
| ITEM 4.    |       | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                             |       |     | 19         |   |   |
|       |       | PART II                                                                                    |       |     |       |   |   |
| ITEM 5.    |       | MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED  STOCKHOLDER MATTERS                     |       |     | 20         |   |   |
| ITEM  6.   |       | SELECTED  FINANCIAL DATA                                                                        |       |     | 20         |   |   |
| ITEM 7.    |       | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS OF OPERATIONS     |       |     | 22         |   |   |
| ITEM 7A.   |       | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT  MARKET RISK                                |       |     | 41         |   |   |
| ITEM 8.    |       | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                     |       |     | 42         |   |   |
| ITEM 9.    |       | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON  ACCOUNTING AND FINANCIAL DISCLOSURE           |       |     | 97         |   |   |
| ITEM 9A.   |       | CONTROLS AND PROCEDURES                                                                         |       |     | 97         |   |   |
| ITEM  9B.  |       | OTHER  INFORMATION                                                                              |       |     | 99         |   |   |
|       |       | PART III                                                                                   |       |     |       |   |   |
| ITEM 10.   |       | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE  GOVERNANCE                                         |       |     | 99         |   |   |
| ITEM 11.   |       | EXECUTIVE COMPENSATION                                                                          |       |     | 104        |   |   |
| ITEM 12.   |       | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND  MANAGEMENT AND RELATED STOCKHOLDER MATTERS |       |     | 118        |   |   |
| ITEM 13.   |       | CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND  DIRECTOR INDEPENDENCE                     |       |     | 119        |   |   |
| ITEM 14.   |       | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                          |       |     | 123        |   |   |
|       |       | PART IV                                                                                    |       |     |       |   |   |
| ITEM 15.   |       | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                      |       |     | 125        |   |   |

 

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In this Form 10-K,unless the context requires otherwise, references to “we,” “us” and “our” meanVWR International, Inc. and its consolidated subsidiaries, and referencesto the “Company” mean VWR International, Inc.

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**PART I**

**ITEM1.**                BUSINESS

**Overview**

We are a leader in theglobal laboratory supply industry. We provide distribution services to a highlyfragmented supply chain by offering products from a wide range of manufacturersto a large number of customers. Our business is highly diversified acrossproducts and services, geographic regions and customer segments. Products wedistribute include chemicals, glassware, instruments, protective clothing andother assorted laboratory products. We also provide certain services to some ofour customers, which are primarily comprised of technical services, on-sitestoreroom services, warehousing and furniture design, supply and installation.We maintain operations in more than 20 countries and process an average of52,000 order lines daily from 20 strategically located distribution centers.Our principal customers are major pharmaceutical, biotechnology, chemical,technology, food processing and consumer product companies, universities andresearch institutes, governmental agencies, environmental organizations, andprimary and secondary schools.

The roots of our businessdate back to 1852. Following a series of business combinations, we became partof Univar Corporation. In 1986, we became a publicly-traded company following aspin-off from Univar and embarked on a substantial expansion program, whichincluded internal growth initiatives as well as acquisitions. Our mostsignificant acquisition occurred in 1995 when we purchased Baxter International’sindustrial distribution business, more than doubling our revenue base. Inconnection with this acquisition, Merck KGaA acquired 49.9% of our outstandingshares and, in 1999, Merck KGaA took us private by acquiring the remainder.During the period from 1995 through 1999, Merck KGaA actively built itsscientific supplies distribution business in Europe through a series ofacquisitions. In 2001, Merck KGaA combined the operations of the twobusinesses, and in 2002, consolidated them under a common U.S. parent company,creating a leader in the global laboratory supply industry.

On April 7, 2004, we were acquired from MerckKGaA by CDRV Holdings, Inc. (the “Acquisition”). In connection with theAcquisition, we issued $200.0 million of senior notes due 2012 and $320.0million of senior subordinated notes due 2014 and entered into a senior securedcredit facility (the “Senior Secured Credit Facility”), consisting of a $150.0million multi-currency revolving credit facility, as well as a U.S.dollar-denominated term loan and a Euro-denominated term loan. The term loanswere initially $415.0 million and €145.0 million in principalamount, respectively, which have been subsequently reduced through prepaymentsin July 2004, March 2006 and September 2006 to $307.1 millionand €107.3million (approximately $141.6 million as of December 31, 2006, on a U.S.dollar equivalent basis), respectively.

On December 16, 2004, our indirect parent, CDRVInvestors, Inc. (“CDRV Investors”) issued $481.0 million aggregateprincipal amount at maturity ($299.4 million gross proceeds) of 95¤8%senior discount notes due 2015. In addition, on December 14, 2006, CDRVInvestors issued $350.0 million of senior floating rate notes due 2011. See “Item7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debtof CDRV Investors.” We do not guarantee the above-referenced obligations ofCDRV Investors.

In 2004 and 2005, weexecuted restructuring programs in Europe and North America. In Europe,operations primarily in France, Germany and the UK were rationalized, and inNorth America, certain parts of our headquarters and field operations functionswere restructured. A significant portion of our realized cost savings over thelast two years has been re-invested in the business in four primary areas:  (1) corporate functions, includingfinance, internal audit and legal, (2) category management, includingglobal sourcing, (3) sales force / specialist additions and (4) strategicacquisitions in Ireland, the Netherlands, Puerto Rico and Singapore.

We report our financialresults on the basis of the following three business segments: North Americanlaboratory distribution (“North American Lab”), European laboratorydistribution (“European Lab”), and 

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ScienceEducation. In addition, we have small, but growing, Asia Pacific operations,which for purposes of external reporting, is embedded within the North AmericanLab and European Lab segments. Both the North American Lab and European Labsegments are comprised of the distribution of supplies to customers in majorpharmaceutical, biotechnology, chemical, technology, food processing andconsumer products industries, as well as governmental agencies, universitiesand research institutes and environmental organizations. Science Education iscomprised of the manufacture and distribution of scientific supplies andspecialized kits principally to primary and secondary schools in North America.See Note 18 under “Item 8—Financial Statements and Supplementary Data” forfurther information about our business segments.

**Customers and Markets**

Industry tradeassociations estimate that the 2006 industry-wide revenues of the globallaboratory supply industry in which our North American Lab and European Labsegments primarily operate were approximately $27 billion. Our net sales inthese segments are influenced by, but not directly correlated with, the growthof research and development spending from a diversified collection ofend-users, and we expect that results may vary by type of end-user.

In relation to our ScienceEducation segment, we estimate that the 2006 sales of scientific supplies toprimary and secondary schools in North America were approximately $600 million.Industry sales levels are subject to fluctuations driven by changes in stateand local government funding, the timing of the state-by-state new textbookadoption cycle and population changes. Accordingly, our Science Educationsegment is seasonal, with increased net sales and operating income in the thirdquarter, in connection with school purchases of supplies in preparation for thebeginning of the new school year.

We maintain a highlyfragmented and stable customer base across a diversified array of end users andgeographies. Our customers include major pharmaceutical, biotechnology,chemical, technology, food processing and consumer products companies. Theyalso include universities and research institutes, governmental agencies,environmental organizations and primary and secondary schools. While we serveour customers locally through our operations in North America, Europe and AsiaPacific, we also export products from these locations to customers in CentralAmerica, South America, British Commonwealth countries, Africa, the Middle Eastand the Pacific Rim. See Note 18 under “Item 8—Financial Statements and SupplementaryData” for further information about our geographic regions.

We seek to be theprincipal provider of scientific supplies to our customer base. We are aprincipal provider of scientific supplies to a majority of the world’s 20largest pharmaceutical companies, as well as three of the largest NorthAmerican biotechnology buying consortia. Pharmaceutical and biotechnologycompanies represented approximately 35% of our 2006 net sales, and togetherwith universities and colleges, accounted for approximately 47% of our 2006 netsales. In 2006, our top 20 customers accounted for approximately 22% of our netsales, with no single customer representing more than 3% of our net sales.

We also provide certainservices to some of our customers, which are primarily comprised of technicalservices, on-site storeroom services, warehousing and furniture design, supplyand installation. Service revenues represent only a small part of our business.

**Products**

We offer a wide range ofproducts, including chemicals, glassware, plasticware, instruments and otherlaboratory equipment, protective clothing, laboratory furniture and scientificeducational materials for primary and secondary schools. Our average order sizeis less than $500. Many of our products, including chemicals, laboratoryconsumables, production supplies and science education products, are consumablein nature. These products are basic and essential supplies required by researchlaboratories and represented approximately 75% of our net sales in 2004, 2005 and2006. We also offer durable products, including centrifuges, fume hoods andworkstations, ovens, microscopes and cold storage equipment.

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Thefollowing table summarizes our product lines:

| **Line**                              | ** ** | **Products**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|---------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| General Laboratory   Supplies         |       |    Disposable laboratory products, including plasticware, glassware, liquid  handling products and general supplies. Products are primarily used in  research and development and all areas of test and measurement. Examples are  bottles, vials, petri dishes, multi-well plates, tubes, beakers, flasks,  cylinders, pipettors, pipet tips, shippers, stir bars, timers, slides and  various apparatus. Among other uses, general laboratory supplies are used to  transport, store, grow, filter and observe cellular and microbiological  products.                                                                             |
| Chemicals                             |       | Includes acids,  solvents, salts, bases, solutions, buffers, standards, dyes, stains, organics  and inorganics that are used in customer research and development, analytical  testing and pharma production applications. All products classified as chemicals  have a chemical formula component per the American Chemical Society  classification and have been designated by regulation as requiring Material  Safety Data Sheets when shipped and sold.                                                                                                                                                                              |
| Equipment/Instrumentation/  Furniture |       |    Includes all storage and testing “capital goods purchased” products used in  research and development and testing. Equipment includes electrically powered  products such as freezers, refrigerators, incubators, ovens, hot plates,  stirrers, shakers, pumps, water systems, circulators, chillers, heat blocks  and autoclaves. Instruments include electrically powered test and measurement  devices such as balances, pH meters, centrifuges, spectrophotometers,  readers, titrators, refractometers and microscopes. Furniture includes  cabinets, work stations, shelves, sinks, eye-wash stations and chairs. |
| Production Supplies and  Safety       |       |    Disposable products that are used to protect products from being contaminated  by employees in “cleanroom” operations and to protect employees’ health from  the products that they use in laboratory research, testing and production  operations. Production supplies and safety products include disposable  apparel, gloves, face masks, eye protection, environmental monitoring and  detecting products, ergonomic products, wipers, disinfectants and cleaners.                                                                                                                                             |
| Life Science Supplies                 |       | Includes  consumable biologicals such as microbiology media, molecular biology  reagents, cell culture media, cell culture serum, electrophoresis reagents,  PCR reagents, restriction enzymes and antibodies. All products classified as  life science supplies are used by customers in biological research and  development, QA/QC testing and BioPharma production applications. Life  sciences supplies are used to grow, stop the growth, preserve and separate cellular,  molecular and microbiological items of interest.                                                                                                         |
| Science Education                     |       | Includes  educational supplies, products, specimens, specialized science kits and  support products.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Other                                 |       | Technical and site  services and third-party procurement and distribution of other non-core  products.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

 

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We distribute productssourced from a wide array of manufacturers and are a primary distributor for avariety of major manufacturers. We offer customers a large selection ofproducts designed to meet their individual needs for a combination of premium, “value-for-money”and lower-cost products. Approximately 86% of our current global net salesconsist of branded products, with the remainder comprised of private labelproducts, primarily in the “value-for-money” category.

**Services**

We offer a varietyof services to customers ranging from single-site laboratories and / orproduction facilities to large multinational corporations with multiplelocations. These services cover a broad range of customer needs and include:

·       TechnicalServices—Validation and calibration services for various pieces of laboratoryequipment and instrumentation; and

·       LaboratoryDesign and Installation—Design, supply and installation of laboratory fixtures andfurniture (cabinetry, workstations, fume hoods) for new lab construction andrenovations; and

·       SiteServices—Provision of various on-site services including storeroom management,product delivery, usage tracking, order replenishment and billing through useof VWR on-site personnel, storeroom management systems, hazardous materialstracking and third-party procurement services.

Recent acquisitions by theCompany have had a strong service focus. In April 2005, we acquired bothAGB Scientific Ltd. (“AGB”) in Ireland and Advanced Instruments Sales &Service, Inc. (“AI”) in Puerto Rico. Both of these businesses have theleading technical services platform in their respective geographies forlaboratory equipment and instrumentation including calibration and validationservices. In mid-2005, we also acquired Technical Service Lab B.V. (“TSL”)in the Netherlands. TSL is a leading service provider in the Netherlands andBelgium for the calibration of small pieces of lab equipment. Our servicesstrategy is to augment our strong distribution platform with symbiotic servicesbusinesses to create profitable growth opportunities.

**DistributionNetwork**

Our distribution network consists of 20 strategicallylocated distribution centers and various smaller regional service centers and “just-in-time”facilities for customer-specific requirements. The distribution centers receiveproducts from manufacturers, manage inventory and fill and ship customerorders. Customer contact centers have responsibility for order entry and customerservice. We also contract with Merck KGaA and other third parties to shipproducts directly to our customers based on our instructions.

The table belowlists our 20 strategically located distribution centers:

| **North America**             | ** ** | **Europe & Asia Pacific** | ** ** |
|-------------------------------|------------|------------------------------------|------------|
| Batavia, Illinois             |       | Briare, France                     |       |
| Bridgeport, New  Jersey       |       | Bruchsal, Germany                  |       |
| Brisbane,  California         |       | Darmstadt, Germany                 |       |
| Buffalo, New York             |       | Dublin, Ireland                    |       |
| Denver, Colorado              |       | Haasrode, Belgium                  |       |
| Manati, Puerto  Rico          |       | Karlskoga, Sweden                  |       |
| Mexico City,  Mexico          |       | Lutterworth, United Kingdom        |       |
| Mississauga,  Ontario, Canada |       | Milan, Italy                       |       |
| Rochester, New  York          |       | Mollet del Valles, Spain           |       |
| Suwanee, Georgia              |       | Singapore                          |       |

 

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Our distribution centers are operated with warehousemanagement systems, most of which are paperless. The paperless system usesradio frequency hand-held electronic devices and bar-coded labels that identifylocation, routing and inventory picking and replacement, allowing us to monitorinventory and track individual customer orders throughout our distributionsystem. These systems provide high levels of customer service while allowing usto operate the centers efficiently and economically.

Our regional service centers are adjacent to selectedcustomer locations and are designed to supply a limited number of products tothose customers that require this level of service. We also operate “just-in-time”facilities at or near customer sites to meet customer needs promptly.

Orders can be placed by a variety of means, includingby telephone and the Internet. We employ sophisticated telephone and softwaretechnology to manage calls from customers. In many distribution centers,incoming calls are automatically routed to a customer contact center and thecustomer service representative that can most efficiently respond to a customerinquiry or order; detailed customer information is then automatically providedto the customer service representative taking the call.

We ship products primarilythrough third-party carriers, such as UPS, DHL, FedEx and others.

**Sales and Marketing**

We market to customers through our global sales force,our websites, and our library of catalogs. We have a global sales, salessupport, customer service, marketing and category management force of over2,900 employees around the world. Supporting the field sales organization arespecialist groups for e-business integrations, customized services, laboratoryfurniture, safety, environment, microbiology, chromatography and life science.

The Internet has become an increasingly important toolfor us. During 2006, approximately 30% of our net sales were derived frome-business sales and marketing channels. Our website features a fully indexedand searchable catalog covering our entire product line, is available in 11languages and has been custom-designed for 20 countries. This electroniccatalog includes product descriptions, technical specifications andcross-referenced data in a variety of different languages through individualcountry sites. This website allows customers to enter orders directly andenables us to communicate new product releases, promotions and other news toour customers.

In addition to our websites, we have, as part of ourintegrated business services capability, a growing e-business capabilitythat covers order creation, authorization, status, billing and reporting. Thesecapabilities provide direct data transfer to customers’ systems and integrationwith third-party marketplaces used by some of our customers.

We also provide printedcatalogs and other printed materials. Our general catalogs are printed in 11languages and include up to 47,000 products per issue. The general catalogs aresupplemented by several specialty catalogs for specific product lines.

**Suppliers**

We distribute products from a wide range of manufacturers.This includes a majority of the major manufacturers of laboratory chemicals,glassware, plasticware, instruments and other laboratory equipment, protectiveclothing and laboratory furniture who sell through distributors. In many cases,we believe we are a principal distributor for these major manufacturers. We arealso a key distributor of Merck KGaA’s chemical products in the laboratoryfield in many Western European countries. Merck KGaA supplied productsaccounted for approximately 13% of our net sales in 2006. This representsapproximately 7% and 25% of our North American Lab and European Lab net sales,respectively. Our distribution arrangements with Merck KGaA were entered intoat the time of the Acquisition and are summarized below.

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***Merck KGaA EuropeanDistribution Agreement.******  ***In connectionwith the Acquisition, we entered into a European distribution agreement withMerck KGaA. The purchase prices and purchase targets included in thedistribution agreement are agreed upon annually, taking into account market,economic and regulatory developments or reasonably foreseeable extraordinaryevents that are likely to have an impact on the industry pricing or salesgrowth in relevant products and market segments.

The initial term of the agreement is five years. Wemay extend the agreement for a second five-year term if we satisfy certainconditions, including annual purchase targets which, to date, we have exceeded.Merck KGaA has the right to terminate the distribution agreement if certainevents occur, including, among others, if we acquire a controlling interest incertain Merck KGaA competitors, or certain Merck KGaA competitors acquire acontrolling interest in us.

***Other Merck KGaADistribution Agreements.***   In connection with theAcquisition, we entered into a five-year distribution agreement with Merck KGaAto distribute certain chemical products in North America. The agreementautomatically extends for a second five-year term unless either party submits atermination notice at least 12 months prior to the expiration of the initialterm. Merck KGaA may terminate the distribution agreement if certain eventsoccur, including, among others, if we acquire a controlling interest in certaincompetitive manufacturers.

In connection with theAcquisition, we also entered into other distribution agreements with MerckKGaA, including five-year distribution agreements with Merck KGaA to distributeits bioscience products in Europe and North America. In addition, we enteredinto a supply agreement with Merck KGaA, pursuant to which it agreed tocontinue to manufacture certain of our private label products for an initialperiod of three years from April 7, 2004, and thereafter to providetechnical assistance in transitioning their manufacture to other manufacturers.During 2005, this agreement was extended through December 31, 2007.

**Manufacturing**

We have specializedmanufacturing facilities in Briare, France; Haasrode, Belgium; Buffalo, NewYork and Rochester, New York. The Briare site repackages chemicals and a limitedassortment of our branded glassware and also produces certain of our brandedchemicals. The Haasrode site also produces our branded chemicals. Our facilityin Buffalo, New York assembles specialized kits for our science educationcustomers. The Rochester site is involved in the preparation of educational andnatural science products. Products manufactured by us accounted forapproximately 3% of our net sales in 2006.

**InformationTechnology and Other Services**

Prior to the Acquisition, we and Merck KGaA hadhistorically performed certain information technology functions for each other.In order to maintain continuous and efficient operations, effective as ofApril 7, 2004, we entered into an information services master agreementwith Merck KGaA to maintain these relationships following the Acquisition untilsuch time as these services can be obtained internally or from other sources.We and Merck KGaA have continued to provide certain information technologyservices to each other consistent with the arrangements in place prior to theAcquisition, including Merck KGaA’s operation and support of the mainenterprise resource planning and business warehouse software and databases forour European companies. The information services master agreement has aninitial five-year term and will expire in April 2009, although individualservices may be terminated during this term following a notice period. TheCompany continues to depend on Merck KGaA to host certain enterprise systems,fulfill hardware support requirements and conduct related informationtechnology functions, such as data archival.

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Merck KGaA may terminate the information servicesmaster agreement if certain events occur including, among others, if we acquirea controlling interest in certain competitive manufacturers, or if certainMerck KGaA competitors acquire a controlling interest in us.

Under the terms of an agreement that expires on December 31,2007, Merck KGaA continues to provide logistics services to certain of oursubsidiaries. Unless earlier terminated following a notice period, suchlogistics service arrangements will be automatically renewed for an additionalthree years.

Certain subsidiaries ofMerck KGaA and certain of our subsidiaries have continued to lease or subleasefrom one another, or otherwise share, space in various offices and warehousesin Europe since the completion of the Acquisition. The terms of these leasingand subleasing arrangements range from less than one year to up to six or moreyears and are generally at market rents and conditions. Certain other existingcontracts with Merck KGaA have also remained in place since the Acquisition.

**Trademarks andTrade Names**

We have more than 50 different registered andunregistered trademarks and service marks for our products and services.Generally, registered trademarks have perpetual life, provided that they arerenewed on a timely basis and continue to be used properly as trademarks,subject only to the rights of third parties to seek cancellation of the marks.

A significant number of our marks were owned by MerckKGaA. In connection with the Acquisition, Merck KGaA agreed that it wouldtransfer, and cause its affiliates to transfer, to us, the ownership ofregistrations and applications for marks owned by a Merck KGaA entity but usedprimarily in our business. Substantially all of such transfers have been made.We have not registered and in some cases do not own the existing applicationsand registrations for our material trademarks or service marks in every countryin which we do business.

Our business is notdependent to a material degree on patents, copyrights or trade secrets althoughwe consider our catalogs, websites and proprietary software integral to ouroperations. Although we believe we have adequate policies and procedures inplace to protect our intellectual property, we have not sought patent protectionfor our processes nor have we registered the copyrights in any of ourcatalogues, websites or proprietary software. Other than licenses tocommercially available third-party software, we have no licenses tointellectual property that are significant to the business.

**Competition**

We operate in a highly competitive environment. Wecompete in the laboratory supplies distribution business primarily with twoother major distributors, Thermo Fisher Scientific Inc. and Sigma AldrichCorporation. We also compete with many smaller regional, local and specialtydistributors, as well as with manufacturers selling directly to theircustomers. Competitive factors include price, service and delivery, breadth ofproduct line, customer support, e-business capabilities and the ability to meetthe special requirements of customers. We believe we compete effectively on allof these factors.

Some of our competitorsare increasing their manufacturing operations both internally and throughacquisitions of manufacturers, including manufacturers that supply products tous. To date, we have not experienced an adverse impact on our ability tocontinue to source products from manufacturers that have been verticallyintegrated, although there is no assurance that we will not experience such animpact in the future.

**GovernmentRegulation**

Some of the products weoffer and our operations are subject to a number of complex and stringent lawsand regulations governing the production, handling, transportation, import,export and distribution of 

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chemicals,drugs and other similar products, including the operating and securitystandards of the United States Drug Enforcement Administration, the Bureau ofAlcohol, Tobacco, Firearms and Explosives, the Food and Drug Administration,the Bureau of Industry and Security and various state boards of pharmacy aswell as comparable state and foreign agencies. In addition, our logisticsactivities must comply with the rules and regulations of the Department ofTransportation, the Federal Aviation Administration and similar foreignagencies. While we believe we are in compliance in all material respects withsuch laws and regulations, any non-compliance could result in substantial finesor otherwise restrict our ability to provide competitive distribution servicesand thereby have an adverse impact on our financial condition. For informationon environmental, health and safety matters, see below under “—Environmental,Health and Safety Matters.”

**Employees**

As of December 31,2006, we had approximately 6,300 employees, including approximately 3,600employees in North America and approximately 2,700 employees in Europe. As of December 31,2006, approximately 6% of our employees in North America are represented byunions, and virtually all of our employees in Europe are represented by workers’councils and/or unions. While we believe our relations with our employees aregood, there can be no assurance that further union expansion will not occur andcause increased future costs.

**Environmental,Health and Safety Matters**

We are subject to a broad range of foreign, federal,state and local environmental, health and safety laws and regulations,including those pertaining to air emissions, water discharges, the handling,disposal and transport of solid and hazardous materials and wastes, theinvestigation and remediation of contamination and otherwise relating to healthand safety and the protection of the environment and natural resources. As ourglobal operations involve and have involved the handling, transport and distributionof materials that are or could be classified as toxic or hazardous, there issome risk of contamination and environmental damage inherent in our operationsand the products we handle, transport and distribute. Our environmental, healthand safety liabilities and obligations may result in significant capitalexpenditures and other costs, which could negatively impact our business,financial condition and results of operations. We may be fined or penalized byregulators for failing to comply with environmental, health and safety laws andregulations. In addition, contamination resulting from our current or pastoperations may trigger investigation or remediation obligations, which may havea material impact on our business, financial condition and results ofoperations.

Based on currentinformation, we believe that any costs we may incur relating to environmentalmatters will not be material. We cannot be certain, however, thatidentification of presently unidentified environmental conditions, more vigorousenforcement by regulatory authorities or other unanticipated events will notarise in the future and give rise to additional environmental liabilities,compliance costs or penalties which could have a material impact on ourbusiness, financial condition and results of operations. In addition,environmental laws and regulations are constantly evolving and it is notpossible to predict accurately the effect they may have in future periods.

**AvailableInformation**

We file or furnish annual and quarterly reports andother information with or to the SEC. You may read and copy any documents wefile at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C.20549. Please call the SEC at 1-800-SEC-0330 for furtherinformation on the public reference room. Our SEC filings are also available tothe public free of charge at the SEC’s website at*www.sec.gov.*

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You may also access ourpress releases, financial information and reports filed with or furnished tothe SEC (for example, our Annual Report on Form 10-K, our QuarterlyReports on Form 10-Q and our Current Reports on Form 8-Kand any amendments to those forms) online at *www.vwr.com.*Copies of any documents on our website are available without charge, andreports filed with or furnished to the SEC will be available as soon asreasonably practicable after they are filed with or furnished to the SEC. Theinformation found on our website is not part of this or any other report filedwith or furnished to the SEC.

**CorporateInformation**

Our principal executive offices are located at 1310Goshen Parkway, P.O. Box 2656, West Chester, PA 19380 and our telephonenumber is (610) 431-1700. Our Internet website is located at *www.vwr.com.*

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**ITEM 1A.**        RISK FACTORS

***Ourbusiness is subject to a number of important risks and uncertainties that aredescribed below. You should carefully consider these risks and all otherinformation included in this Annual Report on Form 10-K.***

**Risk Related to OurCapital Structure**

**We ha**vesubstantial existing debt and may incur substantial additional debt, whichcould adversely affect our financial health and our ability to obtain financingin the future, react to changes in our business and make payments on our debt.

As of December 31, 2006, we had an aggregateprincipal amount of debt outstanding of $991.9 million.

The agreements governing our debt permit us to incuror guarantee additional indebtedness, including indebtedness under the SeniorSecured Credit Facility, subject to specified limitations. We have additionalborrowing capacity on a revolving credit basis under the Senior Secured CreditFacility of $140.5 million as of December 31, 2006, which theselimitations permit us to incur. We may incur substantial additional debt in thefuture.

Our substantialdebt could have important consequences to us. Because of our substantial debt:

·       ourability to engage in acquisitions without raising additional equity orobtaining additional debt financing may be impaired in the future;

·       ourability to obtain additional financing for working capital, capitalexpenditures, acquisitions or general corporate purposes and our ability tosatisfy our obligations with respect to our indebtedness may be impaired in thefuture;

·       asubstantial portion of our cash flow from operations must be dedicated to thepayment of principal and interest on our indebtedness, thereby reducing thefunds available to us for other purposes;

·       wewill be exposed to the risk of increased interest rates because a portion ofour borrowings will be at variable rates of interest; and

·       ourflexibility to adjust to changing market conditions and ability to withstandcompetitive pressures could be limited, and we may be more vulnerable to adownturn in general economic conditions or our business or be unable to carryout capital spending that is necessary or important to our growth strategy andour efforts to improve operating margins.

**Our ability to generate the significant amount ofcash needed to pay interest and principal on our debt when due and our abilityto refinance all or a portion of our indebtedness or obtain additionalfinancing, may depend on many factors beyond our control**.

Our ability to makescheduled payments or to refinance our obligations with respect to our debtdepends on our financial and operating performance, which, in turn, is subjectto prevailing economic and competitive conditions and to the followingfinancial and business factors, some of which may be beyond our control:

·       operatingdifficulties;

·       increasedoperating costs;

·       decreaseddemand for our products;

·       marketcyclicality;

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·       productprices;

·       theresponse of competitors;

·       regulatorydevelopments;

·       failureto successfully integrate acquisitions; and

·       delaysin implementing strategic projects.

If our cash flow andcapital resources are insufficient to fund our debt service obligations, we maybe forced to further reduce or delay capital expenditures, sell assets or seekto obtain additional equity capital, or restructure our debt. In the future,our cash flow and capital resources may not be sufficient for payments ofinterest on and principal of our debt, and such alternative measures may not besuccessful and may not permit us to meet our scheduled debt service obligations.We also cannot assure you that we will be able to refinance any of ourindebtedness or obtain additional financing, particularly because of our highlevels of debt and the debt incurrence restrictions imposed by the agreementsgoverning our debt, as well as prevailing market conditions. In the absence ofsuch operating results and resources, we could face substantial liquidityproblems and might be required to dispose of material assets or operations tomeet our debt service and other obligations. If required, we cannot be sure asto the timing of such sales or the proceeds that we could realize therefrom.

**Risk Related to OurBusiness**

**A significant stockholder controls our business andits interests may not be in line with yours.**

As of March 16, 2007, Clayton, Dubilier &Rice Fund VI Limited Partnership (“CD&R Fund VI”) is a significantstockholder that beneficially owns approximately 70.3% of the outstandingcommon stock of CDRV Investors, the Company’s indirect parent, and exercisescontrol over matters requiring stockholders’ approval and control over ourpolicies and affairs. It has the right to nominate for election all members ofour Board of Directors. In addition, Clayton, Dubilier & Rice, Inc.(“CD&R”), which manages CD&R Fund VI, provides us with financialadvisory and management consulting services. See “Item 13—CertainRelationships, Related Transactions and Director Independence.” We have notinstituted any formal plans to address any conflicts of interest that mayarise.

**The demand for our products depends on the level ofour customers’ research and development and other scientific endeavors. Ourbusiness, financial condition and results of operations may be harmed if ourcustomers spend less on these activities.**

Our customers are engaged in research, development andproduction in the pharmaceutical, biotechnology, education, chemical,technology, food processing, consumer products and other industries. The amountof customer spending on research, development and production has a large impacton our sales and profitability. Our customers determine the amounts that theywill spend on the basis of, among other things, available resources and theirneed to develop new products, which, in turn, is dependent upon a number offactors, including their competitors’ research, development and productioninitiatives. In addition, consolidation in the industries in which ourcustomers operate may have an impact on such spending as customers integrateacquired operations, including research and development departments and theirbudgets. Our customers finance their research and development spending fromprivate and public sources. Government funding of scientific research andeducation has varied for several reasons, including general economicconditions, growth in population, political priorities, changes in the numberof students and other demographic changes. A reduction in spending by ourcustomers could have a material adverse effect on our business, financialcondition and results of operations. In addition, some companies have shiftedtoward outsourcing research, development and production activities overseas. Weare 

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expanding into the AsiaPacific region to address this trend, although there is no assurance that wewill not experience an adverse impact in the future.

**We compete in a highly competitive market. Failure tocompete successfully could have a material adverse effect on our business,financial condition and results of operations.**

We compete globally with two other major distributors,Thermo Fisher Scientific Inc. and Sigma Aldrich Corporation, as well as manysmaller regional, local and specialty distributors, and with manufacturersselling directly to their customers. The bases upon which we compete includeprice, service and delivery, breadth of customer support, e-businesscapabilities and the ability to meet the special requirements of customers.

Some of our competitors may have greater financial andother resources than we do. Most of our products are available from severalsources, and some of our customers have relationships with severaldistributors. Our agreements with customers generally provide that the customercan terminate the agreement or reduce the scope of services provided pursuantto the agreement with short or no notice. Lack of product availability,stemming from either our inability to acquire products or interruptions in thesupply of products from manufacturers, could have a material adverse effect onour ability to compete. Our competitors could also obtain exclusive rights to distributesome products, thereby foreclosing our ability to distribute these products.Vertically integrated distributors may also have an advantage with respect tothe total delivered product cost of certain of their captive products.Additionally, manufacturers could increase their efforts to sell directly toconsumers and effectively bypass distributors like us. Consolidation in thelaboratory supply industry could result in existing competitors increasingtheir market share through business combinations, which could have a materialadverse effect on our business, financial condition and results of operations.The entry of new distributors in the industry could also have a materialadverse effect on our ability to compete.

**Our business, financial condition and results ofoperations depend upon maintaining our relationships with manufacturers.**

We currently offer products from a wide range ofmanufacturers. We are dependent on these manufacturers for our supply ofproducts. Merck KGaA supplied products that accounted for approximately 13% ofour net sales in 2006. This represents approximately 7% and 25% of our NorthAmerican Lab and European Lab net sales, respectively.

Our ability to sustain our gross margins has been, andwill continue to be, dependent in part upon our ability to obtain favorableterms from our suppliers. These terms may be subject to changes from time totime, and such changes could adversely affect our gross margins over time.

The loss of one or more of our large suppliers, amaterial reduction in their supply of products to us, or material changes inthe terms we obtain from them, could have a material adverse effect on ourbusiness, financial condition and results of operations.

Some of our competitors are increasing theirmanufacturing operations both internally and through acquisitions ofmanufacturers, including manufacturers that supply products to us. Forinstance, in 2006, Fisher Scientific International Inc., a supplier of productsto us and one of our largest competitors, merged with Thermo ElectronCorporation, another supplier to us, to form Thermo Fisher Scientific Inc. Todate, we have not experienced an adverse impact on our ability to continue tosource products from manufacturers that have been vertically integrated (includingThermo Fisher Scientific Inc.), although there is no assurance that we will notexperience such an impact in the future.

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**We may be unable to managecertain operational functions of our business if we are not able to replace theinformation technology and logistics services that are provided to us by MerckKGaA after our agreements with them expire or are terminated. Further, anydisruptions in Merck KGaA’s operations may negatively impact our operations.**

Our European Lab segment is dependent on Merck KGaAfor certain information technology services pursuant to a five-year informationservices master agreement as well as warehousing and logistics servicespursuant to a logistics service level agreement. These information technologyservices affect a significant portion of our information technology andoperational infrastructure, including the operation and support of the mainEuropean enterprise resource planning and business warehouse software anddatabases. If Merck KGaA terminates any of these agreements at the end of theirrespective terms or otherwise, we will need to find an alternative supplier of,or create our own infrastructure for, these services. While we have alreadyreplaced some of these services, we may not be able to create our own infrastructurein a timely or cost-effective manner or obtain replacement services for theremaining services on terms that are as favorable to us as the currentarrangements or on acceptable terms, if at all. In addition, any disruptions inthe operational infrastructure or operations of Merck KGaA may negativelyimpact our operations.

**If we do not comply with or if we become subject tomore onerous government regulations, we could be adversely affected.**

Some of the products we offer and our operations aresubject to a number of complex and stringent laws and regulations governing theproduction, handling, transportation, import, export and distribution ofchemicals, drugs and other similar products, including the operating andsecurity standards of the United States Drug Enforcement Administration, theBureau of Alcohol, Tobacco, Firearms and Explosives, the Food and DrugAdministration, the Bureau of Industry and Security and various state boards ofpharmacy as well as comparable state and foreign agencies. In addition, ourlogistics activities must comply with the rules and regulations of theDepartment of Transportation, the Federal Aviation Administration and similarforeign agencies. While we believe we are in compliance in all materialrespects with such laws and regulations, any non-compliance could result insubstantial fines or otherwise restrict our ability to provide competitivedistribution services and thereby have an adverse impact on our financialcondition.

We cannot assure you that existing laws andregulations will not be revised or that new, more restrictive laws will not beadopted or become applicable to us or the products that we distribute. Wecannot assure you that the manufacturers of products that may become subject tomore stringent laws will not try to recover any or all increased costs ofcompliance from us by increasing the prices at which we purchase products fromthem, or, that we will be able to recover any such increased prices from ourcustomers. We cannot assure you that our business and financial condition willnot be materially and adversely affected by future changes in applicable lawsand regulations.

**If any of our operations are found not to comply withapplicable antitrust or competition laws, our business may suffer.**

Our operations are subject to applicable antitrust andcompetition laws in the countries in which we conduct our business, inparticular the United States and in the European Union. These laws prohibit,among other things, anticompetitive agreements and practices. If any of ourcommercial agreements are found to violate or infringe such laws, we may besubject to civil and other penalties and/or third party claims for damages.Further, agreements that infringe these laws may be void and unenforceable, inwhole or in part, or require modification in order to be lawful andenforceable. If we are unable to enforce any of our commercial agreements,whether at all or in material part, our business could be adversely affected.

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**We are subject toenvironmental, health and safety laws and regulations, and costs to comply withsuch laws and regulations, or any liability or obligation imposed under suchlaws or regulations, could negatively impact our business, financial conditionand results of operations.**

We are subject to a broad range of foreign, federal,state and local environmental, health and safety laws and regulations,including those pertaining to air emissions, water discharges, the handling,disposal and transport of solid and hazardous materials and wastes, the investigationand remediation of contamination and otherwise relating to health and safetyand the protection of the environment and natural resources. As our globaloperations involve and have involved the handling, transport and distributionof materials that are or could be classified as toxic or hazardous, there issome risk of contamination and environmental damage inherent in our operationsand the products we handle, transport and distribute. Our environmental, healthand safety liabilities and obligations may result in significant capitalexpenditures and other costs, which could negatively impact our business,financial condition and results of operations. We may be fined or penalized byregulators for failing to comply with environmental, health and safety laws andregulations. In addition, contamination resulting from our current or pastoperations may trigger investigation or remediation obligations, which may havea material adverse effect on our business, financial condition and results ofoperations.

Based on current information, we believe that anycosts we may incur relating to environmental, health and safety matters willnot be material. We cannot be certain, however, that identification ofpresently unidentified environmental, health and safety conditions, morevigorous enforcement by regulatory authorities or other unanticipated eventswill not arise in the future and give rise to additional liabilities,compliance costs or penalties which could have a material adverse effect on ourbusiness, financial condition and results of operations. In addition,environmental, health and safety laws and regulations are constantly evolvingand it is not possible to predict accurately the effect they may have in futureperiods.

**We are subject to product liability and other claimsin the ordinary course of business.**

Our business involves a risk of product liability andother claims in the ordinary course of business. We maintain insurancepolicies, including product liability insurance, and in many cases we haveindemnification rights against such claims from the manufacturers of theproducts we distribute. We cannot assure you that our insurance coverage or themanufacturers’ indemnity will be available in all pending or any future casesbrought against us. Furthermore, our ability to recover under any insurance orindemnification arrangements is subject to the financial viability of ourinsurers, our manufacturers and/or our manufactures’ insurers. In particular,as we seek to expand our sourcing from manufacturers in Asia Pacific and otherdeveloping locations, we expect that we will increase our exposure to potentialdefaults under the related indemnification arrangements. Insurance coverage ingeneral or coverage for certain types of liabilities, such as product liabilityin these developing markets may not be readily available for purchase orcost-effective for us to purchase. Further, insurance for asbestos-relatedliability is cost-prohibitive or no longer available. Accordingly, we could besubject to uninsured and unindemnified future liabilities, and an unfavorableresult in a case for which adequate insurance or indemnification is notavailable could result in a material adverse effect on our business, financialcondition and results of operations.

From time to time, we are named as a defendant incases that arise as a result of our distribution of scientific supplies,including litigation resulting from the distribution of products containingasbestos by us and certain of our predecessors. While the impact of thislitigation on us has typically been immaterial, there can be no assurance thatthe impact of the pending and any future claims will not be material to ourbusiness, financial condition and results of operations in the future.

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**The loss of key personnelcould harm our business, financial condition and results of operations.**

We depend heavily on the services of our seniormanagement. We believe that our future success will depend upon the continuedservices of our management. Our business may be harmed by the loss of one ormore members of our management. We currently do not maintain key-man lifeinsurance with respect to our executive officers.

**Our international operations pose currency risks.**

While we report our financial results in U.S. dollars,we derive a significant portion of our sales and incur costs in foreigncurrencies from our operations outside the United States. For example, in 2006and 2005, approximately 42% and 41% of our net sales respectively, came fromour operations outside the United States, primarily from our operations inEurope and Canada. Because the majority of our debt is denominated in U.S.dollars, fluctuations in exchange rates between non-U.S. currencies(principally the Euro, the British pound sterling and the Canadian dollar)relative to the U.S. dollar could make it more difficult for us to pay amountsdue on our debt.

**The international scope of our operations mayadversely affect our business.**

We currently deriveapproximately 42% of our net sales from our operations outside the UnitedStates, and we are expanding sourcing and commercial operations in AsiaPacific. Accordingly, we face certain risks, including:

·       restrictionson foreign ownership of subsidiaries;

·       tariffsand other trade barriers;

·       politicalrisks;

·       differinglaws or administrative practices;

·       localbusiness practices that are inconsistent with U.S. or local law; and

·       potentiallyadverse tax consequences of operating in multiple jurisdictions.

In addition, an adverse change in laws oradministrative practices in countries within which we operate could have amaterial adverse effect on us. Our operations outside the United States alsomay present additional risk with respect to compliance with governmentregulations.

**Problems with or failure of our informationtechnology, its connectivity to our customers and certain service providers andthe normal functioning of our telephony systems could significantly disrupt ouroperations, which could reduce our customer base and could harm our business,financial condition and results of operations.**

Our success depends, in part, on the secure anduninterrupted performance of our information technology and telephony systems.Our systems, the systems of our customers, suppliers and service providers, andthe connectivity among such systems are vulnerable to damage from a variety ofsources, including telecommunications failures, malicious human acts andnatural disasters. Moreover, despite network security measures, our servers andthose of our customers and service providers are potentially vulnerable tophysical or electronic break-ins, computer viruses and similar disruptiveproblems. While we have taken appropriate steps to reinforce the security ofour websites, applications, electronic data and the electronic data relating toour customers and service providers, there can be no guarantee thatunauthorized intrusion will not occur. Failure to maintain a secure web-basedprocurement system could have a material adverse effect on our business, financialcondition and results of operations.

In addition, because we accept payment by credit cardand similar payment instruments, our ability to accept, process and settlecredit card transactions is subject to rules and regulations issued and/oramended 

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from time to time by thepayment card industry and by individual payment card companies such as AmericanExpress, VISA, MasterCard and Discover. Compliance with these requirements,which vary based on annual transaction volumes and transaction experience,requires us to safeguard customer information, including minimum securitystandards for the manner in which we capture, store, process and transmit suchinformation. Our failure to comply with such changing rules and standardscan subject us to fines, restrictions or expulsion from these card acceptanceprograms, which could have a material adverse affect on our business, financialcondition and results of operations.

Despite the security precautions we have taken,unanticipated problems may nevertheless cause failures in our informationtechnology, connectivity and telephony systems. Sustained or repeated systemfailures or service disruptions that interrupt our ability to receive andprocess orders, receive and process customer payments and deliver products in atimely manner could have a material adverse effect on our business, financialcondition and results of operations.

We will continue to make significant technology andinfrastructure investments, with particular emphasis in North America. Ourtechnology initiatives are designed to enhance the security and reliability ofour technology to allow us to continue to provide high quality service to ourcustomers. The cost and potential problems and interruptions associated withthe implementation of our technology initiatives could disrupt or reduce theefficiency of our operations in the near term.

**We have not registered and in some cases do not ownthe existing applications and registrations for our material trademarks orservice marks in every country in which we do business.**

We maintain operations in more than 20 countries. Wealso export products from our distribution facilities in North America andEurope and sell them to markets in Central America, South America, BritishCommonwealth countries, Africa, the Middle East and the Pacific Rim throughagents and resellers. We have not sought to register our material trademarksand service marks in all of these countries and may be blocked from doing so byothers who have already registered identical or similar marks for similar goodsor services. In addition, if we do business in countries where other companiesmay have registered identical or similar trademarks or service marks, we runthe risk of being sued for infringement.

The failure to own and have enforceable rights in thetrademarks and service marks used in our business could have a material adverseeffect on our business, financial condition and results of operations.

**We may incur impairment charges on our goodwill andother intangible assets with indefinite lives, which could negatively impactour business, financial condition and results of operations.**

We are subject to Statement of Financial AccountingStandards (“SFAS”) No. 142, *Goodwilland Other Intangible Assets* (“SFAS 142”), which requires thatgoodwill and other intangible assets that have an indefinite useful life betested at least annually for impairment. Goodwill and other intangible assetswith indefinite lives must also be tested for impairment between the annualtests if an event or change in circumstance occurs that would more likely thannot reduce the fair value of the asset below its carrying amount. As of December 31,2006, goodwill and other intangible assets with indefinite lives representedapproximately 45% of our total assets, and the results of our annual test didnot identify an impairment. However, if in the future, we determine that therehas been an impairment, our financial results for the relevant period would bereduced by the amount of the impairment, net of any income tax effects, whichcould have an adverse effect on our financial condition and results ofoperations.

**We rely upon third parties to manufacture and shipproducts to us and to our customers, and interruptions in their operationscould harm our business, financial condition and results of operations.**

We are dependent on third-party manufacturers tosupply products to us. In addition, we ship substantially all of our ordersthrough various independent package delivery providers. Strikes or other 

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service interruptions byour manufacturers or carriers could cause our operating expenses to rise orseriously harm our ability to fulfill our customers’ orders or deliver productson a timely basis or both, which could have a material adverse effect on ourbusiness, financial condition and results of operations.

**We may continue to engage in acquisitions or businesscombinations that are subject to a variety of other risks that could harm ourbusiness.**

We may continue to engage in selective acquisitionsfrom time to time. Any future acquisitions could result in a variety of otherrisks:

·       wemay need to spend substantial operational, financial and management resourcesin integrating new businesses, technologies and products, and management mayencounter difficulties in integrating the operations, personnel or systems ofthe acquired businesses;

·       futureacquisitions or business combinations might have a material adverse effect onour business relationships with customers or manufacturers, or both, and couldlead to a termination of, or otherwise affect our relationships with, suchcustomers or manufacturers;

·       wemay assume substantial actual or contingent liabilities;

·       wemay incur substantial unanticipated costs or other problems associated withacquired businesses; and

·       we may not be able toretain the key personnel, customers and suppliers of the acquired business.

**ITEM 1B.**       UNRESOLVEDSTAFF COMMENTS

Not applicable.

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**ITEM 2.**                PROPERTIES

We ownand lease office, warehouse and manufacturing space in North America, Europe andAsia Pacific. We maintain our corporate headquarters in West Chester,Pennsylvania for executive, financial, legal, information systems, marketingand other administrative activities. Our European executive, financial, legal,information systems, marketing and other administrative activities are inDarmstadt, Germany and Haasrode, Belgium. As of December 31, 2006, thefollowing table sets forth information with respect to our significantdistribution, manufacturing and other office facilities:

| **Location**                     | ** ** | **Owned/Leased** | ** ** | **Size**        | ** ** | **Type of Facility**     |
|----------------------------------|------------|------------------|------------|-----------------|------------|------------------------------------|
| Batavia, Illinois(1)             |       | Owned            |       | 300,000 sq. ft. |       | Distribution Center                |
| Briare, France(2)                |       | Owned/Leased     |       | 358,675 sq. ft. |       | Distribution/Manufacturing  Center |
| Bridgeport, New  Jersey(1)       |       | Owned/Leased     |       | 466,776 sq. ft. |       | Distribution Center                |
| Brisbane, California(1)          |       | Leased           |       | 248,280 sq. ft. |       | Distribution Center                |
| Bruchsal, Germany(2)             |       | Owned/Leased     |       | 108,339 sq. ft. |       | Distribution Center                |
| Buffalo, New York(3)             |       | Owned            |       | 127,000 sq. ft. |       | Distribution Center                |
| Darmstadt, Germany(2)            |       | Leased           |       | 45,348 sq. ft.  |       | Offices                            |
| Denver, Colorado(1)              |       | Leased           |       | 130,091 sq. ft. |       | Distribution Center                |
| Dublin, Ireland(2)               |       | Leased           |       | 77,067 sq. ft.  |       | Distribution Center                |
| Haasrode, Belgium(2)             |       | Owned            |       | 201,447 sq. ft. |       | Offices/Distribution/Manufacturing |
| Karlskoga, Sweden(2)             |       | Leased           |       | 129,167 sq. ft. |       | Distribution Center                |
| Lutterworth, United  Kingdom(2)  |       | Leased           |       | 183,205 sq. ft. |       | Distribution Center                |
| Manati, Puerto Rico(1)           |       | Owned            |       | 100,000 sq. ft. |       | Distribution Center                |
| Mexico City, Mexico(1)           |       | Leased           |       | 63,948 sq. ft.  |       | Distribution Center                |
| Milan, Italy(2)                  |       | Leased           |       | 13,563 sq. ft.  |       | Distribution Center                |
| Mississauga, Ontario,  Canada(1) |       | Leased           |       | 114,000 sq. ft. |       | Distribution Center                |
| Mollet del Valles,  Spain(2)     |       | Leased           |       | 33,480 sq. ft.  |       | Distribution Center                |
| Rochester, New York(3)           |       | Owned            |       | 286,260 sq. ft. |       | Distribution/Manufacturing  Center |
| Singapore(1)                     |       | Leased           |       | 27,034 sq. ft.  |       | Distribution Center                |
| Suwanee, Georgia(1)              |       | Leased           |       | 168,925 sq. ft. |       | Distribution Center                |
| West Chester, Pennsylvania(1)(3) |       | Leased           |       | 97,516 sq. ft.  |       | Offices                            |

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(1)   —North American Lab;  (2)—European Lab; (3)—Science Education

We also lease variousregional service centers and “just-in-time” facilities in North America andEurope that support our sales and warehouse functions.

**ITEM 3.**                LEGALPROCEEDINGS

Our business involves a risk of product liability andother claims in the ordinary course of business. We maintain insurancepolicies, including product liability insurance, and in many cases we haveindemnification rights against such claims from the manufacturers of theproducts we distribute. We cannot assure you that our insurance coverage or themanufacturers’ indemnities will be available in all pending or any future casesbrought against us. In addition, our ability to recover under insurance or indemnificationarrangements is subject to the financial viability of the insurers andmanufacturers. In particular, as we seek to expand our sourcing frommanufacturers in Asia Pacific and other developing locations, we expect that wewill increase our exposure to potential defaults under the relatedindemnification arrangements. Insurance for some liabilities, includingasbestos, is not available, and we 

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currently are not able toobtain cost-effective insurance coverage for certain sourcing transactions in AsiaPacific. Accordingly, we could be subject to uninsured and unindemnified futureliabilities, and an unfavorable result in a case for which adequate insuranceor indemnification is not available could result in a material impact on ourbusiness, financial condition and results of operations.

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. In January 2007, the German Federal Cartel Officerequested additional information which we have recently provided. At thecurrent time, we cannot assess the likely outcome of the investigation orpotential economic impact associated with an adverse ruling. In connection withthe Acquisition, we recorded intangible assets related to our EuropeanDistribution Agreement with Merck KGaA. As of December 31, 2006, theunamortized net book value of these intangible assets is approximately $23.6million.

In March 2006, the Company was served with acomplaint filed in the United States District Court, Western District of NewYork, by Corning Incorporated (“Corning”) alleging a breach of contract andunliquidated damages. In April 2006, Corning amended its complaint toallege trademark and unfair competition claims. In November 2006, theCourt dismissed Corning’s breach of contract claim, but in March 2007,reconsidered its ruling and has now permitted Corning to proceed with theclaim. In January 2007, the Company filed counterclaims for breach of rebateobligation, unfair competition and tortious interference. The Company believesCorning’s claims are without merit and will vigorously defend itself on thoseclaims and pursue its counterclaims.

From time to time, we arenamed as a defendant in cases that arise as a result of our distribution ofscientific supplies, including litigation resulting from the distribution ofproducts containing asbestos by us and certain of our predecessors. Until 1987,we distributed certain asbestos-containing products primarily for use inlaboratories, including pads, protective clothing and laboratory equipment.Individuals who were exposed to these asbestos-containing products have, fromtime to time, brought claims against us for asbestos-related injuries. Webelieve that the liabilities associated with asbestos-related claims currentlypending against us are not material. While liabilities arising from potentialfuture claims could become material, we currently believe, on the basis of ourclaims history and related factors, that such potential future claims are notlikely to have a material impact on our business, financial condition andresults of operations.

**ITEM 4.**                SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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**PART II**

**ITEM 5.**                MARKETFOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

There is no established public trading market for ourcommon stock. We are a wholly-owned indirect subsidiary of CDRV Investors. Wedid not pay any dividends on our common stock during 2006, 2005 or 2004. Ourdebt instruments restrict our ability to pay dividends. See “Item 7—Management’sDiscussion and Analysis of Financial Condition and Results of Operations—Indebtedness.”Since April 7, 2004, there have been no purchases of equity securities.

**ITEM 6.**                SELECTEDFINANCIAL DATA

The selected financial data below under the captions “IncomeStatement Data” and “Balance Sheet Data” as of and for each of the years in thefive-year period ended December 31, 2006 are derived from the consolidatedand combined financial statements of VWR International, Inc. andsubsidiaries that have been audited by KPMG LLP (“KPMG”), an independentregistered public accounting firm. You should read the following selectedfinancial data in conjunction with “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations” and the Financial Statementspresented elsewhere herein. The term “predecessor” refers to VWR InternationalCorporation prior to the Acquisition. The term “successor” refers to VWRInternational, Inc. following the Acquisition.

| ** **                                                                            | ** ** | **Successor**                              | ** ** | ** **                                 | ** ** | **Predecessor**    | ** ** |
|---------------------------------------------------------------------------------------|------------|--------------------------------------------|------------|--------------------------------------------|------------|--------------------|------------|
| ** **                                                                            | ** ** | **Year Ended December 31,** | ** ** | **April 7-   December 31,** | ** ** | ** **         | ** ** | **January 1-  April 6,** | ** ** | **Year Ended December 31,** | ** ** |
| ** **                                                                            | ** ** | **2006**                                   | ** ** | **2005**                                   | ** ** | **2004**           | ** ** | ** ** | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
| ** **                                                                            | ** ** | **(Consolidated)**                         | ** ** | **(Consolidated)**                         | ** ** | **(Consolidated)** | ** ** | ** ** | ** ** | **(Consolidated)** | ** ** | **(Consolidated)** | ** ** | **(Combined)** | ** ** |
| ** **                                                                            | ** ** | **(Dollars in millions)**        | ** ** |
| **Income Statement Data:**                                                            |       |                                       |       |                                       |       |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                                                                             |       |                                       | $          | 3,257.6                                    |       |               |       | $ | 3,138.2 |   |   |   | $ | 2,212.2 |   |   |   |   |   | $ | 793.2 |   |   |   | $ | 2,794.2 |   |   |   | $ | 2,624.1 |   |   |
| Cost of goods sold                                                                    |       |                                       | 2,374.3    |                                       |       |               | 2,334.5    |   |   |   | 1,652.7 |   |   |   |   |   | 588.0 |   |   |   | 2,078.1 |   |   |   | 1,950.1 |   |   |
| Gross profit                                                                          |       |                                       | 883.3      |                                       |       |               | 803.7      |   |   |   | 559.5 |   |   |   |   |   | 205.2 |   |   |   | 716.1 |   |   |   | 674.0 |   |   |
| Selling, general  and administrative expenses(1)                                      |       |                                       | 693.2      |                                       |       |               | 639.9      |   |   |   | 455.4 |   |   |   |   |   | 163.7 |   |   |   | 583.4 |   |   |   | 560.0 |   |   |
| Restructuring  (credits) charges(3)                                                   |       |                                       | (1.0       | )                                          |       |               | 20.6       |   |   |   | — |   |   |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Operating income                                                                      |       |                                       | 191.1      |                                       |       |               | 143.2      |   |   |   | 104.1 |   |   |   |   |   | 41.5 |   |   |   | 132.7 |   |   |   | 114.0 |   |   |
| Interest expense,  net                                                                |       |                                       | 76.6       |                                       |       |               | 74.3       |   |   |   | 50.7 |   |   |   |   |   | 5.6 |   |   |   | 24.4 |   |   |   | 39.4 |   |   |
| Other expense (income),  net                                                          |       |                                       | 1.5        |                                       |       |               | (3.9       | ) |   |   | (2.0 | ) |   |   |   |   | 0.1 |   |   |   | (3.0 | ) |   |   | 0.6 |   |   |
| Income before  income taxes and cumulative effect of changes in accounting principles |       |                                       | 113.0      |                                       |       |               | 72.8       |   |   |   | 55.4 |   |   |   |   |   | 35.8 |   |   |   | 111.3 |   |   |   | 74.0 |   |   |
| Income tax  provision                                                                 |       |                                       | 44.3       |                                       |       |               | 31.0       |   |   |   | 23.5 |   |   |   |   |   | 15.1 |   |   |   | 46.2 |   |   |   | 29.7 |   |   |
| Income before  cumulative effect of changes in accounting principles                  |       |                                       | 68.7       |                                       |       |               | 41.8       |   |   |   | 31.9 |   |   |   |   |   | 20.7 |   |   |   | 65.1 |   |   |   | 44.3 |   |   |
| Cumulative effect  of changes in accounting principles(2)(4)                          |       |                                       | —     |                                       |       |               | (0.5       | ) |   |   | — |   |   |   |   |   | — |   |   |   | — |   |   |   | (43.8 | ) |   |
| Net income                                                                            |       |                                       | $          | 68.7                                       |       |               |       | $ | 41.3 |   |   |   | $ | 31.9 |   |   |   |   |   | $ | 20.7 |   |   |   | $ | 65.1 |   |   |   | $ | 0.5 |   |   |
| **Other Financial Data:**                                                             |       |                                       |       |                                       |       |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and  amortization                                                        |       |                                       | $          | 41.4                                       |       |               |       | $ | 33.9 |   |   |   | $ | 25.8 |   |   |   |   |   | $ | 8.9 |   |   |   | $ | 32.9 |   |   |   | $ | 32.6 |   |   |
| Capital  expenditures                                                                 |       |                                       | 23.6       |                                       |       |               | 18.4       |   |   |   | 13.1 |   |   |   |   |   | 3.3 |   |   |   | 16.6 |   |   |   | 41.0 |   |   |
| Gross profit as a  percentage of net sales                                            |       |                                       | 27.1       | %                                          |       |               | 25.6       | % |   |   | 25.3 | % |   |   |   |   | 25.9 | % |   |   | 25.6 | % |   |   | 25.7 | % |   |
| Ratio of earnings  to fixed charges(5)                                                |       |                                       | 2.2x       |                                       |       |               | 1.8x       |   |   |   | 1.9x |   |   |   |   |   | 5.1x |   |   |   | 4.1x |   |   |   | 2.4x |   |   |

 

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| ** **               | ** ** | **Successor**                       | ** ** | **Predecessor**       | ** ** |
|--------------------------|------------|-------------------------------------|------------|-----------------------|------------|
| ** **               | ** ** | **December 31,**               | ** ** | **December 31,** | ** ** |
| ** **               | ** ** | **2006**                            | ** ** | **2005**              | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
| ** **               | ** ** | **(Consolidated)**                  | ** ** | **(Consolidated)**    | ** ** | **(Consolidated)** | ** ** | **(Consolidated)** | ** ** | **(Consolidated)** | ** ** |
| ** **               | ** ** | **(Dollars in millions)** | ** ** |
| **Balance  Sheet Data**: |       |                                |       |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets             |       |                                | $          | 2,601.7               |       |   |   | $ | 2,528.5 |   |   |   | $ | 2,550.9 |   |   |   | $ | 1,767.9 |   |   |   | $ | 1,705.2 |   |   |
| Total debt               |       |                                | 991.9      |                  |       |   | 1,063.8 |   |   |   | 1,099.2 |   |   |   | 1,026.0 |   |   |   | 1,100.6 |   |   |
| Stockholders'  equity(6) |       |                                | 751.9      |                  |       |   | 641.7 |   |   |   | 637.3 |   |   |   | 265.4 |   |   |   | 176.9 |   |   |
|                          |            |                                     |            |                       |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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(1)           Effective January 1, 2006, the Company adoptedSFAS No. 123 Revised, *Share-Based Payment*(“SFAS 123R”), which requires companies to recognize in the income statement,the grant date fair value of stock options and other forms of equity-basedcompensation issued to employees. The Company adopted SFAS 123R using themodified prospective transition method. Compensation expense related to stockoptions of $4.6 million is included in selling, general and administrative(“SG&A”) expenses for the year ended December 31, 2006.

(2)           We adopted SFAS 142, effective January 1, 2002.SFAS 142 requires that goodwill and certain intangibles with indefinite livesnot be amortized, but subject to an impairment test on an annual basis or whenfacts and circumstances suggest that such assets may be impaired. As a resultof the transitional goodwill impairment evaluation as of January 1, 2002,we recognized a non-cash transitional impairment loss of $43.8 million, whichwas not deductible for tax purposes. In addition, we ceased amortization ofgoodwill effective January 1, 2002.

(3)           During 2006, we reversed $1.0 million of excessaccruals and credited operations primarily as a result of the re-deployment ofcertain personnel originally included in 2005 programs.

During 2005, we recorded pre-tax restructuring chargesaggregating $20.6 million to rationalize and streamline our operations. Thesecharges included $17.9 million for severance and termination benefits and $2.7million for facility exit costs.

(4)           We adopted Financial Accounting Standards Board (“FASB”)Interpretation No. 47, *AnInterpretation of FASB No. 143*, *Accounting for Asset Retirement Obligations* (“SFAS 143”),effective December 31, 2005. SFAS 143 addresses financial accounting andreporting for obligations associated with the retirement of tangible long-livedassets and the associated asset retirement costs. SFAS 143 requires recognitionof a liability at fair value and an increase to the carrying value of therelated asset for any retirement obligation. As a result of the adoption, werecognized a non-cash charge of $0.5 million, net of applicable income taxes of$0.3 million.

(5)           For purposes of calculating the ratio of earnings tofixed charges, (1) earnings is defined as income before income taxes andcumulative effect of a change in accounting principle and equity methodearnings or losses plus fixed charges and distributed earnings of investees,and (2) fixed charges is defined as interest expense (includingamortization of debt issuance costs) and one-third of rental expense (which webelieve is representative of the interest component of rent expense).

(6)           We adopted SFAS No. 158, *Employers’Accounting for Defined Benefit Pension and Other Postretirement Plans - anamendment of SFAS No 87, 88, 106, and 132(R)* (“SFAS 158”) as ofDecember 31, 2006. This Statement requires balance sheet recognition ofthe funded status for all pension and postretirement benefit plans. As a resultof the adoption, stockholders’ equity decreased by $2.3 million.

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**ITEM 7.**                MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

**Cautionary FactorsRegarding Forward-Looking Statements**

This Annual Reporton Form 10-K includes forward-looking statements regarding, amongother things, our plans, strategies and prospects, both business and financial.These statements are based on the beliefs and assumptions of our management.Although we believe that our plans, intentions and expectations reflected in orsuggested by these forward-looking statements are reasonable, we cannot assureyou that we will achieve or realize these plans, intentions or expectations.Forward-looking statements are inherently subject to risks, uncertainties andassumptions. Generally, statements that are not historical facts, includingstatements concerning our possible or assumed future actions, businessstrategies, events or results of operations, are forward-looking statements.These statements may be preceded by, followed by or include the words “believes,”“expects,” “anticipates,” “intends,” “plans,” “estimates” or similarexpressions. Forward-looking statements include the information in this AnnualReport on Form 10-K regarding, among other things:

·       managementforecasts;

·       efficienciesand cost savings;

·       incomeand margins;

·       growth;

·       economiesof scale;

·       theeconomy;

·       futureeconomic performance;

·       futureacquisitions and dispositions;

·       litigation;

·       potentialand contingent liabilities;

·       management’splans;

·       taxes;and

·       refinancingof debt.

Forward-looking statementsare not guarantees of performance. You should not place undue reliance on thesestatements. You should understand that the following important factors, inaddition to those discussed in “Item 1A—Risk Factors” and elsewhere in this Form 10-K,could affect our future results and could cause those results or other outcomesto differ materially from those expressed or implied in our forward-lookingstatements:

·       actionsby manufacturers, customers, carriers and other third parties;

·       ourability to maintain our relationships with manufacturers;

·       lossof our key executive officers;

·       ourability to consummate and integrate potential acquisitions;

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

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

·       increasedcompetition from other companies in our industry and our ability to retain orincrease our market shares in our principal geographical markets.

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 Annual Report on Form 10-K. Weundertake no obligations to update or revise publicly any forward-lookingstatements, whether as a result of new information, future events or otherwise.

**Overview**

We generate our net sales through the sale of productsand the provision of services to the global laboratory supply industry. Servicecomprises a small portion of our revenue. We generate approximately 75% of ournet sales from the sale of consumable products. We offer exclusive, branded andprivate label products that we source from a wide range of manufacturers.

Our principal customers are major pharmaceutical,biotechnology, chemical, technology, food processing and consumer productcompanies, universities and research institutes, governmental agencies,environmental organizations, and primary and secondary schools. Our largestcustomer accounted for less than 3% of our 2006 net sales.

The principal tenets of our strategy are outlinedbelow.

***IncreaseProductivity and Profitability.******  ***We willcontinue to refine our processes to increase our operating efficiencies whileenhancing our service capabilities and customer support levels. For example, wehave increased customer service levels while reducing overall costs in our callcenter network. We believe that additional opportunities exist to improveprofitability, including plans to further optimize freight costs, enhance ourlogistics network and consolidate various administrative and back-officefunctions to drive greater efficiencies throughout the organization.

***Expand GlobalPresence.******  ***We will expand our operations in AsiaPacific. In 2006, we established our presence in Asia Pacific, primarilythrough our export network. We hope to further this presence with our owndirect distribution capability, which will allow us to effectively service thelaboratory supply industry. In 2006, we acquired Sino Chemical Company (Pte.)Limited (“Sino”), located in Singapore, which distributes laboratory chemicals,equipment and consumables. We also hope to further expand through futurestrategic acquisitions that will provide well-established in-country operationsand local staff to service our global accounts. In addition, we will continueto add to our field operations and commercial staff in Asia Pacific.

***Improve SourcingStrategy.***   By utilizing our global scale,strong relationships with our multinational customers and our primary focus ondistribution, we intend to continue developing mutually beneficialrelationships with our leading manufacturers. An important part of our strategyinvolves providing our customers with a choice of products at varying pricepoints. Global sourcing is a key element of this strategy. VWR continues toexpand its sourcing efforts for high quality, lower-cost, globally sourcedproducts. We have dedicated sourcing teams, specifically in China and India, tosource high quality and lower-cost products.

***Increase Sales of Private Label Products.***   Wewill continue to direct our sales and marketing efforts to grow sales of ourprivate label products, which accounted for approximately 14% of our net salesin 2006. We believe that this strategy represents a significant profitabilityenhancement opportunity.

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**Restructuring**and OtherOperating Initiatives****

Since the Acquisition, we have completed variousrestructuring activities to rationalize operating costs and improve ouroperating and administrative capabilities. The initial focus was on the Company’sEuropean operations and organization structure and, to a lesser extent, theoperations in North America. In connection with this initial focus, we recordedrestructuring accruals of $29.7 million in 2004, primarily related toreductions in headcount in Europe due to the reorganization of our Europeansales and marketing functions. In early 2005, we implemented restructuringplans that were formulated in 2004 and were in the planning and evaluationstages. Accordingly, we recorded additional restructuring accruals of $24.5million in 2005, primarily for severance and other exit costs includingestimates for environmental remediation associated with cessation ofmanufacturing operations at a plant in France and severance costs associatedwith the consolidation of certain sales and marketing personnel in our Germanand UK operations. These charges have been recorded as adjustments toacquisition costs (increases to goodwill) pursuant to the provisions ofEmerging Issues Task Force Issue No. 95-3, *Recognition of Liabilities in Connection with aPurchase Business Combination*.

In addition, we initiatedcost reduction programs in response to relatively static market conditions andimplemented reductions in force and other cost containment measures primarilyduring the later part of 2005 that were recorded as expenses. In connectionwith these actions, we recorded restructuring charges related to severance andfacility exit costs totaling approximately $20.6 million for the year ended December 31,2005. During 2006,we reversed $1.0 million of excess accruals and credited operations primarilyas a result of the re-deployment of certain personnel originally included inthe 2005 programs.

**Compliance with Sarbanes-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 experts, additional audit fees, and changes in systems design, securityand structure. For the years ended December 31, 2006 and 2005, we expensedapproximately $7.2 million and $3.1 million, respectively, for externalassistance related to our Sarbanes-Oxley compliance program. See “Item 9A—Controlsand Procedures” for further information on our compliance program.

**Basis of FinancialStatement Presentation**

On December 31, 2002, Merck KGaA entered into aseries of reorganization transactions whereby all of its legal entities thatcomprised our North American and European businesses were contributed to VWRInternational Corporation and became its wholly-owned subsidiaries. Thefinancial statements for the year ended December 31, 2002 represent thecombined financial statements of the two businesses that have been derived fromthe consolidated financial statements and accounting records of Merck KGaAusing the historical results of operations and historical basis of the assetsand liabilities of the individual businesses following a carve-out process forthe European business. The financial statements for the year ended December 31,2003 and the period January 1—April 6, 2004 include the accounts ofVWR International Corporation and its subsidiaries. On April 7, 2004,Merck KGaA sold its investment in us to CDRV Holdings, Inc. As a result ofthe Acquisition, the financial statements for the period April 7—December 31,2004 and the years ended December 31, 2005 and 2006 include the accountsof VWR International, Inc. and its subsidiaries. In order to provide ameaningful basis of comparing our results of operations for the year ended December 31,2004, the results of operations for the “predecessor” period (January 1—April 6,2004) have been combined with the results of operations for the “successor”period (April 7—December 31, 2004). All intercompany accounts andtransactions have been eliminated.

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The purchase price paid by Merck KGaA for thepredecessor businesses was pushed down to VWR International Corporation’sfinancial statements from the date of acquisition and has resulted in theallocation of the purchase price to the assets and liabilities acquired and therecognition of either push down debt due Merck KGaA or a contribution tostockholders’ equity for cash consideration. Interest expense was recorded onthis push down debt based upon Merck KGaA’s intercompany interest rates, whichare not necessarily indicative of rates we would have obtained if we were notan ultimate subsidiary of Merck KGaA. Interest expense, including tax effects,on push down debt has been included in the predecessor statement of operations,and presented as a non-cash item in the predecessor statement of cash flows anda capital contribution in the predecessor statement of stockholders’ equity, asthis interest was not required to be paid to Merck KGaA.

Management believes theassumptions underlying the predecessor financial statements are reasonable.However, the financial statements, for all periods up to April 6, 2004, donot include allocations of Merck KGaA general corporate expenses or charges forfinancial reporting, tax, and treasury services, as such costs were not chargedto us. Management does not believe that charges for such services would havebeen material. The historical financial information does not reflect the addedcosts that we incur as a separate company. These additional costs include costsfor new information technology systems to operate as a separate company, costsof periodic reporting to the SEC, as well as the costs related to a global taxand treasury staff and compliance with the Sarbanes-Oxley Act of 2002. Thehistorical financial information also does not reflect the incremental costsassociated with changes in our capital structure and operations.

**Effects of theAcquisition**

The Acquisition has been accounted for using thepurchase method of accounting. As such, our assets and liabilities wereadjusted, as of the date of Acquisition, to their respective fair values. Thisresulted in the recognition of significant identified intangible assetsrelating to customer relationships, trademarks and trade names, an increase inpension and post-retirement liabilities for existing plans, the recognition ofother fair value adjustments and the impact of the new debt and equitystructure.

The recognition of thefair value of assets acquired resulted in higher net non-cash amortizationexpense. The new debt outstanding resulted in a significant increase ininterest expense. The cash outflow for interest expense is partially offset bytax deductions associated with such interest expense.

**Constant CurrencyAnalysis**

We maintain operations in more than 20 countries.Approximately 42% of our net sales for the year ended December 31, 2006originated in currencies other than the U.S. dollar, principally the Euro, theBritish pound sterling and the Canadian dollar. As a result, changes in ourrevenues and operating profits include the impact of changes in foreigncurrency exchange rates. We provide “constant currency” calculations in thisAnnual Report on Form 10-K to remove the impact of the fluctuationin foreign exchange rates.

We utilize constantcurrency results in our analysis of segment performance. This means that wehave translated financial data for a period into U.S. dollars using the sameforeign currency exchange rates that we used to translate financial data forthe previous comparable period. We believe that this calculation is a usefulmeasure, indicating the actual growth of our operations. Earnings from oursubsidiaries are not ordinarily repatriated to the United States, therefore wedo not incur significant gains or losses on foreign currency transactions withour subsidiaries. Therefore, changes in foreign currency exchange ratesprimarily impact only reported earnings and not our actual cash flow oreconomic condition.

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**Business Segments**

We report our financialresults on the basis of the following three business segments: North AmericanLab, European Lab and Science Education. Asia Pacific operations are embeddedwithin the North American Lab and European Lab segments. Both the NorthAmerican Lab and European Lab segments are comprised of the distribution ofsupplies to customers in major pharmaceutical, biotechnology, chemical,technology, food processing and consumer products industries, as well asgovernmental agencies, universities and research institutes and environmentalorganizations. Science Education is comprised of the manufacture anddistribution of scientific supplies and specialized kits principally to primaryand secondary schools in North America.

**Seasonality**

Our results of operationsare subject to seasonal trends primarily affecting our Science Educationsegment, which tend to result in increased net sales and operating income inthe third quarter in comparison to other quarters of the year. For example, in2006 and 2005, approximately 29% and 33%, respectively, of our total operatingincome was generated in the quarter ending September 30. This strongerquarterly performance is typically due to higher sales and operating income inour Science Education segment, as schools purchase supplies in preparation forthe beginning of the new school year, offset by a seasonal slowdown in ourEuropean Lab segment. Quarterly sales are also influenced by the number ofshipping days in a given fiscal quarter.

**Exploration ofStrategic Options**

On March 12, 2007,the Company announced that two investment banks have been retained to explorestrategic options for the Company.

**Stock-basedCompensation and Bonuses**

Our results of operationsfor 2006 were impacted by a significant increase in stock-based compensationand bonus expense as compared to prior periods. Such charges totaled $20.3million and $3.3 million in 2006 and 2005, respectively. This increase isprimarily attributable to (1) increased performance-based incentive compensationearned under our 2006 Management Incentive Plan, (2) our adoption of SFAS 123Ras of January 1, 2006, (3) costs relating to rights to purchase shares ofCDRV Investors common stock granted to certain executive officers and employeestreated as options, and (4) one-time bonus payments made to certain executiveofficers and employees in 2006 relating to option grants. See Note 15 under “Item8—Financial Statements and Supplementary Data” and “Item 11—ExecutiveCompensation” for more information.

**Results ofOperations**

Our net sales are derived primarily from the sale ofscientific supplies, including chemicals, glassware, instruments, protectiveclothing and other assorted laboratory products and the provision of services,including technical services, on-site storeroom services, warehousing andfurniture design, supply and installation. Freight costs that are billed to ourcustomers are also included in net sales.

Our cost of sales consists primarily of the cost ofinventory shipped and our 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 expenses primarily reflect the costs ofoperations dedicated to generating new sales, maintaining existing customerrelationships, enhancing technology capabilities, receiving customer orders 

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and maintaining ourdistribution center facilities. These expenses also include depreciation andamortization.

During the years ended December 31, 2006, 2005and 2004, inflation has not had a significant impact on our results ofoperations as we have been able to pass the majority of these increases throughto our customers. However, our earnings and cash flows could be adverselyaffected if we are unable to pass through future cost increases due toinflation or fuel costs.

On April 1, 2005, the Company acquired AGB forinitial cash consideration of approximately $23.8 million. AGB distributesscientific supplies and is headquartered in Dublin, Ireland. The results of AGBhave been included in the European Lab segment from the date of acquisition. OnApril 1, 2005, the Company acquired AI for cash consideration ofapproximately $16.8 million and CDRV Investors stock of approximately $0.5million. AI performs services and distributes scientific supplies in PuertoRico and is headquartered in San Juan, Puerto Rico. The results of AI have beenincluded in the North American Lab segment from the date of acquisition. On July 1,2005, the Company acquired TSL for cash consideration of approximately $3.1million. TSL performs technical services on laboratory equipment in theNetherlands, Germany, Belgium and France. The results of TSL have been includedin the European Lab segment from the date of acquisition. Had theseacquisitions occurred at the beginning of 2004, the pro-forma consolidatedstatements of operations would not have been materially different from theamounts reported.

On October 2, 2006,the Company acquired Sino for initial cash consideration of approximately $4.2million. Sino is located in Singapore and distributes laboratory chemicals,equipment and consumables. The results of Sino have been included in the NorthAmerican Lab segment from the date of acquisition. Had this acquisitionoccurred at the beginning of 2004, the pro-forma consolidated statements ofoperations would not have been materially different from the amounts reported.

***Net Sales***

Thefollowing table presents net sales and net sales growth by reportable segmentfor the years ended December 31, 2006, 2005 and 2004 (dollars inmillions):

| ** **          | ** ** | **Year Ended December 31,** | ** ** |
|---------------------|------------|--------------------------------------------|------------|
| ** **          | ** ** | **2006**                                   | ** ** | **% Change** | ** ** | **2005** | ** ** | **% Change** | ** ** | **2004** | ** ** |
| North American  Lab |       | $                                          | 1,966.0    |   |   | 3.3 | % |   | $ | 1,902.4 |   |   | 3.5 | % |   | $ | 1,837.2 |   |
| European Lab        |       | 1,137.6                                    |       |   | 4.4 | % |   | 1,089.8 |   |   | 5.3 | % |   | 1,035.3 |   |
| Science Education   |       | 154.0                                      |       |   | 5.5 | % |   | 146.0 |   |   | 9.9 | % |   | 132.9 |   |
| Total               |       | $                                          | 3,257.6    |   |   | 3.8 | % |   | $ | 3,138.2 |   |   | 4.4 | % |   | $ | 3,005.4 |   |

 

Net sales for 2006 increased $119.4 million or 3.8%.Foreign currency and the acquisitions of AGB, AI and TSL favorably impacted netsales by $36.8 million. Excluding these effects, net sales increased 2.6% from2005. Net sales for 2005 increased $132.8 million or 4.4% over 2004. Foreigncurrency and the acquisitions of AGB, AI and TSL accounted for $50.6 million ofthe increase. Excluding these effects, net sales increased 2.7% from 2004.

Net sales in our North American Lab segment for 2006increased $63.6 million or 3.3%. Foreign currency and the acquisition of AI favorablyimpacted net sales by $16.1 million. Excluding these effects, net salesincreased $47.5 million or 2.5% from 2005. During 2006, our net sales tocustomers in the pharmaceutical and biotechnology industries experiencedlow-single digit growth and our net sales to customers in industrial marketsachieved mid-single digit growth. These increases were partially offset bydeclines in net sales to our education customers. Net sales for 2005 increased$65.2 million or 3.5%. Foreign currency and the acquisition of AI accounted for$26.9 million of the increase. Excluding these effects, net sales increased2.1% from 2004. During 2005, our net sales to bio-pharmaceutical customers 

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were relatively flat andour net sales to education and industrial customers achieved low single-digitgrowth.

Net sales in our European Lab segment for 2006increased $47.8 million or 4.4%. Foreign currency and the acquisitions of AGBand TSL favorably impacted net sales by $20.7 million. Excluding these effects,net sales increased $27.1 million or 2.5% from 2005. For 2006, our net sales toour bio-pharmaceutical and industrial customers experienced mid-single digitgrowth. These increases were partially offset by declines in net sales to oureducation, reseller and clinical customers. Net sales for 2005 increased $54.5million or 5.3%. Foreign currency and the acquisitions of AGB and TSL favorablyimpacted net sales by $23.7 million. Excluding these effects, net salesincreased 3.0% from 2004. Our 2005 growth was primarily driven by ourbio-pharmaceutical and industrial markets and was partially offset by a declinein net sales to our reseller customers.

Net sales in our ScienceEducation segment for 2006 increased $8.0 million or 5.5%. This increase wasprimarily a result of growth in net sales to our publisher customers andpartially due to growth in net sales to our consumer customers. Net sales for2005 increased $13.1 million or 9.9%. This increase was primarily driven byincreased sales to our education and publishers customers. In addition, thefirst half of 2004 was unfavorably impacted by budget constraints by certainstate and local governments, which limit the amount of funds available for thepurchase of scientific supplies for school laboratories.

***Gross Profit***

The following table presents gross profit for theyears ended December 31, 2006, 2005 and 2004 (dollars in millions):

| ** **                              | ** ** | **Year Ended December 31,** | ** ** |
|-----------------------------------------|------------|--------------------------------------------|------------|
| ** **                              | ** ** | **2006**                                   | ** ** | **2005** | ** ** | **2004** | ** ** |
| Gross profit                            |       | $                                          | 883.3      |   | $ | 803.7 |   | $ | 764.7 |   |
| Percentage of net  sales (gross margin) |       | 27.1                                       | %          | 25.6 | % | 25.4 | % |
|                                         |            |                                            |            |  |  |  |  |  |  |  |

 

Gross profit for 2006 increased $79.6 million or 9.9%.Foreign currency and the acquisitions of AGB, AI and TSL favorably impactedgross profit by $11.1 million. Excluding these effects, gross profit increased$68.5 million or 8.5% from 2005. Our gross margin percentages improved in eachof our segments over the comparable periods of 2005. The increases in NorthAmerican Lab and European Lab are primarily a result of favorable pricing,better mix and improved recovery of freight costs. The increases in ScienceEducation are primarily a result of improved pricing, partially offset byincreased international net sales, which generate somewhat lower margins.

Gross profit for 2005increased $39.0 million or 5.1%. Foreign currency and the acquisitions of AGB,AI and TSL accounted for $16.6 million of the increase. Excluding theseeffects, gross profit increased 2.9% from 2004. During 2005, our North AmericanLab margins improved slightly while both the European Lab and Science Educationmargins declined. The European Lab gross margin percentages decreased slightlyas a result of product mix and pricing pressures. Science Education grossmargin percentages decreased as a result of product mix, pricing pressures anda shift in customer buying patterns to open bid or auction purchasing.

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

The following table presents SG&A expenses, forthe years ended December 31, 2006, 2005 and 2004 (dollars in millions):

| ** **                                    | ** ** | **Year Ended December 31,** | ** ** |
|-----------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                    | ** ** | **2006**                                   | ** ** | **2005** | ** ** | **2004** | ** ** |
| Selling, general  and administrative expenses |       | $                                          | 693.2      |   | $ | 639.9 |   | $ | 619.1 | ** ** |
| Percentage of net  sales                      |       | 21.3                                       | %          | 20.4 | % | 20.6 | **%** |
|                                               |            |                                            |            |  |  |  |  |  |  |  |

 

Since the Acquisition in April 2004, we madesignificant investments in sales, marketing, and sourcing personnel to supportour strategic growth plans and expanded our finance, legal and administrativecapabilities to support the Company as a stand-alone entity. In addition, wehave incurred significant costs to comply with the requirements ofSarbanes-Oxley during 2005 and especially in 2006. At the same time, we alsoimplemented various restructuring and cost reduction programs to partiallyoffset the costs of these investments, while redirecting resources to alignwith our strategy and improve operating effectiveness.

SG&A expenses for 2006 increased $53.3 million or8.3%. Foreign currency and the acquisitions of AGB, AI and TSL increasedSG&A by $9.1 million. Excluding these effects, SG&A expenses increased$44.2 million or 6.9% from 2005 primarily as a result of increases in bonusesof $13.3 million; increased information technology spending of $6.0 million,which includes spending to improve our application security; increased externalassistance related to our Sarbanes-Oxley program of $4.1 million; increaseddepreciation and amortization expense of $7.5 million reflecting additionalcharges due to capital investments, acquisitions and the impact of accountingerrors of $2.8 million described in Note 19 under “Item 8—Financial Statementsand Supplementary Data”; increased investments in our sourcing function andBioSciences business of $7.1 million and increased stock-based compensationcharges of $3.7 million, resulting from the expensing of stock options in 2006pursuant to SFAS 123R.

SG&A expenses for 2005 increased $20.8 million or3.4%. Foreign currency and the acquisitions of AGB, AI and TSL accounted for$12.7 million of the increase. Excluding these effects, SG&A expensesincreased $8.1 million or 1.3% from 2004. This increase primarily reflects ouraforementioned investments in personnel, inflation, and costs incurred relatedto our compliance with the Sarbanes-Oxley Act. Partially offsetting theincrease are savings from our restructuring programs and lower provisions for bonus of approximately$7.1 million in North America, due to shortfalls from the 2005 ManagementIncentive Plan.

***Restructuring Charges***

During 2005, we initiatedseveral cost reduction programs in response to relatively static marketconditions and implemented reductions in force and other cost containmentmeasures and recorded pre-tax charges of $20.6 million. In connection withthese actions, we recorded restructuring charges of $5.8 million, primarilyseverance, for North American Lab; $13.8 million, primarily related to theclosing of a facility and the consolidation of administrative operations in theUK and severances and related costs for personnel in our UK, German, French,Nordic and Italian operations, for European Lab; and $1.0 million, primarilyseverance, for Science Education. During 2006, we reversed $1.0 million ofexcess accruals and credited operations primarily as a result of there-deployment of certain personnel originally included in the 2005 programs forNorth American Lab.

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***Operating Income***

Thefollowing table presents operating income and operating income as a percentageof net sales by reportable segment for the years ended December 31, 2006,2005 and 2004 (dollars in millions):

| ** **          | ** ** | **Year Ended December 31,** | ** ** |
|---------------------|------------|--------------------------------------------|------------|
| ** **          | ** ** | **2006**                                   | ** ** | **% of  Net Sales** | ** ** | **2005** | ** ** | **% of  Net Sales** | ** ** | **2004** | ** ** | **% of  Net Sales** | ** ** |
| North American  Lab |       | $                                          | 112.3      |   |   | 5.7 | % |   | $ | 91.1 |   |   | 4.8 | % |   | $ | 93.8 |   |   | 5.1 | % |   |
| European Lab        |       | 59.4                                       |       |   | 5.2 | % |   | 38.1 |   |   | 3.5 | % |   | 37.2 |   |   | 3.6 | % |   |
| Science Education   |       | 19.4                                       |       |   | 12.6 | % |   | 14.0 |   |   | 9.6 | % |   | 14.6 |   |   | 11.0 | % |   |
| Total               |       | $                                          | 191.1      |   |   | 5.9 | % |   | $ | 143.2 |   |   | 4.6 | % |   | $ | 145.6 |   |   | 4.8 | % |   |

 

Operating income for 2006 increased $47.9 million or33.4%. Excluding the effects of foreign currency, the acquisitions of AGB, AIand TSL, due to the timing of the acquisitions, and the restructuring activitiesdiscussed above, operating income increased $24.3 million or 14.8% from 2005.This increase was the result of an increase in gross profit of $68.5 millionpartially offset by an SG&A increase of $44.2 million. Operating income for2005 decreased $2.4 million or 1.6% from 2004. Excluding the effects of foreigncurrency, the acquisitions of AGB, AI and TSL, and the restructuring programsdiscussed above, operating income increased $14.3 million or 9.8% over 2004.This increase was the result of improvement in gross profit of $22.4 million,primarily attributable to sales increases, partially offset by an SG&Aincrease of $8.1 million.

Operating income in our North American Lab segment for2006 increased $21.2 million or 23.3%. Excluding the effects of foreigncurrency, the acquisition of AI, due to the timing of the acquisition, and therestructuring activities discussed above, operating income increased $13.7million or 14.1% from 2005. This increase was the result of an increase ingross profit of $43.7 million, primarily attributable to pricing initiatives.This gross profit increase was offset by an SG&A increase of $30.0 million,due primarily to increases in bonuses of $12.7 million; increased informationtechnology spending of $6.0 million; increased external assistance related toour Sarbanes-Oxley program of $4.1 million; increased investments in oursourcing function and BioSciences business of $7.1 million and increasedstock-based compensation charges of $3.0 million. Operating income for 2005 decreased$2.7 million or 2.9% from 2004. Excluding the effects of foreign currency, theacquisition of AI, and the restructuring activities discussed above, operatingincome increased $0.6 million or 0.6% over 2004. This increase was a result ofa gross profit increase of $19.3 million offset by an SG&A increase of$18.7 million. The increase in SG&A reflects the investments in personneland costs incurred related to our compliance with the Sarbanes-Oxley Act,partially offset by the lower provisions for bonus, discussed in SG&Aabove.

Operating income in our European Lab segment for 2006increased $21.3 million or 55.9%. Excluding the effects of foreign currency,the acquisitions of AGB and TSL, due to the timing of the acquisitions, and therestructuring activities discussed above, operating income increased $6.2million or 11.9% from 2005. This increase was the result of an increase ingross profit of $19.5 million, primarily attributable to pricing initiatives,partially offset by an SG&A increase of $13.3 million, due primarily toinflation. Operating income of our French operations improved significantly in2006, reflecting improved pricing discipline and cost control. Our Irelandoperations offset the aforementioned improvement due to escalating operatingcosts, integration costs, and lower than anticipated revenue growth in 2006.Operating income for 2005 increased $0.9 million or 2.4% over 2004. Excludingthe effects of foreign currency, the acquisitions of AGB and TSL, and therestructuring activities discussed above, operating income increased $13.3million or 35.8% over 2004. This increase was a result of a gross profitincrease of $0.2 million and an SG&A decrease of $13.1 million reflectingsavings from both 2004 and 2005 restructuring initiatives. Included in thisincrease is an improvement in operating results in France of $5.1 million from2004.

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Operating income in ourScience Education segment for 2006 increased $5.4 million or 38.6%. Excludingrestructuring charges of $1.0 million in 2005, operating income for ScienceEducation increased $4.4 million or 29.3% over 2005. This increase is a resultof a gross profit increase of $5.3 million, partially offset by an increase inSG&A of $0.9 million. Operating income for 2005 decreased $0.6 million, or4.1% from 2004. Excluding restructuring charges of $1.0 million in 2005,operating income for Science Education increased $0.4 million or 2.7% over2004. This increase is a result of a gross profit increase of $2.9 millionattributable to sales volume, partially offset by an unfavorable mix ofbusiness and more aggressive buying patterns of customers, and an increase inSG&A of $2.5 million.

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

Interest expense, net ofinterest income was $76.6 million, $74.3 million and $56.3 million for 2006,2005 and 2004, respectively. The 2006 increase was due to higher variableinterest rates on the Senior Secured Credit Facility term loans, partiallyoffset by decreased amounts outstanding under the Senior Secured Credit Facilityterm loans as a result of $104.5 million of prepayments made in 2006 andincreased interest income earned on our cash and cash equivalents due to higherinterest rates. The 2005 increase was due to the new capital structure from theAcquisition being in place for the entire year and higher variable interestrates on our Senior Secured Credit Facility during 2005 than 2004.

***Other Expense/(Income), net***

Other expense/(income),net was $1.5 million, ($3.9) million and ($1.9) million for 2006, 2005 and2004, respectively. Other expense, net in 2006 included net exchange losses of$2.0 million offset by equity income of ($0.5) million. Other income, net in2005 included net exchange gains of ($2.9) million and equity income of ($0.5)million. Other income, net in 2004 included net exchange gains of ($1.5)million and equity income of ($0.5) million.

***Income Tax Provision***

The effective income taxrate was 39.2%, 42.6% and 42.3% for 2006, 2005 and 2004, respectively. Our 2006effective tax rate declined as a result of a $1.3 million reduction in deferredtax liabilities due to reduced future tax rates in Canada and lower chargesrelated to valuation allowances of approximately $3.0 million due to improvedFrench operations, partially offset by increased valuation allowances ofapproximately $1.0 million in Ireland where the statutory tax is significantlylower.

**Historical CashFlows**

***Cash Flows from Operating Activities***

The following tablepresents cash flow from operations related to operations and working capital(dollars in millions):

| ** **                                            | ** ** | **Year Ended December 31,** | ** ** |
|-------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                            | ** ** | **2006**                                   | ** ** | **2005** | ** ** | **2004** | ** ** |
| Cash flow from  operations, excluding working capital |       | $                                          | 132.9      |   | $ | 100.0 |   | $ | 100.5 |   |
| Cash flow from  working capital changes, net          |       | 37.6                                       |       | (30.0 | ) | 84.2 |   |
| Cash flow from  operations                            |       | $                                          | 170.5      |   | $ | 70.0 |   | $ | 184.7 |   |

 

We generated $170.5 million of cash flow fromoperations during 2006 compared to $70.0 million during 2005. The increase incash flow from operations is primarily the result of increased net income,improved management of inventories, reduced cash payments for restructuringcharges, increased taxes payable due to increased income and related commercialtaxes, and increased accrued bonuses. These increases are partially offset byhigher cash usage due to the growth of our accounts receivable discussed below.

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We generated $70.0 million of cash flow fromoperations during 2005 compared to $184.7 million during 2004. The decrease incash from operations is a result of increased levels of working capital in 2005as compared to 2004. In 2005, cash flow from working capital changes used cashprimarily for cash payments for restructuring charges of $34.9 million andincreases in inventories of $29.0 million. These cash usages were partiallyoffset by an increase in our accounts payable of $32.4 million.

Days sales outstanding in accounts receivable were50.2, 48.2 and 49.0 days as of December 31, 2006, 2005 and 2004,respectively. Days sales outstanding are higher in Europe due to the extendedpayment practices in the countries in which we operate. The increase in 2006reflects a general slow down in the timing of customer payments attributable torising interest rates in 2006.

Days supply in inventory were 39.8, 43.1 and 39.1 daysas of December 31, 2006, 2005 and 2004, respectively. The 2006 improvementis a result of focused efforts to reduce our inventories on hand. The 2005increase is a result of changes in our supplier network and the stocking ofproducts from new suppliers.

Days payable outstandingwere 58.1, 59.1 and 52.5 days as of December 31, 2006, 2005 and 2004,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 payable outstanding are generally higher in Europe dueto 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.

***Cash Flows from Investing Activities***

Net cash used in investing activities was $24.1million, $62.2 million and $1,576.3 million for the years ended December 31,2006, 2005 and 2004, respectively. The 2006 usage primarily related to capitalexpenditures of $23.6 million. The 2005 usage primarily related to investmentsto acquire businesses of $46.0 million and capital expenditures of $18.4million. The 2004 usage primarily related to the Acquisition and capitalexpenditures of $16.4 million.

Our capital expendituresconsist of two principal components: expenditures for facilities andexpenditures for technology to support the business. The timing of warehouseexpansions may cause a variance in year-to-year capital expenditures. Weanticipate 2007 capital expenditures to approximate $30.0 million.

***Cash Flows from Financing Activities***

Net cash (used in)provided by financing activities was ($137.7) million, $4.3 million and$1,606.7 million for the years ended December 31, 2006, 2005 and 2004,respectively. Cash utilization in 2006 is primarily related to debt principalprepayments of $104.5 million on the Senior Secured Credit Facility, and adecrease in bank checks outstanding of $33.4 million due primarily to thetiming of vendor payments. The 2005 cash provided is comprised of a netincrease in our bank checks outstanding of $15.0 million, partially offset bynet debt payments of $10.7 million. The net cash provided in 2004 was primarilya result of the Acquisition, the new capital structure we established, a netincrease in our bank checks outstanding and proceeds from the CDRV Investors, Inc.Stock Incentive Plan (the “Stock Plan”).

***Liquidity and Capital Resources***

We broadly define liquidity as our ability to generatesufficient funds from both internal and external sources to meet ourobligations and commitments. In addition, liquidity includes the ability toobtain appropriate debt and equity financing. Therefore, liquidity cannot beconsidered separately from capital 

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resources that consist ofcurrent or potentially available funds for use in achieving long-rangeobjectives and meeting debt service commitments.

As of December 31, 2006, we had outstandingindebtedness of $991.9 million, which consists primarily of $520.0 millionaggregate principal amount of notes, a $307.1 million U.S. dollar-denominatedterm loan and a $141.6 million Euro-denominated term loan. Cash paid forinterest during 2006 was $77.4 million as compared to $70.4 million in 2005.Based on borrowings outstanding and interest rates in effect as of December 31,2006, interest expense for the year ending December 31, 2007 is expectedto be slightly lower than the 2006 amount. Prior to the Acquisition, intereston our push down debt did not represent cash interest, as we were not requiredto pay Merck KGaA interest. The interest expense associated with the push downdebt was recorded as a capital contribution by Merck KGaA, net of tax.

As of December 31, 2006, we had $9.5 million ofoutstanding but undrawn letters of credit and our remaining borrowingavailability under the $150.0 million multi-currency revolving credit facilityforming part of our Senior Secured Credit Facility was $140.5 million. Undrawnamounts under the multi-currency revolving credit facility will be available tomeet future working capital and our other business needs. Any potentialborrowings under the multi-currency revolving credit facility bear interest atvariable rates, interest expense for any such borrowings would fluctuate aswell.

Under the credit agreement for our Senior SecuredCredit Facility, beginning in 2006, excess cash flow (as defined in the creditagreement) from the prior year was required to be used to prepay creditagreement debt. In March 2006, a $44.5 million mandatory principalprepayment was made based on excess cash flow generated in 2005. On March 30,2007, $20.5 million will be repaid as required by the excess cash flowprovisions of our Senior Secured Credit Facility. In September 2006, a$60.0 million voluntary principal prepayment was made.

Based upon current levelsof operations and expectations as to future growth, we believe that cash onhand, cash generated from operations and amounts available under our $150.0million multi-currency revolving credit facility will be adequate to permit usto meet our debt service obligations, capital expenditure requirements, ongoingoperating costs and working capital needs until the maturity of our SeniorSecured Credit Facility, although no assurance can be given in this regard. Ourfuture financial and operating performance, ability to service or refinance ourdebt and ability to comply with covenants and restrictions contained in ourdebt agreements will be subject to future economic conditions and to financial,business and other factors, many of which are beyond our control and will besubstantially dependent on the global economy, demand for our products, and ourability to successfully implement our overall business and profitabilitystrategies. As of December 31, 2006, we had $138.1 million of cash andcash equivalents on hand.

**Schedule ofContractual Obligations**

The following tables detail the payment schedule fordebt, capital leases and operating leases as of December 31, 2006 (dollarsin millions):

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| ** **                                       | ** ** | **<1 year** | ** ** | **1-3 years** | ** ** | **4-5 years** | ** ** | **>5 years** | ** ** | **Total** | ** ** |
|--------------------------------------------------|------------|---------------------|------------|--------------------|------------|--------------------|------------|----------------------|------------|-----------|------------|
| Senior Secured  Credit Facility                  |       | $                   | 20.5       | (1)                |       | $                  | 9.4        |                 |       |      | $          | 418.8 |   |   |   | $ | — |   |   | $ | 448.7 |   |
| 6.875% Unsecured  Senior Notes due 2012          |       | —              |       |               | —     |               |       |                 | —     |      |       |   | 200.0 |   |   | 200.0 |   |
| 8% Unsecured  Senior Subordinated Notes due 2014 |       | —              |       |               | —     |               |       |                 | —     |      |       |   | 320.0 |   |   | 320.0 |   |
| Interest(2)                                      |       | 69.9                |       |               | 138.2      |               |       |                 | 100.1      |      |       |   | 62.5 |   |   | 370.7 |   |
| Loan from CDRV                                   |       | 16.5                |       |               | —     |               |       |                 | —     |      |       |   | — |   |   | 16.5 |   |
| Loan from CDRV  Holdings, Inc.                   |       | —              |       |               | —     |               |       |                 | —     |      |       |   | 0.6 |   |   | 0.6 |   |
| Bank loans                                       |       | 0.3                 |       |               | —     |               |       |                 | —     |      |       |   | — |   |   | 0.3 |   |
| Capital leases                                   |       | 1.0                 |       |               | 1.4        |               |       |                 | 1.4        |      |       |   | 2.0 |   |   | 5.8 |   |
| Operating leases                                 |       | 28.5                |       |               | 39.9       |               |       |                 | 27.3       |      |       |   | 37.3 |   |   | 133.0 |   |
| Total                                            |       | $                   | 136.7      |               |       | $188.9             |       |                 |       | $547.6    |       |   |   | $622.4 |   |   | $1,495.6 |   |
|                                                  |            |                     |            |                    |            |                    |            |                      |            |           |            |  |  |  |  |  |  |  |  |  |  |  |

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(1)          Reflects the amount due March 2007based on excess cash flow generated in 2006.

(2)          For purposes ofcalculating interest noted above, interest rates and effects of foreigncurrency on the Senior Secured Credit Facility were assumed to be unchangedfrom levels at December 31, 2006. In addition, the principal amountsoutstanding at December 31, 2006 under the Senior Secured Credit Facilitywere adjusted for the mandatory principal prepayments noted above.

Prior to the Acquisition,substantially all of our debt was with Merck KGaA and affiliates at an averageinterest rate of 2.0% to 2.8%. The push down debt reflects the debt incurred byMerck KGaA as a result of its acquisition of us. A portion of the cashconsideration for the Acquisition was used to repay all debt owing to MerckKGaA and affiliates outstanding on April 7, 2004.

**Indebtedness**

***Senior SecuredCredit Facility.***   On April 7, 2004, we, with a syndicateof lenders, led by Deutsche Bank AG, New York Branch, as administrative agent,Citicorp North America Inc., as syndication agent, and Bank of America, N.A.,BNP Paribas and Barclays Bank PLC, as documentation agents, entered into theSenior Secured Credit Facility. The Company is the borrower under the SeniorSecured Credit Facility. The Senior Secured Credit Facility consists of (1) aterm loan facility providing for a loan denominated in Euros, in an aggregateprincipal amount currently outstanding of $141.6 million as of December 31,2006, (2) a term loan facility providing for a term loan denominated inU.S. dollars in an aggregate principal amount currently outstanding at $307.1million, and (3) a multi-currency revolving credit facility, providing forup to $150.0 million in multi-currency revolving loans (reduced by the amountof any standby and commercial letters of credit drawn under that facility)outstanding at any time.

As of December 31, 2006, no amount wasoutstanding under the multi-currency revolving credit facility, and wehad $9.5 million in undrawn letters of credit and up to$140.5 million of additional debt that could be incurred as revolvingloans or under standby and commercial letters of credit. Undrawn amounts underthe multi-currency revolving credit facility are available on a revolvingcredit basis for our general corporate purposes. The Senior Secured CreditFacility permits one or more of our foreign subsidiaries to become borrowersunder the facility upon the satisfaction of certain conditions. In August of2006, the Senior Secured Credit Facility was amended to allow for $60.0 millionto be spent on acquisitions going forward, subject to annual increases.

Borrowings under our Senior Secured Credit Facilityare a key potential source of our liquidity. Our ability to borrow under ourSenior Secured Credit Facility is dependent upon, among other things, ourcompliance with the financial covenants that limit the Company’s ability toincur additional indebtedness, pay cash dividends and make certain otherpayments as set forth in the credit agreement for our Senior Secured CreditFacility. The financial covenants include a specified debt to Credit AgreementEBITDA 

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leverage ratio and aspecified Credit Agreement EBITDA to interest expense coverage ratio forspecified periods. Failure to comply with these financial ratio covenants wouldresult in a default under the credit agreement for our Senior Secured CreditFacility and, absent a waiver or an amendment from our lenders, would permitthe acceleration of all outstanding borrowings under our Senior Secured CreditFacility. We were in compliance with these financial covenants as of December 31,2006.

Credit Agreement EBITDA as presented herein is afinancial measure that is used in the credit agreement for our Senior SecuredCredit Facility. Credit Agreement EBITDA is not a defined term under U.S. GAAPand should not be considered as an alternative to operating income or netincome as a measure of operating results or cash flows as a measure ofliquidity. Credit Agreement EBITDA differs from the term “EBITDA” as it iscommonly used as a non-GAAP financial measure. Credit Agreement EBITDAgenerally is defined as consolidated net income before consolidated netinterest expense, consolidated income taxes, consolidated depreciation andamortization, other non-cash charges deducted in determining consolidated netincome (loss), non-cash provisions for reserves for discontinued operations,extraordinary, unusual or non-recurring items, gain or loss associated with thesale or write down of assets not in the ordinary course of business and thecumulative effect of accounting changes and earnings of, but including cashdividends or distributions from, non-controlled affiliates. Credit AgreementEBITDA is reduced by the amount of certain permitted dividends to CDRV Holdings, Inc.

Credit Agreement EBITDA is not a financial measureused in the covenants under the indentures for the notes. The term “ConsolidatedEBITDA” is used in the indentures as part of the calculation of the term “ConsolidatedCoverage Ratio”, which is used for a number of purposes, including determiningour ability to incur additional indebtedness and pay cash dividends and makecertain other restricted payments, and may include certain cost savings orsynergies. “Consolidated EBITDA” is not the same as Credit Agreement EBITDA.

The following table presents a calculation of CreditAgreement EBITDA for the year ended December 31, 2006 (dollars inmillions):

| Income before  cumulative effect of a change in accounting principle |   | $    | 68.7   |   |
|----------------------------------------------------------------------|--------|------|--------|--------|
| Income tax  provision                                                |   | 44.3 |   |
| Interest expense,  net                                               |   | 76.6 |   |
| Depreciation and  amortization                                       |   | 41.4 |   |
| Non-cash  charges(1)                                                 |   | 11.7 |   |
| Other  extraordinary, unusual or non-recurring items(2)              |   | 1.7  |   |
| Credit Agreement EBITDA                                              |   | $    | 244.4  |   |

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(1)          Non-cash charges includepension, postretirement and post employment benefit expenses, net of cashcontributed to the respective benefit plans in that year; amortization ofdirect response catalog costs for those catalogs with useful lives greater thanone year; charges for equity compensation; and LIFO adjustments.

(2)          Other extraordinary,unusual or non-recurring items include one-time severance costs; non-routineinventory reserve adjustments; gains or losses on the sale of businesses orfacilities; and other extraordinary, unusual or non-recurring gains, losses,charges or credits.

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Thefinancial covenants in the credit agreement specify, among other things, thefollowing requirements for each four-quarter period ended during the followingtest periods:

| **Test Period**                                | ** ** | ** ** | ** **   | **Consolidated Debt to  Credit Agreement EBITDA  Leverage Ratio Not More Than** | ** ** | **Credit Agreement EBITDA  to Credit Agreement  Interest Expense Ratio  Not Less Than** | ** **   |
|-----------------------------------------------------|------------|------------|--------------|-------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------|--------------|
| December 31,  2006—December 30, 2007 |       |       | 6.50 to 1.00 |                                                                                                                    |       |                                                                                                                            | 2.00 to 1.00 |   |   |
| December 31,  2007—December 30, 2008 |       |       | 6.00 to 1.00 |                                                                                                                    |       |                                                                                                                            | 2.10 to 1.00 |   |   |
| December 31,  2008—December 30, 2009 |       |       | 5.50 to 1.00 |                                                                                                                    |       |                                                                                                                            | 2.20 to 1.00 |   |   |
| December 31,  2009—December 30, 2010 |       |       | 5.00 to 1.00 |                                                                                                                    |       |                                                                                                                            | 2.30 to 1.00 |   |   |
| December 31, 2010  and thereafter              |       |       | 5.00 to 1.00 |                                                                                                                    |       |                                                                                                                            | 2.40 to 1.00 |   |   |

 

The table below sets forth the specified debt toCredit Agreement EBITDA leverage ratio and Credit Agreement EBITDA to interestexpense ratio for the year ended December 31, 2006:

| Consolidated Debt to  Credit Agreement EBITDA Leverage Ratio                |   | 4.1 to 1.0 |
|-----------------------------------------------------------------------------|--------|------------|
| Credit Agreement EBITDA to Credit Agreement Interest  Expense Ratio(1) |   | 3.4 to 1.0 |

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(1)          For purposes ofcalculating the compliance ratio noted above, credit agreement interest expensewas based on actual interest expense, net of interest income, reduced byamortization of deferred financing fees.

As noted above, the credit agreement for our SeniorSecured Credit Facility restricts our ability to transfer assets, pay cashdividends and make certain other payments to our direct or indirect parentcompanies. In January 2007, we amended provisions in the credit agreementto conform them in certain respects to the provisions in the indenturesgoverning our 67¤8%senior notes and 8% senior subordinated notes (described below), including theindebtedness, restricted payments and investments covenants. The modificationspermit us to pay or make specified cash dividends, payments or distributions toallow CDRV Investors to make cash interest payments on the Senior Floating RateNotes described below under  “Debt of CDRV Investors” and to makeother payments, subject to the indenture governing such notes. In addition, as part of the amendment to thecredit agreement, the interest margin on the Euro-denominated term loan wasdecreased by 50 basis points.

***ForeignSubsidiaries.***   Our foreign subsidiariesoperate from time to time with and without formal lines of credit with localbanks. The borrowings available to and drawn from time to time by our foreignsubsidiaries are limited in aggregate by certain covenants contained within ourSenior Secured Credit Facility.

***Senior and SeniorSubordinated Notes.******  ***OnApril 7, 2004, we issued 67¤8%senior notes and 8% senior subordinated notes that mature on April 15,2012 and April 15, 2014, respectively, in the aggregate principal amountsof $200.0 million and $320.0 million, respectively, to finance a portion of theAcquisition.

The indentures governingthe senior notes and the senior subordinated notes contain certain covenantsthat, among other requirements, limit the Company’s ability to incur additionalindebtedness and liens against the Company’s property and assets, limit theCompany’s ability to transfer assets, pay cash dividends and make certain otherrestricted payments (unless certain conditions are met), and limit the Company’sability to sell assets or restrict the use of the proceeds therefrom. At December 31,2006, the Company was in compliance with all covenants under these indentures.

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**Debt of CDRVInvestors**

On December 16, 2004, CDRV Investors issued$481.0 million aggregate principal amount at maturity ($297.9 million in netproceeds) of 95¤8%senior discount notes due 2015 (“CDRV Senior Discount Notes”). The net proceedsof the issuance were used to pay a dividend to the holders of the common stockof CDRV Investors. In connection with various transactions involving theissuance of the Senior Floating Rate Notes described below, in December 2006,CDRV Investment Holdings Corporation, a wholly owned subsidiary of CDRVInvestors and our indirect parent, assumed the obligations under the CDRVSenior Discount Notes. The CDRV Senior Discount Notes are senior unsecuredobligations of CDRV Investment Holdings Corporation and are structurallysubordinated to all obligations and other liabilities of CDRV InvestmentHoldings Corporation’s existing and future subsidiaries, including us. No cashinterest will accrue on the CDRV Senior Discount Notes prior to January 1,2010. Thereafter, cash interest will accrue and be payable semiannually, onlyto the extent of funds actually available for distribution to CDRV InvestmentHoldings Corporation under specified provisions of the indentures governing oursenior notes and senior subordinated notes and the Senior Secured CreditFacility covenants. As of December 31, 2006, the accreted value of theCDRV Senior Discount Notes was $362.8 million.

On December 14, 2006, CDRV Investors issued$350.0 million aggregate principal amount of senior floating rate notes due2011 (“CDRV Senior Floating Rate Notes”). The proceeds from the issuance, netof related expenses, were used to pay a distribution to the holders of thecommon stock of CDRV Investors. The CDRV Senior Floating Rate Notes are seniorunsecured obligations of CDRV Investors and are structurally subordinated toall obligations and other liabilities of CDRV Investors’ existing and futuresubsidiaries, including us. Interest is payable quarterly. Interest on the CDRVSenior Floating Rate Notes may be paid (1) entirely in cash (“CashInterest”), (2) entirely by increasing the principal amount of theoutstanding CDRV Senior Floating Rate Notes (“PIK Interest”) or (3) 50% asCash Interest and 50% as PIK Interest. Cash Interest will accrue on the CDRVSenior Floating Rate Notes at a rate per annum equal to an applicable LIBORrate plus an applicable spread (as defined in the agreement) (“Cash InterestRate”). PIK Interest will accrue on the CDRV Senior Floating Rate Notes at arate per annum equal to the Cash Interest Rate plus 75 basis points.

We do not guarantee theobligations under the CDRV Senior Discount Notes or CDRV Senior Floating RateNotes. The terms of the Senior Secured Credit Facility and the indenturesgoverning our senior notes and senior subordinated notes significantly restrictus from making distributions and otherwise transferring assets to our direct orindirect parent companies. However, as noted above, in January 2007, weamended the provisions of the credit agreement for our Senior Secured CreditFacility to provide us with more flexibilityto make dividends or other payments to enable CDRV Investors to pay CashInterest with respect to the CDRV Senior Floating Rate Notes. On March 1, 2007, we paid a dividend of $7.4million that enabled CDRV Investors to make a Cash Interest payment of $7.4million with respect to the CDRV Senior Floating Rate Notes.

**Critical AccountingPolicies**

The policies discussed below are considered bymanagement to be critical to an understanding of our financial statementsbecause their application places the most significant demands on management’sjudgment, with financial reporting results relying on estimation about theeffect of matters that are inherently uncertain. Specific risks for thesecritical accounting policies are described in the following paragraphs. For allof these policies, management cautions that future events rarely developexactly as forecast, and such estimates routinely require adjustment.

***Accounts Receivableand Reserves.***   The carrying amount ofaccounts receivable reflects a reserve representing our estimate of the amountsthat will not be collected for losses due to uncollectibility and for estimatedsales returns and allowances. In addition to reviewing delinquent accountsreceivable, we 

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consider many factors inestimating our reserve, including historical data, experience, customer types,credit worthiness, and economic trends. From time to time, we may adjust ourassumptions for anticipated changes in any of these or other factors expectedto affect collectibility.

***Inventories.***   Inventoriesare valued at the lower of cost or market, cost being determined principally bythe last-in, first-out (“LIFO”) method for the U.S. subsidiaries and theaverage cost or the first-in, first-out method for all other subsidiaries.During the year, estimates of the impact of LIFO are based upon full yearestimates of the impact of LIFO and such estimates may change during the courseof the year based upon various factors such as price increases and inventoryturnover. We review our inventory realization based upon several factors,including customer demand, supply of inventory and competitive activity andrecord reserves for obsolescence based upon those and other factors. From timeto time, we may adjust our assumptions for anticipated changes in any of theseor other factors.

***Rebates fromSuppliers.***   We earn rebates from certain ofour suppliers from the achievement of certain sales growth and/or purchasevolume thresholds. To the extent that rebates relate to inventory on hand, theinventory cost is reduced to reflect the lower cost. During the course of theyear, estimates made concerning the achievement of these goals or milestonescan vary from quarter to quarter. Generally, a proportionally larger amount ofrebates are earned in the fourth quarter of each year.

***Agreements withCustomers.***   We have agreements with severalof our customers, which contain provisions related to pricing, volume purchaseincentives and other contractual provisions. During the course of the year,estimates are made concerning customer contracts and changes in estimatesrelated to these contracts may vary from quarter to quarter and are recorded asa reduction to sales.

***Goodwill andIntangible Assets.***   In accordance with SFAS142, goodwill is no longer amortized, but rather, is evaluated for impairmenton an annual basis or between annual tests if events occur or circumstanceschange that would more likely than not reduce the fair value of a reportingunit below its carrying amounts. To accomplish this, we were required toidentify our reporting units and determine the carrying value of each reportingunit by assigning the assets and liabilities, including the existing goodwilland intangible assets, to those reporting units. We are required to determinethe fair value of each reporting unit and compare it to the carrying amount ofthe reporting unit. Fair value of the reporting unit is determined using acombination of discounted cash flows and multiple of earnings valuationtechniques. To the extent the carrying amount of a reporting unit exceeded thefair value of the reporting unit, we would be required to perform the secondstep of the transitional impairment test, as this is an indication that thereporting unit goodwill may be impaired.

As a result of the Acquisition, we have recognizedsignificant intangible assets. In accordance with the provisions of SFAS 142,we reevaluate the estimated useful lives of our intangible assets annually.Those intangible assets considered to have indefinite useful lives are notamortized but are evaluated for impairment on an annual basis, by comparing thefair value of the intangible asset to its carrying value. In addition, wheneverevents or changes in circumstances indicate that the carrying value ofintangible assets might be less than the fair value, we perform an impairment review.Fair value of intangible assets is determined using a discounted cash flowapproach. We have determined that our trademarks and trade names haveindefinite lives because they do not have legal, regulatory, contractual,competitive, or economic limitations and are expected to contribute to thegeneration of cash flows indefinitely. Intangible assets with finite usefullives are amortized over their respective estimated useful lives to theirestimated residual values, and reviewed for impairment in accordance with SFAS No. 144,*Accounting for Impairment or Disposal ofLong-Lived Assets*.

Our estimates are based upon historical trends,management’s knowledge and experience and overall economic factors includingprojections of future earnings potential. While we believe our estimates arereasonable, different assumptions regarding items such as future earningspotential and volatility in the 

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markets we serve couldaffect our evaluations and result in write-downs to the carrying amount of ourgoodwill and our intangible assets.

***Product Liability.***   Weare subject to product liability and other claims in the ordinary course ofbusiness. Our business involves a risk of product liability and other claims inthe ordinary course of business, and from time to time we are named as adefendant in cases as a result of our distribution of scientific supplies.While the impact on us of this litigation has typically been immaterial, therecan be no assurance that the impact of the pending and any future claims willnot be material to our business, financial condition and results of operationsin the future.

***EnvironmentalLiabilities.***   We record accruals forenvironmental liabilities based on current interpretations of environmentallaws and regulations when it is probable that a liability has been incurred andthe amount can be reasonably estimated. Our estimates are based upon severalfactors, including reports prepared by environmental specialists and management’sknowledge and experience with these environmental matters. Inherentuncertainties exist in these estimates due to unknown conditions, changing lawsand regulations and changes in the manner or method of enforcement of such lawsand regulations. Accrued liabilities and payments related to environmentalliabilities have not been material. Although management uses its best estimateswhen establishing accruals for environmental liabilities, if interpretations ofapplicable laws and regulations, cleanup methods or the extent of ourresponsibility change from our current estimates, revisions to our estimatedenvironmental liabilities may be required.

***Pension Plans.***   Wehave defined benefit pension plans covering a significant number of domesticand international employees. Accounting for these plans requires the use ofassumptions, including estimates on the expected long-term rate of return onassets, discount rates and the average rate of increase in employeecompensation. In order to make informed assumptions, management consults withactuaries and reviews public market data and general economic information. Weperiodically assess these assumptions based on market conditions, and if thoseconditions change, our pension cost and pension obligation may be adjustedaccordingly.

***Stock Options.***   Priorto January 1, 2006, we measured compensation expense for our stock-basedcompensation plans using the intrinsic value method of Accounting PrinciplesBoard Opinion No. 25, *Accounting forStock Issued to Employees* (“APB 25”). Under the intrinsic valuemethod, compensation cost is the excess, if any, of the fair market value ofCDRV Investors common stock at the grant date over the amount an employee mustpay to acquire the stock. While our consolidated financial statements have usedthe above measure, SFAS 123R also requires that we present pro-forma amounts asif a fair value method of accounting for a stock option or similar equityinstrument were applied. Effective January 1, 2006, we adopted SFAS 123R.Under SFAS 123R, the fair value of the stock option is determined using anoption-pricing model that takes into account the fair value of the stock at thegrant date, the exercise price, the expected life of the option, the volatilityof the underlying stock and its expected dividends, and the risk-free interestrate over the expected life of the option. These assumptions are highlysubjective and changes in them could significantly impact the value of theoption and future compensation charges as well as pro-forma compensation cost.

***Estimates and Other Accounting Policies.***   Thepreparation of financial statements in conformity with U.S. GAAP requiresmanagement to make estimates and assumptions that affect the reported amountsof assets and liabilities and disclosure of contingent assets and liabilitiesat the date of the financial statements and the reported amounts of revenuesand expenses during the reporting period. Management evaluates its estimatesand judgments, including those related to product returns, intangible assets,income taxes, restructuring costs, insurance-related retained losses, andcontingencies and litigation. While actual results could differ from thoseestimates, management believes that the estimates are reasonable.

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**New AccountingStandards**

The following accounting standards were adopted during2006. The impact, if any, of these accounting standards is included in ourfinancial statements.

We adopted SFAS 123R, effective January 1, 2006,which requires companies to recognize in the income statement, the grant datevalue of stock options and other forms of equity-based compensation issued toemployees. The Company previously accounted for stock options granted to ouremployees using the intrinsic value method of APB 25. Under APB 25, the Companydid not recognize compensation expense for CDRV options granted to ouremployees because such options had an exercise price equal to their fair marketvalue on the date of grant. See Note 15 under “Item 8—Financial Statements andSupplementary Data” for further discussion of stock-based compensation.

During September 2006, the FASB issued SFAS 158.This Statement requires balance sheet recognition of the funded status for allpension and postretirement benefit plans. The Company adopted the provisions ofSFAS 158 as of December 31, 2006. See Note 14 under “Item 8—FinancialStatements and Supplementary Data” for further discussion of the impact of SFAS158.

During September 2006, the Securities andExchange Commission issued Staff Accounting Bulletin No. 108, *Considering the Effects of Prior Year Misstatementswhen Quantifying Misstatements in Current Year Financial Statements*(“SAB 108”). SAB 108 was issued in order to eliminate the diversity in practicesurrounding how registrants quantify financial statement misstatements. SAB 108requires that registrants quantify the impact on the current year’s financialstatements of correcting all misstatements, including the carryover andreversing effects of prior years’ misstatements, as well as the effects oferrors arising in the current year. SAB 108 is effective for fiscal yearsending after November 15, 2006. The implementation of SAB 108 did not havea material effect on our financial position or results of operations.

The following accounting standards will be adoptedprospectively.

During July 2006, the FASB issued Interpretation No. 48,*Accounting for Uncertainty in Income Taxes*(“FIN 48”). This Interpretation clarifies the accounting for uncertainty inincome taxes recognized in accordance with SFAS No. 109, *Accounting for Income Taxes.*FIN 48provides guidance on the financial statement recognition and measurement of atax 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. Based on our current assessment, we do not expectthat the adoption of FIN 48 will be material.

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.

**Market and IndustryData**

Information contained inthis Form 10-K regarding the global laboratory supply industry,including our general expectations concerning the industry, are based onestimates prepared using data from various sources and on assumptions made byus. We believe data regarding the global laboratory supply industry areinherently imprecise, but based on management’s understanding of the markets inwhich we compete, management believes that such data is generally indicative ofthe industry. Our estimates, in particular as they relate to our generalexpectations concerning the global laboratory supply industry, involve risksand uncertainties and are subject to change based on various factors, includingthose discussed in “Item 1A—Risk Factors”.

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**ITEM 7A.**        QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

***Interest Rates.***   Weare exposed to changes in interest rates, primarily as a result of our existingshort-term and long-term debt with both fixed and floating interest rates. A100 basis point (or 1.00%) change in variable rate debt outstanding as of December 31,2006 would, on an annualized basis, affect net income by approximately $2.8 million.

Our Senior Secured Credit Facility required us toenter into interest rate protection agreements which, together with fixedinterest rates then applicable to our consolidated funded indebtedness, wouldprovide interest rate protection with respect to at least 50% of ourconsolidated funded indebtedness for a period of time, for the first two years.Effective July 21, 2004, we entered into an interest rate cap, whichhedged a portion of the variability of cash flows related to potential changesin interest rates on €35.0 million of ourEuro-denominated term loan facility. This agreement was for two years and wasnot renewed upon its expiration in July 2006. In the future, we may useinterest rate swaps or other derivatives to manage interest rate risk on futureincome caused by interest rate changes on the variable rate facilities underour Senior Secured Credit Facility. If swaps are used, the differential to bepaid or received under the agreements would be recognized as an adjustment tointerest expense related to the debt.

***Foreign CurrencyHedging.***   The value of certain foreigncurrencies as compared to the U.S. dollar may affect our financial results.Fluctuations in exchange rates may positively or negatively affect our netsales, gross margins, operating expenses, cash flows and retained earnings, allof which are expressed in U.S. dollars. However, net sales and costs tend to beincurred in the same currency, and therefore, mitigate local currency risks.

Where we deem it prudent, we have engaged in hedgingprograms, using primarily foreign currency forward contracts, aimed at limitingthe impact of foreign currency exchange rate fluctuations on cash flows andearnings. Cash flows from currency forward contracts accounted for as hedgesare classified in the statement of cash flows in the same category as the itembeing hedged or on a basis consistent with the nature of the instrument. Theseactivities have not been material to our financial statements. We may purchaseshort-term foreign currency forward contracts to protect against currencyexchange risks associated with long-term intercompany loans due from or betweenour international subsidiaries and the payment of merchandise purchases toforeign vendors or receipts from customers. The majority of our debt, includingthe notes, is denominated in U.S. dollars, and accordingly, the majority of ourfuture debt service needs will be U.S. dollar denominated. We have aEuro-denominated term loan in an aggregate principal amount of $141.6 millionas of December 31, 2006 and a $150.0 million multi-currency revolvingcredit facility forming part of our Senior Secured Credit Facility, as well asborrowings under certain local credit facilities, each of which partiallymitigates our currency risk with respect to future debt service. Net sales andcosts tend to be incurred in the same currency, and therefore mitigate localcurrency risk.

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**ITEM 8.**                FINANCIALSTATEMENTS AND SUPPLEMENTARY DATA

The following financial statements and schedule of VWRInternational, Inc. (Successor) and VWR International Corporation(Predecessor) for the periods indicated are included in this 10-K.

Theterm “Successor” refers to VWR International, Inc. following theAcquisition. The term “Predecessor” refers to VWR International Corporationprior to the Acquisition on April 7, 2004. 
|                                                                                                                                                                                                             | ** ** | **Page** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|
| **VWR INTERNATIONAL, INC. (Predecessor  and Successor)**                                                                                                                                                    |       |     |   |   |
| Report of Independent Registered Public Accounting  Firm                                                                                                                                                    |       |     | 43 |   |
| Consolidated  Balance Sheets as of December 31, 2006 and 2005                                                                                                                                          |       |     | 44 |   |
| Consolidated Statements of Operations for the years  ended December 31, 2006 and 2005 and the periods included in the year  ended December 31, 2004                                               |       |     | 45 |   |
| Consolidated Statements of Stockholders’ Equity and  Other Comprehensive Income for the years ended December 31, 2006 and  2005 and the periods included in the year ended December 31, 2004 |       |     | 46 |   |
| Consolidated Statements of Cash Flows for the years  ended December 31, 2006 and 2005 and the periods included in the year  ended December 31, 2004                                               |       |     | 48 |   |
| Notes to Consolidated Financial Statements                                                                                                                                                                  |       |     | 49 |   |
| Schedule II—Valuation and Qualifying Accounts for the  years ended December 31, 2006 and 2005 and the periods included in the  year ended December 31, 2004.                                 |       |     | 131 |   |

 

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**Reportof Independent Registered Public Accounting Firm**

The Board of Directors andStockholdersVWR International, Inc.:

We have audited theaccompanying consolidated balance sheets of VWR International, Inc. andsubsidiaries (Successor) as of December 31, 2006 and 2005, and the relatedconsolidated statements of operations, stockholders’ equity and othercomprehensive income, and cash flows for the years ended December 31, 2006and 2005 and for the period from April 7, 2004 to December 31, 2004(Successor periods) and from January 1, 2004 to April 6, 2004(Predecessor period). In connection with our audits of the consolidatedfinancial statements, we also have audited the financial statement schedule forthe Successor and Predecessor periods. These consolidated financial statementsand financial statement schedule are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these consolidatedfinancial statements based on our audits.

We conducted our audits inaccordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basisfor our opinion.

Inour opinion, the aforementioned Successor consolidated financial statementsreferred to above present fairly, in all material respects, the financialposition of VWR International, Inc. and subsidiaries as of December 31,2006 and 2005, and the results of their operations and their cash flows for theSuccessor periods in conformity with U.S. generally accepted accountingprinciples. Further, in our opinion, the aforementioned Predecessorconsolidated financial statements present fairly, in all material respects, theresults of operations and cash flows of VWR International Corporation andsubsidiaries for the Predecessor periods, in conformity with U.S. generallyaccepted accounting principles. Also in our opinion, the related consolidatedfinancial statement schedule, when considered in relation to the basicconsolidated financial statements taken as a whole, presents fairly, in allmaterial respects, the information set forth therein.

We also have audited, inaccordance with the standards of the Public Company Accounting Oversight Board(United States), the effectiveness of VWR International, Inc.’s internalcontrol over financial reporting as of December 31, 2006, based on criteria established in*Internal Control—Integrated Framework*issuedby the Committee of Sponsoring Organizations of the Treadway Commission (COSO),and our report dated March 30, 2007 expressed an unqualified opinion on management’s assessment of, and the effectiveoperation of, internal control over financial reporting.

Asdiscussed in Note 1 to the consolidated financial statements, effective April 7,2004, CDRV Acquisition Corporation (which merged into VWR International, Inc.)acquired all of the outstanding stock of VWR International Corporation in abusiness combination accounted for as a purchase. As a result of theacquisition, the consolidated financial information for the periods after theacquisition are presented on a different cost basis than that for the periodsbefore the acquisition and, therefore, are not comparable.

As discussed in Notes 2and 15 to the consolidated financial statements, the Company adopted theprovisions of Statement of Financial Accounting Standards No. 123(R), *Share-Based Payment,*using the modified prospectivetransition method, effective January 1, 2006. Also, as discussed in Notes2 and 14, the Company adopted the provisions of Statement of FinancialAccounting Standards No. 158, *Employers’ Accounting forDefined Benefit Pension and Other Postretirement Plans,*as of December 31,2006. As discussed in Note 3, the Company adopted Financial Interpretation No. 47,*Accounting for Conditional Asset RetirementObligations,* in 2005.

/s/ KPMG LLP

Philadelphia, PennsylvaniaMarch 30, 2007

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

| ** **                                                                      | ** ** | **December 31,** | ** ** |
|---------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                      | ** ** | **2006**              | ** ** | **2005** | ** ** |
| **Assets**                                                                      |       |                  |       |   |   |
| Current Assets:                                                                 |       |                  |       |   |   |
| Cash and cash equivalents                                                       |       | $                     | 138.1      |   | $ | 126.1 |   |
| Trade accounts receivable, less reserves of $9.8 and  $6.6, respectively        |       | 452.7                 |       | 407.3 |   |
| Other receivables                                                               |       | 36.1                  |       | 30.8 |   |
| Inventories                                                                     |       | 260.6                 |       | 270.4 |   |
| Other current assets                                                            |       | 20.5                  |       | 13.9 |   |
| Total current assets                                                            |       | 908.0                 |       | 848.5 |   |
| Property and  equipment, net                                                    |       | 156.9                 |       | 156.8 |   |
| Investments                                                                     |       | 8.3                   |       | 7.8 |   |
| Goodwill                                                                        |       | 933.1                 |       | 910.0 |   |
| Other intangible  assets, net                                                   |       | 552.3                 |       | 552.7 |   |
| Deferred income  taxes                                                          |       | 7.2                   |       | 8.4 |   |
| Other assets                                                                    |       | 35.9                  |       | 44.3 |   |
| Total assets                                                                    |       | $                     | 2,601.7    |   | $ | 2,528.5 |   |
| **Liabilities  and Stockholders' Equity**                                       |       |                  |       |   |   |
| Current Liabilities:                                                            |       |                  |       |   |   |
| Short-term portion of debt and current portion of  capital lease obligations    |       | $                     | 38.3       |   | $ | 45.5 |   |
| Accounts payable                                                                |       | 380.8                 |       | 370.3 |   |
| Accrued expenses                                                                |       | 169.1                 |       | 143.8 |   |
| Total current liabilities                                                       |       | 588.2                 |       | 559.6 |   |
| Long-term debt                                                                  |       | 948.8                 |       | 1,013.3 |   |
| Capital lease  obligations                                                      |       | 4.8                   |       | 5.0 |   |
| Other long-term  liabilities                                                    |       | 80.5                  |       | 87.1 |   |
| Deferred income  taxes                                                          |       | 227.0                 |       | 219.2 |   |
| Total liabilities                                                               |       | 1,849.3               |       | 1,884.2 |   |
| Parent Company  common stock purchase subject to guarantee agreement  (Note 15) |       | 0.5                   |       | 2.6 |   |
| Commitments and  contingences (Note 16)                                         |       |                  |       |   |   |
| Stockholders' equity:                                                           |       |                  |       |   |   |
| Common stock, $0.01 par value; 100 shares  authorized, issued  and outstanding  |       | —                |       | — |   |
| Additional paid-in capital                                                      |       | 559.2                 |       | 557.4 |   |
| Retained earnings                                                               |       | 141.9                 |       | 73.2 |   |
| Unamortized value of restricted stock issued                                    |       | —                |       | (1.6 | ) |
| Accumulated other comprehensive income                                          |       | 50.8                  |       | 12.7 |   |
| Total stockholders' equity                                                      |       | 751.9                 |       | 641.7 |   |
| Total liabilities and  stockholders' equity                                     |       | $                     | 2,601.7    |   | $ | 2,528.5 |   |

 

See accompanying notes to consolidated financial statements.

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

| ** **                                                                                 | ** ** | **Successor**         | ** ** | **Predecessor**        | ** ** |
|--------------------------------------------------------------------------------------------|------------|-----------------------|------------|------------------------|------------|
| ** **                                                                                 | ** ** | **Year Ended**   | ** ** | **April 7—** | ** ** | **January 1—** | ** ** |
| ** **                                                                                 | ** ** | **December 31,** | ** ** | **December 31,**  | ** ** | **April 6,** | ** ** |
| ** **                                                                                 | ** ** | **2006**              | ** ** | **2005**               | ** ** | **2004** | ** ** | **2004** | ** ** |
| Net sales                                                                                  |       | $                     | 3,257.6    |                   | $          | 3,138.2 |   |   | $ | 2,212.2 |   |   |   | $ | 793.2 |   |   |
| Cost of goods  sold                                                                        |       | 2,374.3               |       | 2,334.5                |       |   | 1,652.7 |   |   |   | 588.0 |   |   |
| Gross profit                                                                               |       | 883.3                 |       | 803.7                  |       |   | 559.5 |   |   |   | 205.2 |   |   |
| Selling, general  and administrative expenses                                              |       | 693.2                 |       | 639.9                  |       |   | 455.4 |   |   |   | 163.7 |   |   |
| Restructuring  (credits) charges (Note 4)                                                  |       | (1.0                  | )          | 20.6                   |       |   | — |   |   |   | — |   |   |
| Operating income                                                                           |       | 191.1                 |       | 143.2                  |       |   | 104.1 |   |   |   | 41.5 |   |   |
| Interest income                                                                            |       | (6.7                  | )          | (2.7                   | )          |   | (0.8 | ) |   |   | (0.2 | ) |   |
| Interest expense                                                                           |       | 83.3                  |       | 77.0                   |       |   | 51.5 |   |   |   | 5.8 |   |   |
| Other expense  (income), net                                                               |       | 1.5                   |       | (3.9                   | )          |   | (2.0 | ) |   |   | 0.1 |   |   |
| Income before income taxes and cumulative effect of  a change in accounting principle |       | 113.0                 |       | 72.8                   |       |   | 55.4 |   |   |   | 35.8 |   |   |
| Income tax  provision                                                                      |       | 44.3                  |       | 31.0                   |       |   | 23.5 |   |   |   | 15.1 |   |   |
| Income before cumulative effect of a change in  accounting principle                       |       | 68.7                  |       | 41.8                   |       |   | 31.9 |   |   |   | 20.7 |   |   |
| Cumulative effect  of a change in accounting principle, net of taxes of $0.3 (Note 3)      |       | —                |       | (0.5                   | )          |   | — |   |   |   | — |   |   |
| Net income                                                                                 |       | $                     | 68.7       |                   | $          | 41.3 |   |   | $ | 31.9 |   |   |   | $ | 20.7 |   |   |

 

See accompanying notes to consolidated financial statements.

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**VWR INTERNATIONAL, INC.Consolidated Statements of Stockholders’ Equity andOther Comprehensive Income(Dollars in millions)For the Period January 1, 2004—April 6, 2004 (Predecessor)**

| ** **                                                               | ** ** | ** ** | ** ** | ** **     | ** ** | ** **   | ** ** | **Unamortized ** | ** ** | **Accumulated**        | ** ** | ** ** | ** ** |
|--------------------------------------------------------------------------|------------|------------|------------|----------------|------------|--------------|------------|-----------------------|------------|------------------------|------------|------------|------------|
| ** **                                                               | ** ** | ** ** | ** ** | **Additional** | ** ** | ** **   | ** ** | **value of**     | ** ** | **other**              | ** ** | ** ** | ** ** |
| ** **                                                               | ** ** | **Common** | ** ** | **paid-in**    | ** ** | **Retained** | ** ** | **restricted**        | ** ** | **comprehensive**      | ** ** | ** ** | ** ** |
| ** **                                                               | ** ** | **stock**  | ** ** | **capital**    | ** ** | **earnings** | ** ** | **stock issued** | ** ** | **income (loss)** | ** ** | **Total**  | ** ** |
| Balance at  January 1, 2004                                              |       |       | $          | —         |       |         |       | $                     | 224.8      |                   |       |       | $          | 65.1 |   |   |   | $ | — |   |   |   | $ | (24.5 | ) |   | $ | 265.4 |   |
| Comprehensive  income (loss):                                            |       |       |       |           |       |         |       |                  |       |                   |       |       |       |   |   |   |   |   |   |   |   |   |   |
| Net income                                                               |       |       | —     |           |       |         | —     |                  |       |                   | 20.7       |       |       |   | — |   |   |   | — |   |   | 20.7 |   |
| Foreign currency translation adjustment                                  |       |       | —     |           |       |         | —     |                  |       |                   | —     |       |       |   | — |   |   |   | (3.7 | ) |   | (3.7 | ) |
| Unrealized gain on derivatives, net of tax                               |       |       | —     |           |       |         | —     |                  |       |                   | —     |       |       |   | — |   |   |   | 0.2 |   |   | 0.2 |   |
| Total comprehensive income                                               |       |       |       |           |       |         |       |                  |       |                   |       |       |       |   |   |   |   |   |   |   |   | 17.2 |   |
| Capital contribution for interest expense on push  down debt, net of tax |       |       | —     |           |       |         | 2.5        |                  |       |                   | —     |       |       |   | — |   |   |   | — |   |   | 2.5 |   |
| Balance at April 6, 2004                                                 |       |       | $          | —         |       |         |       | $                     | 227.3      |                   |       |       | $          | 85.8 |   |   |   | $ | — |   |   |   | $ | (28.0 | ) |   | $ | 285.1 |   |

 

See accompanying notes to consolidated financial statements.

46

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**VWR INTERNATIONAL,INC.Consolidated Statements of Stockholders’ Equity andOther Comprehensive Income(Dollars in millions)For the Period April 7, 2004—December 31, 2006 (Successor)**

| ** **                                                                                      | ** ** | **Common  stock** | ** ** | **Additional  paid-in  capital** | ** ** | **Retained  earnings** | ** ** | **Unamortized  value of  restricted  stock issued** | ** ** | **Accumulated  other  comprehensive  income** | ** ** | **Total** | ** ** |
|-------------------------------------------------------------------------------------------------|------------|-------------------|------------|----------------------------------|------------|------------------------|------------|---------------------------------------------------------------|------------|-----------------------------------------------|------------|-----------|------------|
| Balance at April 7, 2004                                                                        | ** ** |              | $          | —                           |       |                   |       | $                                                             | —     |                                          |       |      | $          | — |   |   |   | $ | — |   |   |   | $ | — |   |   | $ | — |   |
| Issuance of 100 shares of common stock, net of  expenses                                        | ** ** |              | —     |                             |       |                   | 530.5      |                                                          |       |                                          | —     |      |       |   | — |   |   |   | — |   |   | 530.5 |   |
| Capital contributions (Note 15(f))                                                              | ** ** |              | —     |                             |       |                   | 21.5       |                                                          |       |                                          | —     |      |       |   | — |   |   |   | — |   |   | 21.5 |   |
| Issuance of Parent Company restricted common stock,  net                                        | ** ** |              | —     |                             |       |                   | 0.3        |                                                          |       |                                          | —     |      |       |   | (0.3 | ) |   |   | — |   |   | — |   |
| Comprehensive  income (loss):                                                                   | ** ** |              |       |                             |       |                   |       |                                                          |       |                                          |       |      |       |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                      | ** ** |              | —     |                             |       |                   | —     |                                                          |       |                                          | 31.9       |      |       |   | — |   |   |   | — |   |   | 31.9 |   |
| Foreign currency translation adjustment                                                         | ** ** |              | —     |                             |       |                   | —     |                                                          |       |                                          | —     |      |       |   | — |   |   |   | 54.1 |   |   | 54.1 |   |
| Unrealized loss on derivatives, net of tax                                                      | ** ** |              | —     |                             |       |                   | —     |                                                          |       |                                          | —     |      |       |   | — |   |   |   | (0.7 | ) |   | (0.7 | ) |
| Total comprehensive income                                                                      | ** ** |              |       |                             |       |                   |       |                                                          |       |                                          |       |      |       |   |   |   |   |   |   |   |   | 85.3 |   |
| Balance at December 31, 2004                                                                    | ** ** |              | —     |                             |       |                   | 552.3      |                                                          |       |                                          | 31.9       |      |       |   | (0.3 | ) |   |   | 53.4 |   |   | 637.3 |   |
| Capital contributions (Note 15(f))                                                              | ** ** |              | —     |                             |       |                   | 3.5        |                                                          |       |                                          | —     |      |       |   | — |   |   |   | — |   |   | 3.5 |   |
| Issuance of Parent Company restricted common stock,  net (Note 15(c))                           | ** ** |              | —     |                             |       |                   | 1.3        |                                                          |       |                                          | —     |      |       |   | (1.3 | ) |   |   | — |   |   | — |   |
| Reduction of Parent Company common stock purchase  subject to guarantee agreement               | ** ** |              | —     |                             |       |                   | 0.3        |                                                          |       |                                          | —     |      |       |   | — |   |   |   | — |   |   | 0.3 |   |
| Comprehensive  income (loss):                                                                   |       |              |       |                             |       |                   |       |                                                          |       |                                          |       |      |       |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                      | ** ** |              | —     |                             |       |                   | —     |                                                          |       |                                          | 41.3       |      |       |   | — |   |   |   | — |   |   | 41.3 |   |
| Minimum pension liability, net of taxes of $7.6                                                 | ** ** |              | —     |                             |       |                   | —     |                                                          |       |                                          | —     |      |       |   | — |   |   |   | (11.9 | ) |   | (11.9 | ) |
| Foreign currency translation adjustment                                                         | ** ** |              | —     |                             |       |                   | —     |                                                          |       |                                          | —     |      |       |   | — |   |   |   | (29.2 | ) |   | (29.2 | ) |
| Unrealized gain on derivatives, net of tax                                                      | ** ** |              | —     |                             |       |                   | —     |                                                          |       |                                          | —     |      |       |   | — |   |   |   | 0.4 |   |   | 0.4 |   |
| Total comprehensive income                                                                      | ** ** |              |       |                             |       |                   |       |                                                          |       |                                          |       |      |       |   |   |   |   |   |   |   |   | 0.6 |   |
| Balance at December 31, 2005                                                                    | ** ** |              | —     |                             |       |                   | 557.4      |                                                          |       |                                          | 73.2       |      |       |   | (1.6 | ) |   |   | 12.7 |   |   | 641.7 |   |
| Equity reclassification (Note 15(c))                                                            | ** ** |              | —     |                             |       |                   | (1.6       | )                                                             |       |                                          | —     |      |       |   | 1.6 |   |   |   | — |   |   | — |   |
| Capital contributions (Note 15(f))                                                              | ** ** |              | —     |                             |       |                   | 8.6        |                                                          |       |                                          | —     |      |       |   | — |   |   |   | — |   |   | 8.6 |   |
| Make whole option payment recorded as a reduction to  equity, net of taxes of $4.7 (Note 15(b)) | ** ** |              | —     |                             |       |                   | (7.4       | )                                                             |       |                                          | —     |      |       |   | — |   |   |   | — |   |   | (7.4 | ) |
| Tax benefit related to Parent Company stock options                                             | ** ** |              | —     |                             |       |                   | 0.1        |                                                          |       |                                          | —     |      |       |   | — |   |   |   | — |   |   | 0.1 |   |
| Reduction of Parent Company common stock purchase  subject to guarantee agreement               | ** ** |              | —     |                             |       |                   | 2.1        |                                                          |       |                                          | —     |      |       |   | — |   |   |   | — |   |   | 2.1 |   |
| Comprehensive  income:                                                                          |       |              |       |                             |       |                   |       |                                                          |       |                                          |       |      |       |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                      | ** ** |              | —     |                             |       |                   | —     |                                                          |       |                                          | 68.7       |      |       |   | — |   |   |   | — |   |   | 68.7 |   |
| Minimum pension liability, net of taxes of $4.9                                                 | ** ** |              | —     |                             |       |                   | —     |                                                          |       |                                          | —     |      |       |   | — |   |   |   | 7.4 |   |   | 7.4 |   |
| Foreign currency translation adjustment                                                         | ** ** |              | —     |                             |       |                   | —     |                                                          |       |                                          | —     |      |       |   | — |   |   |   | 32.5 |   |   | 32.5 |   |
| Unrealized gain on derivatives, net of tax                                                      | ** ** |              | —     |                             |       |                   | —     |                                                          |       |                                          | —     |      |       |   | — |   |   |   | 0.5 |   |   | 0.5 |   |
| Total comprehensive income                                                                      | ** ** |              |       |                             |       |                   |       |                                                          |       |                                          |       |      |       |   |   |   |   |   |   |   |   | 109.1 |   |
| Impact of  initially applying SFAS 158, net of taxes of $1.5                               | ** ** |              | —     |                             |       |                   | —     |                                                          |       |                                          | —     |      |       |   | — |   |   |   | (2.3 | ) |   | (2.3 | ) |
| Balance at  December 31, 2006                                                              |       |              | $          | —                           |       |                   |       | $                                                             | 559.2      |                                          |       |      | $          | 141.9 |   |   |   | $ | — |   |   |   | $ | 50.8 |   |   | $ | 751.9 |   |

 

See accompanying notes to consolidated financial statements.

47

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

| ** **                                                                                    | ** ** | **Successor**                     | ** ** | ** **                           | ** ** | **Predecessor** | ** ** |
|-----------------------------------------------------------------------------------------------|------------|-----------------------------------|------------|--------------------------------------|------------|-----------------|------------|
| ** **                                                                                    | ** ** | **Year Ended  December 31,** | ** ** | **April 7-  December 31,** | ** ** | ** **      | ** ** | **January 1-  April 6,** | ** ** |
| ** **                                                                                    | ** ** | **2006**                          | ** ** | **2005**                             | ** ** | **2004**        | ** ** | ** ** | ** ** | **2004** | ** ** |
| Cash flows from operating  activities:                                                        |       |                              |       |                                 |       |            |       |   |   |   |   |   |   |   |   |
| Net income                                                                                    |       | $                                 | 68.7       |                                 | $          | 41.3            |       |   | $ | 31.9 |   |   |   |   |   | $ | 20.7 |   |   |
| Adjustments to  reconcile net income to net cash provided by operating activities:            |       |                              |       |                                 |       |            |       |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                 |       | 41.4                              |       | 33.9                                 |       |            | 25.8       |   |   |   |   |   | 8.9 |   |   |
| Loss (gain) on sale of assets                                                                 |       | 0.6                               |       | (0.5                                 | )          |            | —     |   |   |   |   |   | — |   |   |
| Cumulative effect of a change in accounting principle                                         |       | —                            |       | 0.5                                  |       |            | —     |   |   |   |   |   | — |   |   |
| Non-cash equity compensation expense                                                          |       | 3.4                               |       |                                 |       |            | —     |   |   |   |   |   |   |   |   |
| Interest on push down debt, net of tax                                                        |       | —                            |       | —                               |       |            | —     |   |   |   |   |   | 2.5 |   |   |
| Non-cash (credit) provision for restructuring                                                 |       | (1.0                              | )          | 11.5                                 |       |            | —     |   |   |   |   |   | — |   |   |
| Amortization of debt issuance costs                                                           |       | 5.6                               |       | 5.3                                  |       |            | 3.7        |   |   |   |   |   | — |   |   |
| Deferred income tax expense                                                                   |       | 8.2                               |       | 4.8                                  |       |            | 3.0        |   |   |   |   |   | 0.9 |   |   |
| Provision for doubtful accounts                                                               |       | 6.0                               |       | 3.2                                  |       |            | 2.5        |   |   |   |   |   | 0.6 |   |   |
| Changes in working  capital, net of effect of business acquisitions:                          |       |                              |       |                                 |       |            |       |   |   |   |   |   |   |   |   |
| Trade accounts receivable                                                                     |       | (27.3                             | )          | (14.6                                | )          |            | 4.9        |   |   |   |   |   | (26.8 | ) |   |
| Other receivables                                                                             |       | (4.1                              | )          | (8.3                                 | )          |            | (7.0       | ) |   |   |   |   | 8.7 |   |   |
| Inventories                                                                                   |       | 20.3                              |       | (29.0                                | )          |            | 20.5       |   |   |   |   |   | 17.5 |   |   |
| Other assets                                                                                  |       | 0.2                               |       | (2.0                                 | )          |            | (0.9       | ) |   |   |   |   | 1.9 |   |   |
| Accounts payable                                                                              |       | 27.9                              |       | 32.4                                 |       |            | 0.2        |   |   |   |   |   | 61.7 |   |   |
| Accrued expenses and other long-term liabilities                                              |       | 20.6                              |       | (8.5                                 | )          |            | 2.6        |   |   |   |   |   | 0.9 |   |   |
| Net cash provided by operating activities                                                     |       | 170.5                             |       | 70.0                                 |       |            | 87.2       |   |   |   |   |   | 97.5 |   |   |
| Cash flows from investing  activities:                                                        |       |                              |       |                                 |       |            |       |   |   |   |   |   |   |   |   |
| Payment to Merck KGaA and affiliates to acquire  business, net of cash acquired of $130.8     |       | —                            |       | —                               |       |            | (1,538.3   | ) |   |   |   |   | — |   |   |
| Transaction costs                                                                             |       | (0.2                              | )          | (1.5                                 | )          |            | (20.5      | ) |   |   |   |   | — |   |   |
| Acquisitions of businesses and other intangible  assets                                       |       | (5.7                              | )          | (44.5                                | )          |            | (2.7       | ) |   |   |   |   | — |   |   |
| Capital expenditures                                                                          |       | (23.6                             | )          | (18.4                                | )          |            | (13.1      | ) |   |   |   |   | (3.3 | ) |   |
| Proceeds from sales of property and equipment                                                 |       | 5.4                               |       | 2.2                                  |       |            | 1.2        |   |   |   |   |   | 0.4 |   |   |
| Net cash used in investing activities                                                         |       | (24.1                             | )          | (62.2                                | )          |            | (1,573.4   | ) |   |   |   |   | (2.9 | ) |   |
| Cash flows from financing  activities:                                                        |       |                              |       |                                 |       |            |       |   |   |   |   |   |   |   |   |
| Proceeds from debt                                                                            |       | 4.4                               |       | 3.2                                  |       |            | 1,168.2    |   |   |   |   |   | 13.3 |   |   |
| Repayment of debt                                                                             |       | (106.1                            | )          | (13.9                                | )          |            | (111.1     | ) |   |   |   |   | (6.8 | ) |   |
| Decrease in notes receivable from Merck KGaA and  affiliates                                  |       | —                            |       | —                               |       |            | —     |   |   |   |   |   | 4.1 |   |   |
| Net change in bank checks outstanding                                                         |       | (33.4                             | )          | 15.0                                 |       |            | 25.0       |   |   |   |   |   | (2.1 | ) |   |
| Issuance of 100 shares of common stock, net of  expenses                                      |       | —                            |       | —                               |       |            | 530.5      |   |   |   |   |   | — |   |   |
| Proceeds from stock incentive plan                                                            |       | 4.8                               |       | —                               |       |            | 23.7       |   |   |   |   |   | — |   |   |
| Make whole option payment recorded as a reduction to  additional paid-in capital (Note 15(b)) |       | (7.4                              | )          | —                               |       |            | —     |   |   |   |   |   | — |   |   |
| Cash paid for debt issuance costs                                                             |       | —                            |       | —                               |       |            | (38.1      | ) |   |   |   |   | — |   |   |
| Net cash (used in) provided by financing activities                                           |       | (137.7                            | )          | 4.3                                  |       |            | 1,598.2    |   |   |   |   |   | 8.5 |   |   |
| Effect of exchange rate changes on cash                                                       |       | 3.3                               |       | (2.1                                 | )          |            | 4.1        |   |   |   |   |   | (0.6 | ) |   |
| Net increase in cash and cash equivalents                                                     |       | 12.0                              |       | 10.0                                 |       |            | 116.1      |   |   |   |   |   | 102.5 |   |   |
| Cash and cash equivalents beginning of period                                                 |       | 126.1                             |       | 116.1                                |       |            | —     |   |   |   |   |   | 28.3 |   |   |
| Cash and cash equivalents end of period                                                       |       | $                                 | 138.1      |                                 | $          | 126.1           |       |   | $ | 116.1 |   |   |   |   |   | $ | 130.8 |   |   |
| Supplemental disclosures  of cash flow information:                                           |       |                              |       |                                 |       |            |       |   |   |   |   |   |   |   |   |
| Cash paid during  the period for:                                                             |       |                              |       |                                 |       |            |       |   |   |   |   |   |   |   |   |
| Interest                                                                                      |       | $                                 | 77.4       |                                 | $          | 70.4            |       |   | $ | 33.9 |   |   |   |   |   | $ | 1.3 |   |   |
| Income taxes paid,  net                                                                       |       | $                                 | 17.1       |                                 | $          | 12.6            |       |   | $ | 29.1 |   |   |   |   |   | $ | 4.2 |   |   |

 

See accompanying notes to consolidated financial statements.

48

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

**(1)   Background and Nature of Operations**

VWR International, Inc.and its predecessor, VWR International Corporation, (“VWR”, the “Company” or “we”),distribute scientific supplies, chemicals, and equipment and provide services,primarily in North America and Europe. The business is diversified acrossproducts, geographic regions and customer segments. VWR’s principal customersare major pharmaceutical, biotechnology, chemical, technology, food processingand consumer product companies, universities and research institutes,governmental agencies, environmental organizations, and primary and secondaryschools.

VWR’s North Americanbusiness was formerly the VWR Scientific Products Corporation (“VWRSP”). In1995, Merck KGaA, VWR’s ultimate parent company until April 7, 2004,headquartered in Darmstadt, Germany, agreed to acquire approximately 49.9% ofthe then-outstanding shares of VWRSP. In 1999, following a tender offer for theremaining shares, VWRSP became a wholly-owned subsidiary of Merck KGaA(collectively, the “VWRSP Acquisition”) (See Note 5(c)).

As more fully discussed inNote 5(a), on April 7, 2004, Merck KGaA sold all of the outstanding sharesof capital stock of VWR International Corporation to CDRV AcquisitionCorporation (“CDRVA”), a wholly-owned subsidiary of CDRV Holdings, Inc., awholly-owned subsidiary of CDRV Investors, Inc. (“CDRV”), for a purchaseprice of approximately $1,683.4, consisting of approximately $1,669.1 in cashand approximately $14.3 of assumed debt (the “Acquisition”). In addition,direct acquisition costs of approximately $77.5 were incurred. CDRVA financedthe Acquisition through a $549.2 equity investment, approximately $1,110.5 invarious debt instruments, acquired cash of $70.1 and accrued expenses of $16.8.

In connection with theAcquisition, CDRVA issued $200.0 of 67¤8% UnsecuredSenior Notes due 2012 (“Senior Notes”) and $320.0 of 8% Unsecured SeniorSubordinated Notes due 2014 (“Senior Subordinated Notes”) and obtainedfinancing under a new senior secured credit facility (the “Senior SecuredCredit Facility”). Following the completion of the Acquisition, there were a series ofinternal reorganizations, pursuant to which, among other things, (i) VWRInternational Corporation merged with and into VWR International, Inc.,with VWR International, Inc. surviving, and (ii) thereafter, CDRVAmerged with and into VWR International, Inc., with VWR International, Inc.surviving and assuming the obligations of CDRVA.

The term “successor”refers to VWR International, Inc. following the Acquisition. The term “predecessor”refers to VWR International Corporation prior to the change in control on April 7,2004. CDRVA had no operations prior to the Acquisition.

The financial statements,for the period presented prior to the Acquisition, do not include allocationsof Merck KGaA general corporate expenses or charges for financial reporting,tax, and treasury services, as such costs were not charged to VWR. Managementdoes not believe that charges for such services would have been material. See Note17 for a further discussion of transactions with Merck KGaA.

Thefinancial statements, for the period presented prior to the Acquisition,reflect the push down of the purchase price paid by Merck KGaA for VWR to theVWR financial statements that resulted in the recognition of push down debt dueMerck KGaA or a contribution to stockholders’ equity for cash consideration.For the period prior to the Acquisition, interest expense of $4.1 was recordedon this push down debt based upon Merck KGaA’s intercompany interest rates,which are not necessarily indicative of rates VWR would have obtained if itwere not an ultimate subsidiary of Merck KGaA. Interest expense, 

49

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

including tax effects on push down debt, has beenincluded in the predecessor statement of operations, and presented as anon-cash item in the predecessor statement of cash flows and a capitalcontribution in the predecessor statement of stockholders’ equity and othercomprehensive income, as this interest was not required to be paid to MerckKGaA.

**(2)   Summary of Significant Accounting Policies**

Theaccounting policies as described herein are applicable to both the predecessorand successor financial statements unless specifically noted therein.

***(a) Principles ofConsolidation***

Theaccompanying consolidated financial statements include the accounts of VWR andits subsidiaries after elimination of all intercompany balances andtransactions.

***(b) Cash and CashEquivalents***

Cashand cash equivalents are comprised of highly liquid investments withinsignificant interest rate risk and having original maturities of three monthsor less. The amount of restricted cash was $0.7 and $1.2 at December 31,2006 and 2005, respectively.

***(c) Trade AccountsReceivables Reserve***

Thecarrying amount of accounts receivable reflects a reserve representing ourestimate of the amounts that will not be collected and for estimated salesreturns and allowances. In addition to reviewing delinquent accountsreceivable, we consider many factors in estimating our reserve, includinghistorical data, experience, customer types, credit worthiness, and economictrends. From time to time, we may adjust our assumptions for anticipatedchanges in any of these or other factors expected to affect collectibility.

***(d) Inventories***

Inventoriesare valued at the lower of cost or market, cost being determined principally bythe last-in, first-out (“LIFO”) method for our U.S. subsidiaries and theaverage cost or the first-in, first-out (“FIFO”) method for all othersubsidiaries. The Company periodically reviews quantities of inventories onhand and compares these amounts to the expected use of each product or productline. The Company records a charge to cost of sales for the amount required toreduce the carrying value of inventory to net realizable value. Costsassociated with the procurement and warehousing of inventories, such as inboundfreight charges, purchasing and receiving costs, and internal transfer costs,are included in the cost of sales line item within the statement of operations.

***(e) Property andEquipment***

Propertyand equipment are recorded at cost. Property and equipment held under capitalleases are stated at the present value of minimum lease payments. Depreciationis computed using the straight-line method as follows: buildings and improvements,10 to 40 years; equipment and software, 3 to 15 years. Property and equipmentheld under capital leases and leasehold improvements are amortized over the 

50

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

shorter of the remaining life of the lease or theuseful lives of the improvements. Costs for repairs and maintenance that do notsignificantly increase the value or estimated lives of property and equipmentare treated as expense as such expenses are incurred.

***(f) Goodwill andIntangible Assets***

Goodwill represents theexcess of costs over fair value of assets of businesses acquired. In accordancewith the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 142,*Goodwill and Other Intangible Assets*(“SFAS142”), goodwill and intangible assets acquired in a purchase business combinationand determined to have an indefinite useful life are not amortized, but insteadare tested for impairment. We have determined that our trademarks and tradenames have indefinite lives because they do not have legal, regulatory,contractual, competitive, or economic limitations and are expected tocontribute to the generation of cash flows indefinitely. SFAS 142 also requiresthat intangible assets with finite useful lives be amortized over theirrespective estimated useful lives to their estimated residual values, andreviewed for impairment in accordance with SFAS No. 144, *Accounting for Impairment or Disposal of Long-LivedAssets*.

SFAS 142 requires thatgoodwill be tested annually or between annual tests if events occur orcircumstances change that would more likely than not reduce the fair value of areporting unit below its carrying amounts. VWR has elected to perform itsannual test for indications of goodwill impairment in the fourth quarter ofeach year. The test was performed and no impairment was identified.

Goodwill included in thefinancial statements primarily represents the excess of acquisition costs overthe fair value of net assets acquired in connection with the Acquisition asdiscussed in Note 5(a).

***(g) Impairmentof Long-Lived Assets***

VWR evaluates therecoverability of long-lived assets used in operations when events orcircumstances indicate a possible inability to recover carrying amounts. Suchevaluations are based on undiscounted cash flow and profitability projections.An impairment charge is recorded for the difference between the fair value andcarrying value of the asset. No impairment losses were recorded in 2006, 2005or 2004.

***(h) Advertising***

VWRexpenses advertising costs as incurred, except for certain direct-responseadvertising, which is capitalized and amortized over its expected period offuture benefit, generally from 12 to 48 months. Capitalized direct-responseadvertising, which is included in other current assets and other assets,consists of catalog production and mailing costs that are expensed over theestimated useful life from the date catalogs are mailed. Capitalizeddirect-response advertising as of December 31, 2006 and 2005 were $8.5 and$8.8, respectively. The table below shows total advertising expense for each ofthe reporting periods.
|                      | ** ** | **Successor**                                                                    | ** ** | **Predecessor**                                                                  | ** ** |
|----------------------|------------|----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **           | ** ** | ** **                                                                       | ** ** | ** **                                                                       | ** ** | **April 7–** | ** ** | **January 1–** | ** ** |
| ** **           | ** ** | **Year Ended December 31,**                                       | ** ** | **December 31,**                                                            | ** ** | **April 6,** | ** ** |
| ** **           | ** ** | **      2006      ** | ** ** | **      2005      ** | ** ** | **2004** | ** ** | **2004** | ** ** |
| Advertising  expense |       |                                                                             | $          | 21.5                                                                             |       |   |   | $ | 20.7 |   |   |   | $ | 16.4 |   |   |   | $ | 5.4 |   |   |
|                      |            |                                                                                  |            |                                                                                  |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

51

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

***(i) RevenueRecognition***

VWR records product revenue on a gross basis whenpersuasive evidence of an arrangement exists, the price is fixed ordeterminable, title and risk of loss have been transferred to the customer andcollectibility of the resulting receivable is reasonably assured. Title andrisk of loss is transferred at the time of shipment or upon delivery tocustomers, depending upon the terms of the arrangement with the customer.Products are delivered without significant post-sale obligations to thecustomer. Provisions for discounts, rebates to customers, sales returns, andother adjustments are provided for as a reduction of sales in the period therelated sales are recorded.

VWR’s service revenues,which represent a small part of our business, are primarily comprised oftechnical services, on-site storeroom services, warehousing and furnituredesign, supply and installation. Revenues related to technical services,on-site storeroom services and warehousing are recognized as the services areperformed. Certain of our arrangements to provide on-site storeroom servicescontain multiple elements. We recognize revenue separately for each elementbased on the fair value of the element provided. The majority of contractsassociated with our furniture design, supply and installation are recordedunder the percentage-of-completion method of accounting. Profits recognized oncontracts in process are based upon estimated contract revenue and cost tocompletion. Cost to completion is measured based on actual costs incurred todate compared to total estimated cost.

***(j) Shipping and Handling***

VWR records shipping andhandling charges billed to customers in net sales and records shipping andhandling costs in cost of goods sold for all periods presented.

***(k) Income Taxes***

Income taxes are accountedfor under SFAS No. 109, *Accounting forIncome Taxes*, which requires the asset and liability method underwhich deferred income taxes are recognized for the expected net tax effects oftemporary differences between the carrying amounts of assets and liabilitiesfor financial reporting and income tax purposes and net operating loss andcredit carryforwards. Deferred tax assets and liabilities are measured usingthe enacted tax rates expected to apply to taxable income in the years in whichthose temporary differences are expected to be recovered or settled. The effecton deferred tax assets and liabilities of a change in tax rates is recognizedin income in the period that includes the enactment date. VWR records avaluation allowance to reduce deferred tax assets to the amount that is morelikely than not to be realized. See Note 13 for a discussion of the Company’sfiling of a consolidated federal tax return with CDRV.

***(l) Insurance***

Certain insurable risks such as commercial generalliability; property damage and business interruption; and workers’ compensationare insured by third parties. However, VWR self-insures certain components ofthese risk exposures at various deductible levels and subject to certainexclusions. Accruals for claims under VWR’s self-insurance programs arerecorded on a claims-incurred basis.

52

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

***(m) Pensions and Other Postretirement Plans***

VWR has defined benefitplans covering certain of its employees. The benefits include pension, salarycontinuance, severance, life insurance, and health care. Benefits are accruedover the employee’s service period. As noted under Note 2 (u) and 14 (a),during September 2006, the Financial Accounting Standards Board (“FASB”)issued SFAS No. 158, *Employers’Accounting for Defined Benefit Pension and Other Postretirement Plans - anamendment of SFAS No 87, 88, 106, and 132(R) *(“SFAS 158”). ThisStatement requires balance sheet recognition of the funded status for allpension and postretirement benefit plans.

***(n) Concentrations of Credit Risk***

Trade receivables reflecta diverse customer base and our wide geographic dispersion of businesses. As aresult, no significant concentrations of credit risk exist.

***(o) Stock-Based Compensation***

We adopted SFAS No. 123Revised, *Share-Based Payment* (“SFAS 123R”),effective January 1, 2006, which requires companies to recognize in theincome statement the grant date value of stock options and other forms ofequity-based compensation issued to employees. The Company previously accountedfor stock options granted to our employees using the intrinsic value method ofAccounting Principles Board Opinion No. 25, *Accounting for Stock Issued to Employees* (“APB 25”). UnderAPB 25, the Company did not recognize compensation expense for CDRV optionsgranted to our employees because such options had an exercise price equal totheir fair market value on the date of grant. See Note 15 for furtherdiscussion of stock-based compensation.

***(p) Foreign Currency Translation***

Assetsand liabilities of VWR’s foreign subsidiaries, where the functional currency isthe local currency, are translated into U.S. dollars using period-endexchange rates, and income and expenses are translated using average exchangerates. Resulting translation adjustments are reported as a separate componentof stockholders’ equity. Foreign currency translation adjustments for exchangegains and losses on transactions are included in other expense (income), net,and were as follows:

| ** **                    | ** ** | **Successor**                                                                                | ** ** | **Predecessor**                                                                              | ** ** |
|-------------------------------|------------|----------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------|------------|
| ** **                    | ** ** | ** **                                                                                   | ** ** | ** **                                                                                   | ** ** | **April 7-** | ** ** | **January 1-** | ** ** |
| ** **                    | ** ** | **Year Ended December 31,**                                                   | ** ** | **December 31,**                                                                        | ** ** | **April 6,** | ** ** |
| ** **                    | ** ** | **       2006       ** | ** ** | **       2005       ** | ** ** | **2004** | ** ** | **2004** | ** ** |
| Exchange (losses)  gains, net |       |                                                                                         | $          | (2.0                                                                                         | )          |   |   | $ | 2.9 |   |   |   | $ | 1.1 |   |   |   | $ | 0.4 |   |   |
|                               |            |                                                                                              |            |                                                                                              |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

There have been nosignificant fluctuations in foreign currency exchange rates since December 31,2006.

***(q) Financial Instruments and Derivatives***

The Company accounts for derivative financialinstruments in accordance with SFAS No. 133, *Accounting for Derivative Instruments and Hedging Activities,*as amended. All derivatives, whether designated for hedging relationships ornot, are recorded on the balance sheet at fair value. If the 

53

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

derivative is designatedas a fair value hedge, the changes in the fair value of the derivative and ofthe hedged item attributable to the hedged risk are recognized in the resultsof operations. If the derivative is designated as a cash flow hedge, theeffective portions of changes in the fair value of the derivative are recordedin accumulated other comprehensive income and are recognized in the results ofoperations when the hedged item affects earnings. Ineffective portions ofchanges in the fair value cash flow hedges are recognized in the results ofoperations. For derivative instruments not designated as hedging instruments,changes in fair value are recognized in the results of operations in thecurrent period.

VWR enters into foreign currency forward contractsprimarily to hedge exposures to fluctuations in foreign currency rates thatarise from purchasing of products that are denominated in foreign currencies.Gains and losses on the foreign currency forward contracts generally offset gainsand losses on certain expected commitments. To the extent these foreigncurrency forward contracts are considered effective hedges, gains and losses onthese positions are deferred and included in the basis of the transaction whenit is completed. Cash flows from foreign currency forward contracts accountedfor as hedges are classified in the statement of cash flows in the samecategory as the item being hedged or on a basis consistent with the nature ofthe instrument.

Beginning in July of2004, the Company used an interest rate cap agreement to manage its exposure tointerest rate risk. This interest rate cap was designated as a cash flow hedgeof the Company’s variable rate debt. This agreement was for two years and wasnot renewed upon its expiration in July of 2006. Amounts accumulated inother comprehensive income were reclassified into earnings as interest wasaccrued on the hedge transactions. The amounts accumulated in othercomprehensive income fluctuated based on changes in the fair value of theCompany’s derivatives at each reporting period.

***(r) Investments***

We account for our 24%investment in KMF Laborchemie Handels GmbH (“KMF”), an independent distributioncompany, using the equity method of accounting.

***(s) Other Comprehensive Income***

Components of other comprehensive income arecumulative foreign currency translation adjustments, pension and otherpostretirement benefit liability adjustments, and unrealized gain (loss) onderivatives. We report other comprehensive income in our consolidatedstatements of stockholders’ equity and other comprehensive income.

Accumulatedother comprehensive income net of tax, consist of:

| ** **                                                                                            | ** ** | **December 31,** | ** ** |
|-------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                                            | ** ** | **2006**              | ** ** | **2005** | ** ** |
| Foreign currency  translation adjustments                                                             |       | $                     | 57.4       |   | $ | 24.9 |   |
| Unrealized gain  (loss) on derivatives, net of taxes of ($0.1) and $0.2, respectively                 |       | 0.2                   |       | (0.3 | ) |
| Pension and other  postretirement liability adjustments, net of taxes of $4.2 and $7.6,  respectively |       | (6.8                  | )          | (11.9 | ) |
|                                                                                                  |       | $                     | 50.8       |   | $ | 12.7 |   |

 

54

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

***(t) Use of Estimates***

The preparation offinancial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting period. While actual results could differ from those estimates,management believes that the estimates are reasonable.

***(u) New Accounting Standards***

The following accounting standards were adopted during2006. The impact, if any, of these accounting standards is included in ourfinancial statements.

We adopted SFAS 123R, effective January 1, 2006,which requires companies to recognize in the income statement, the grant datevalue of stock options and other forms of equity-based compensation issued toemployees. The Company previously accounted for stock options granted to ouremployees using the intrinsic value method of APB 25. See Note 15 for furtherdiscussion of stock-based compensation.

During September 2006, the FASB issued SFAS 158,which requires balance sheet recognition of the funded status for all pensionand postretirement benefit plans. The Company adopted the provisions of SFAS158 as of December 31, 2006. See Note 14 for further discussion on theimpact of SFAS 158.

During September 2006, the Securities andExchange Commission issued Staff Accounting Bulletin No. 108, *Considering the Effects of Prior Year Misstatementswhen Quantifying Misstatements in Current Year Financial Statements*(“SAB 108”). SAB 108 was issued in order to eliminate the diversity in practicesurrounding how registrants quantify financial statement misstatements. SAB 108requires that registrants quantify the impact on the current year’s financialstatements of correcting all misstatements, including the carryover andreversing effects of prior years’ misstatements, as well as the effects oferrors arising in the current year. SAB 108 is effective for fiscal yearsending after November 15, 2006. The implementation of SAB 108 did not havea material effect on our financial position or results of operations.

The following accounting standards will be adoptedprospectively.

During July 2006, the FASB issued Interpretation No. 48,*Accounting for Uncertainty in Income Taxes*(“FIN 48”). This Interpretation clarifies the accounting for uncertainty inincome taxes recognized in accordance with SFAS No. 109, *Accounting for Income Taxes.*FIN 48provides guidance on the financial statement recognition and measurement of atax 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. Based on our current assessment, we do not expectthat the adoption of FIN 48 will be material.

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 

55

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

forfiscal years beginning after November 15, 2007. We are currentlyevaluating the impact this Statement will have on our consolidated financialstatements.

***(v) Reclassifications***

Certain amounts from priorperiods have been reclassified to conform to the current presentation.

**(3) Accounting forAsset Retirement Obligations**

SFAS No. 143, *Accountingfor Asset Retirement Obligations* (“SFAS 143”) addresses financialaccounting and reporting for obligations associated with the retirement oftangible long-lived assets and the associated asset retirement costs. SFAS 143requires recognition of a liability at fair value and an increase to thecarrying value of the related asset for any retirement obligation. This amountis depreciated over the life of the asset. The liability is adjusted to reflectthe passage of time and changes in the estimated future cash flows. SFAS 143was effective for the Company as of January 1, 2003.

In March 2005, the FASB issued Interpretation No. 47,*Accounting for Conditional Asset RetirementObligations* (“FIN 47”). FIN 47 clarifies that the term conditionalasset retirement obligation, as used in SFAS 143, refers to a legal obligationto perform an asset retirement activity in which the timing and/or method ofsettlement are conditional on a future event that may or may not be within thecontrol of the Company. FIN 47 requires that a liability for the fair value ofa conditional asset retirement obligation be recognized if the fair value ofthe liability can be reasonably estimated.

Weadopted FIN 47 effective December 31, 2005. Our conditional assetretirement obligations primarily relate to restoration costs for leasedfacilities including the removal of certain leasehold improvements. As a resultof the adoption of FIN 47, we recorded the following amounts in our financialstatements as of and for the year ended December 31, 2005:

| Consolidated Statement  of Operations:                                                  |   |   |   |
|-----------------------------------------------------------------------------------------|--------|--------|--------|
| Charge for  cumulative effect of a change in accounting principle, net of taxes of $0.3 |   | $      | 0.5    |   |
| Consolidated Balance  Sheet:                                                            |   |   |   |
| Property and equipment, net of accumulated  depreciation of $0.5                        |   | 1.5    |   |
| Deferred income tax asset                                                               |   | 0.3    |   |
| Long-term  liabilities for asset retirement obligations                                 |   | 2.3    |   |
|                                                                                         |        |        |        |  |

 

The cumulativeeffect of the adoption of FIN 47 of $0.5 reflects charges since theAcquisition. Asset retirement obligations were adjusted to reflect thecumulative accretion of all related liabilities to December 31, 2005. Hadwe adopted FIN 47 at the beginning of 2004, the pro-forma consolidatedstatements of operations would not have been materially different from theamounts reported.

56

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

EffectiveJanuary 1, 2006, the liabilities for asset retirement obligations areadjusted on an ongoing basis due to the passage of time, new laws andregulations and revisions to either the timing or amount of the originalestimates. These liabilities are accreted to their full estimated settlementamounts through the estimated ultimate settlement dates of the underlyingobligations. This accretion charge is reflected as a component of selling,general and administrative expense in our consolidated statement of operations.Net asset retirement costs are depreciated over the remaining lease terms orlives of the related assets. This charge is recorded as depreciation expense inour consolidated statement of operations. Costs related to FIN 47 were not material for 2006.

**(4)   Restructuring**

***(a) Restructuring as a Result of the Acquisition***

Subsequent to the Acquisition, we completedrestructuring activities to reduce operating costs and improve the operatingand administrative capabilities of the Company. The initial focus was on theCompany’s European operations and organizational structure and, to a lesserextent, the operations in North America. In connection with this initial focus,we recorded restructuring accruals of $29.7 in 2004. These charges primarilyrelated to reductions in headcount in Europe due to the reorganization of theCompany’s European sales and marketing functions.

In early 2005, we implemented various restructuringplans that were formulated in 2004 and were in the planning and evaluationstages. Accordingly, we recorded additional restructuring accruals ofapproximately $24.5 in the first half of 2005. These charges primarily reflectseverance and other exit costs including estimates for environmentalremediation associated with cessation of manufacturing operations at a plant inFrance and severance costs associated with the consolidation of certain salesand marketing personnel in our German and UK operations.

These charges have been recorded as adjustments toacquisition costs (increases to goodwill) pursuant to the provisions ofEmerging Issues Task Force Issue No. 95-3, *Recognition of Liabilities in Connection with aPurchase Business Combination* (“EITF 95-3”).

The charge for environmental remediation in France wasinitially estimated at $6.4 based on a preliminary study conducted by anenvironmental engineering firm. In 2005, we updated these estimates incoordination with the environmental engineering firm and determined that ourestimate for remediation costs should have been $3.9. Accordingly, we reducedthe reserve and goodwill by $2.5 at December 31, 2005. In addition, wealso reduced our severance accruals, primarily in France and the UK, by $1.7with a corresponding reduction to goodwill, at December 31, 2005.

57

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

Thefollowing table sets forth the activity associated with the Company’sliabilities for restructuring as a result of the Acquisition.

| ** **                       | ** ** | **Severance**   | ** ** | ** **     | ** ** | ** ** | ** ** | ** ** | ** ** |
|----------------------------------|------------|-----------------|------------|----------------|------------|------------|------------|------------|------------|
| ** **                       | ** ** | **and**         | ** ** | ** **     | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                       | ** ** | **termination** | ** ** | **Facilities** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                       | ** ** | **benefits**    | ** ** | **related**    | ** ** | **Other**  | ** ** | **Total**  | ** ** |
| Balance as of  April 7, 2004     |       |            | $          | —         |       |       |       | $          | —     |   |   | $ | — |   | $ | — |   |
| Accruals charged to goodwill     |       |            | 28.2       |           |       |       | 0.6        |       |       | 0.9 |   | 29.7 |   |
| Cash payments/other              |       |            | (7.9       | )              |       |       | (0.1       | )          |       | (0.6 | ) | (8.6 | ) |
| Currency translation changes     |       |            | 0.7        |           |       |       | —     |       |       | — |   | 0.7 |   |
| Balance as of  December 31, 2004 |       |            | 21.0       |           |       |       | 0.5        |       |       | 0.3 |   | 21.8 |   |
| Accruals charged to goodwill     |       |            | 13.4       |           |       |       | 10.9       |       |       | 0.2 |   | 24.5 |   |
| Cash payments/other              |       |            | (24.7      | )              |       |       | (0.6       | )          |       | (0.5 | ) | (25.8 | ) |
| Revisions to estimates           |       |            | —     |           |       |       | (4.2       | )          |       | — |   | (4.2 | ) |
| Currency translation changes     |       |            | (2.1       | )              |       |       | (1.0       | )          |       | — |   | (3.1 | ) |
| Balance as of  December 31, 2005 |       |            | 7.6        |           |       |       | 5.6        |       |       | — |   | 13.2 |   |
| Cash payments/other              |       |            | (4.2       | )              |       |       | (1.4       | )          |       | — |   | (5.6 | ) |
| Currency translation changes     |       |            | 0.2        |           |       |       | 0.5        |       |       | — |   | 0.7 |   |
| Balance as of December  31, 2006 |       |            | $          | 3.6            |       |       |       | $          | 4.7        |   |   | $ | — |   | $ | 8.3 |   |

 

***(b) Other restructuring activities***

In addition, we initiated several cost reduction programsin response to relatively static market conditions and implemented reductionsin force and other cost containment measures during 2005. In connection withthese actions, we recorded accruals and charges to operations related toseverance and facility exit costs of $20.6 and incurred approximately $2.1 forduplicate expenditures incurred in our UK operations related to the transitionand consolidation of certain administrative functions for the year ended December 31,2005. These duplicate expenditures are included in selling, general andadministrative expenses in the statement of operations for the year ended December 31,2005.

For the year ended December 31, 2006, we reversed$1.0 of excess accruals and credited operations primarily as a result of there-deployment of certain personnel originally included in the 2005 programs.

58

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

Thefollowing table sets forth the activity associated with the Company’sliabilities for these cost reduction programs.

| ** **                                        | ** ** | **Severance**   | ** ** | ** **     | ** ** | ** ** | ** ** |
|---------------------------------------------------|------------|-----------------|------------|----------------|------------|------------|------------|
| ** **                                        | ** ** | **and**         | ** ** | ** **     | ** ** | ** ** | ** ** |
| ** **                                        | ** ** | **termination** | ** ** | **Facilities** | ** ** | ** ** | ** ** |
| ** **                                        | ** ** | **benefits**    | ** ** | **related**    | ** ** | **Total**  | ** ** |
| Balance as of  January 1, 2005                    |       |            | $          | —         |       |       |       | $ | — |   |   | $ | — |   |
| Accruals charged  to earnings                     |       |            |       |           |       |       |       |   |   |   |   |
| North American Lab                                |       |            | 5.7        |           |       |       | 0.1        |   |   | 5.8 |   |
| European Lab                                      |       |            | 11.2       |           |       |       | 2.6        |   |   | 13.8 |   |
| Science Education                                 |       |            | 1.0        |           |       |       | —     |   |   | 1.0 |   |
| Cash payments/other                               |       |            | (8.1       | )              |       |       | (2.4       | ) |   | (10.5 | ) |
| Balance as of  December 31, 2005                  |       |            | 9.8        |           |       |       | 0.3        |   |   | 10.1 |   |
| Reversal of  excess accruals credited to earnings |       |            |       |           |       |       |       |   |   |   |   |
| North American Lab                                |       |            | (1.0       | )              |       |       | —     |   |   | (1.0 | ) |
| Cash payments/other                               |       |            | (7.3       | )              |       |       | (0.3       | ) |   | (7.6 | ) |
| Currency translation changes                      |       |            | 0.1        |           |       |       | —     |   |   | 0.1 |   |
| Balance as of December  31, 2006                  |       |            | $          | 1.6            |       |       |       | $ | — |   |   | $ | 1.6 |   |

 

At December 31,2006, $4.1 of our aggregate restructuring liabilities are included in accruedexpenses and $5.8 are included in other long-term liabilities. At December 31,2005, $16.6 of our aggregate restructuring liabilities are included in accruedexpenses and $6.7 are included in other long-term liabilities.

**(5)   BusinessCombinations and Acquisitions**

***(a) Acquisition of VWR International Corporation byCDRVA***

On February 15, 2004, Merck KGaA and CDRVAentered into a Stock Purchase Agreement, which was consummated on April 7,2004. The Acquisition was accounted for under the purchase method of accountingin accordance with SFAS No. 141, *Business Combinations.*Underpurchase accounting, tangible and identifiable intangible assets acquired andliabilities assumed have been recorded at their respective fair values based onthird party valuations. The purchase accounting adjustments made in connectionwith the Acquisition were finalized during 2005.

Theexcess investment made by CDRVA over the estimates of the fair market value ofthe identifiable assets and liabilities of the Company as of April 7, 2004was approximately $859.6 and is summarized below.

| Purchase price                |   | $      | 1,669.1 |   |
|-------------------------------|--------|--------|---------|--------|
| Transaction costs             |   | 20.5   |    |
| Net tangible  assets acquired |   | (268.0 | )       |
| Intangible assets  acquired   |   | (562.0 | )       |
| Goodwill                      |   | $      | 859.6   |   |

 

59

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

Thefollowing unaudited pro-forma financial information presents a summary ofconsolidated results of operations of the Company for the year ended December 31,2004 presented as if the Acquisition had occurred as of January 1, 2004:

| Net sales                   |   | $    | 3,005.4 |   |
|-----------------------------|--------|------|---------|--------|
| Income before  income taxes |   | 76.9 |    |
| Net income                  |   | 44.0 |    |

 

Theseunaudited pro-forma results have been prepared for comparative purposes onlyand primarily include adjustments for a consulting advisory fee, interestexpense, depreciation, amortization and income taxes. These results do notpurport to be indicative of the results of operations which actually would haveresulted had the Acquisition occurred at the beginning of 2004, or of thefuture results of operations of the successor Company.

***(b) Successor’s Acquisitions***

On October 2, 2006, the Company acquired SinoChemical Company (Pte.) Limited (“Sino”) for initial cash consideration ofapproximately $4.2. Sino is located in Singapore and distributes laboratorychemicals, equipment and consumables. The results of Sino have been included inthe North American Lab segment from the date of acquisition. Had thisacquisition occurred at the beginning of 2005, the pro-forma consolidatedstatements of operations would not have been materially different from the amountsreported.

On July 1, 2005, the Company acquired TechnicalService Lab B.V. (“TSL”) for cash consideration of approximately $3.1. TSLperforms technical services on laboratory equipment in the Netherlands,Germany, Belgium and France. The results of TSL have been included in theEuropean Lab segment from the date of acquisition.

On April 1, 2005, the Company acquired AGBScientific Ltd. (“AGB”) for initial cash consideration of approximately $23.8.During 2006, additional consideration of $0.9 was recorded related to the AGBacquisition. AGB distributes scientific supplies and is headquartered inDublin, Ireland. The results of AGB have been included in the European Labsegment from the date of acquisition.

On April 1, 2005, the Company acquired AdvancedInstruments Sales & Services, Inc. (“AI”) for cash considerationof approximately $16.8 and CDRV stock of approximately $0.5. AI performsservices and distributes scientific supplies in Puerto Rico and isheadquartered in San Juan, Puerto Rico. The results of AI have been included inthe North American Lab segment from the date of acquisition.

60

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

Theexcess investment made by the Company in 2005 over the estimates of the fairmarket value of the identifiable assets and liabilities for the threeacquisitions discussed above and one other minor acquisition was $23.3 and issummarized below.

| Purchase price,  including $0.5 of CDRV stock |   | $     | 45.0   |   |
|-----------------------------------------------|--------|-------|--------|--------|
| Transaction costs                             |   | 1.5   |   |
| Net tangible  assets acquired                 |   | (9.3  | )      |
| Intangible assets  acquired                   |   | (13.9 | )      |
| Goodwill                                      |   | $     | 23.3   |   |

 

Had these acquisitions occurred at the beginning of2004, the pro-forma consolidated statements of operations would not have beenmaterially different from the amounts reported.

On June 1, 2004, our Science Education segmentacquired certain assets of a business that focuses on providing math kits andsupplies primarily to the publisher textbook market for approximately $2.7.

Cashconsideration for these acquisitions was funded from cash and cash equivalentson hand.

***(c) Predecessor’s Acquisition of VWRSP in 1995 and1999***

VWR’s North American business was formerly VWRSP. In1995, Merck KGaA, agreed to acquire approximately 49.9% of the then outstandingshares of VWRSP. In July 1999, affiliates of Merck KGaA acquired through apublic tender offer the remaining 50.1% of the issued and outstanding commonshares of VWRSP for $584.0 to increase its beneficial ownership to 100%. Thetotal cumulative purchase price paid by Merck KGaA for the 100% ownership was$792.0.

The 1999 acquisition has been accounted for under thepurchase method in the financial statements following the push down basis ofaccounting through April 7, 2004. After recording the purchase price inthe VWR statements, VWR had recorded $778.8 of goodwill, $17.5 of intangibleassets, and $773.3 of push down debt in addition to recording other assets andliabilities at their fair values.

Interestexpense was recorded on pushdown debt based upon Merck KGaA’s intercompanyinterest rates, which were not necessarily indicative of rates VWR would haveobtained if it were not an ultimate subsidiary of Merck KGaA. Interest expenseof $4.1 before tax effects, on pushdown debt, has been included in thepredecessor statement of operations and presented as a non-cash item in thepredecessor statement of cash flows and a capital contribution in thepredecessor statement of stockholders’ equity, as this interest was notrequired to be paid to Merck KGaA.

61

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

***(d) Goodwill andOther Intangible Assets***

Thefollowing table provides a summary of goodwill established as of theAcquisition and a roll forward of goodwill to December 31, 2006 asreflected in the accompanying consolidated balance sheets.

| ** **                                                                   | ** ** | **North**             | ** ** | **European** | ** ** | **Science**   | ** ** | ** ** | ** ** |
|------------------------------------------------------------------------------|------------|-----------------------|------------|--------------|------------|---------------|------------|------------|------------|
| ** **                                                                   | ** ** | **American Lab** | ** ** | **Lab**      | ** ** | **Education** | ** ** | **Total**  | ** ** |
| Balance as of  April 7, 2004 from Acquisition                                |       |                  | $          | 627.0        |       |          |       | $          | 164.3      |   |   |   | $ | 68.3 |   |   | $ | 859.6 |   |
| Changes as a result of purchase accounting adjustments  for the Acquisition  |       |                  | 4.5        |         |       |          | 8.9        |       |       |   | 0.9 |   |   | 14.3 |   |
| Currency translation changes                                                 |       |                  | 13.5       |         |       |          | 19.6       |       |       |   | — |   |   | 33.1 |   |
| Balance as of  December 31, 2004                                             |       |                  | 645.0      |         |       |          | 192.8      |       |       |   | 69.2 |   |   | 907.0 |   |
| Changes as a  result of purchase accounting adjustments for the Acquisition: |       |                  |       |         |       |          |       |       |       |   |   |   |   |   |   |
| Restructuring charges, net of tax                                            |       |                  | 1.1        |         |       |          | 19.2       |       |       |   | 0.2 |   |   | 20.5 |   |
| Curtailment of benefit plans, net of tax(1)                                  |       |                  | (12.1      | )            |       |          | —     |       |       |   | — |   |   | (12.1 | ) |
| Other adjustments, net(2)                                                    |       |                  | 0.8        |         |       |          | (4.9       | )          |       |   | (1.6 | ) |   | (5.7 | ) |
| 2005 acquisitions                                                            |       |                  | 7.3        |         |       |          | 16.0       |       |       |   | — |   |   | 23.3 |   |
| Currency translation changes                                                 |       |                  | 5.2        |         |       |          | (28.1      | )          |       |   | (0.1 | ) |   | (23.0 | ) |
| Balance as of  December 31, 2005                                             |       |                  | 647.3      |         |       |          | 195.0      |       |       |   | 67.7 |   |   | 910.0 |   |
| Finalization of purchase accounting for TSL                                  |       |                  | —     |         |       |          | (1.0       | )          |       |   | — |   |   | (1.0 | ) |
| Additional consideration for AGB                                             |       |                  | —     |         |       |          | 0.9        |       |       |   | — |   |   | 0.9 |   |
| Preliminary allocation for Sino                                              |       |                  | 1.4        |         |       |          | —     |       |       |   | — |   |   | 1.4 |   |
| Pre-Acquisition net operating and other tax loss  benefits(3)                |       |                  | (0.1       | )            |       |          | (1.5       | )          |       |   | — |   |   | (1.6 | ) |
| Currency translation changes                                                 |       |                  | —     |         |       |          | 23.4       |       |       |   | — |   |   | 23.4 |   |
| Balance as of December  31, 2006                                             |       |                  | $          | 648.6        |       |          |       | $          | 216.8      |   |   |   | $ | 67.7 |   |   | $ | 933.1 |   |

----

(1)          Duringthe first quarter of 2005, the Company finalized its plans with regard to thecurtailment of certain U.S. benefit plans. In accordance with EITF 95-3,the curtailment gains of $12.1, net of tax, were recorded as reductions togoodwill. See Note 14 for further information.

(2)          Otheradjustments, net include the favorable resolution of certain pre-Acquisitiontax contingencies of $3.6 and a charge of $4.5 that represents an adjustment todeferred taxes originally established in North American Lab; reductions torestructuring liabilities for environmental remediation and severances (SeeNote 4(a)) of $4.2 as well as a reduction to retirement benefit liabilities of$0.6 in European Lab; and other minor adjustments to purchase price allocation.

(3)          TheCompany recognized a benefit for pre-Acquisition net operating tax losses thatcarried valuation allowances.

62

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

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

| ** **                                                                                                  | ** ** | **Weighted**     | ** ** | ** **            | ** ** | ** ** | ** ** |
|-------------------------------------------------------------------------------------------------------------|------------|------------------|------------|-----------------------|------------|------------|------------|
| ** **                                                                                                  | ** ** | **Average**      | ** ** | ** **            | ** ** | ** ** | ** ** |
| ** **                                                                                                  | ** ** | **Amortization** | ** ** | ** **            | ** ** | ** ** | ** ** |
| ** **                                                                                                  | ** ** | **Period**       | ** ** | **December 31,** | ** ** |
| ** **                                                                                                  | ** ** | **(Years)**      | ** ** | **2006**              | ** ** | **2005**   | ** ** |
| Amortizable intangible  assets:                                                                             |       |             |       |                  |       |       |       |   |   |
| Customer relationships in North America (net of  accumulated amortization of $20.5 and $13.2, respectively) |       |             | 32.8       |                  |       | $          | 225.4      |   | $ | 232.7 |   |
| Customer relationships in Europe (net of accumulated  amortization of $11.4 and $6.3, respectively)         |       |             | 20.3       |                  |       | 74.6       |       | 69.5 |   |
| Chemical supply agreements (net of accumulated  amortization of $9.1 and $5.2, respectively)                |       |             | 10.0       |                  |       | 23.6       |       | 24.2 |   |
| Other (net of accumulated amortization of $1.0 and  $0.4, respectively)                                     |       |             | 4.3        |                  |       | 0.2        |       | 0.8 |   |
| Total amortizable intangible assets (net of  accumulated amortization of $42.0 and $25.1, respectively)     |       |             |       |                  |       | 323.8      |       | 327.2 |   |
| Indefinite-lived  intangible assets:                                                                        |       |             |       |                  |       |       |       |   |   |
| Trademarks and tradenames                                                                                   |       |             |       |                  |       | 228.5      |       | 225.5 |   |
| Total intangible  assets, net                                                                               |       |             |       |                  |       | $552.3     |       | $ | 552.7 |   |
|                                                                                                             |            |                  |            |                       |            |            |            |  |  |  |  |

 

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

| ** **            | ** ** | **Successor**                                                                    | ** ** | **Predecessor**                                                                  | ** ** |
|-----------------------|------------|----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **            | ** ** | ** **                                                                       | ** ** | ** **                                                                       | ** ** | **April 7**– | ** ** | **January 1–** | ** ** |
| ** **            | ** ** | **Year Ended December 31,**                                       | ** ** | **December 31,**                                                            | ** ** | **April 6,** | ** ** |
| ** **            | ** ** | **      2006      ** | ** ** | **      2005      ** | ** ** | **2004** | ** ** | **2004** | ** ** |
| Amortization  expense |       |                                                                             | $          | 15.5                                                                             |       |   |   | $ | 14.8 |   |   |   | $ | 10.6 |   |   |   | $ | 0.4 |   |   |
|                       |            |                                                                                  |            |                                                                                  |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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

| **Years ended December 31:** | ** ** | ** ** | ** ** | ** ** | ** ** |
|---------------------------------------------|------------|------------|------------|------------|------------|
| 2007                                        |       | $          | 15.3       |       |
| 2008                                        |       | 15.3       |       |
| 2009                                        |       | 15.3       |       |
| 2010                                        |       | 15.2       |       |
| 2011                                        |       | 15.2       |       |
| Thereafter                                  |       | 247.5      |       |
|                                        |       | $          | 323.8      |       |

 

63

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements  (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

**(6)   Investments**

Thecarrying amount of our 24% investment in KMF, accounted for under the equitymethod, was $8.1 and $7.4 as of December 31, 2006 and December 31,2005, respectively. Equity income, included in other (income) expense, net foreach of the reporting periods is shown in the table below:

| ** **    | ** ** | **Successor**                              | ** ** | **Predecessor**                         | ** ** |
|---------------|------------|--------------------------------------------|------------|-----------------------------------------|------------|
| ** **    | ** ** | **Year Ended December 31,** | ** ** | **April 7–December 31,** | ** ** | **January 1–April 6,** | ** ** |
| ** **    | ** ** | **2006**                                   | ** ** | **2005**                                | ** ** | **2004** | ** ** | **2004** | ** ** |
| Equity income |       |                                       | $          | 0.5                                     |       |   |   | $ | 0.5 |   |   |   | $ | 0.4 |   |   |   | $ | 0.1 |   |   |
|               |            |                                            |            |                                         |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

The Company believes thatits equity investment does not qualify as a variable interest entity, asdefined in December 2003 by the FASB with its issuance of revisedInterpretation No. 46, *Consolidation ofVariable Interest Entities.*

**(7) Fair Valueof Financial Instruments**

VWR’s financial instruments consist primarily of cashand cash equivalents held at financial institutions, accounts receivables,accounts payable, short- and long-term debt and foreign currency forwardcontracts.

The carrying amounts for cash and cash equivalents,accounts receivables, accounts payable and short-term debt approximate fairvalue due to the short-term nature of these instruments.

Thetable below shows the carrying amounts and estimated fair values of our fixedrate long-term note debt instruments. The fair values of these instruments wereestimated based on quotes from a bond trader making a market in these debtinstruments.

| ** **                                | ** ** | **December 31, 2006** | ** ** | **December 31, 2005** | ** ** |
|-------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| ** **                                | ** ** | **Carrying  Amount**            | ** ** | **Fair  Value**                 | ** ** | **Carrying  Amount** | ** ** | **Fair  Value** | ** ** |
| Unsecured Senior  Notes - 6.875%          |       |                            | $          | 200.0                           |       |   | $ | 201.3 |   |   | $ | 200.0 |   |   | $ | 198.5 |   |
| Unsecured Senior  Subordinated Notes - 8% |       |                            | 320.0      |                            |       | 329.6 |   |   | 320.0 |   |   | 318.4 |   |
|                                      |       |                            | $          | 520.0                           |       |   | $ | 530.9 |   |   | $ | 520.0 |   |   | $ | 516.9 |   |

 

The tables below show ouroutstanding foreign currency forward contracts, fair value of the outstandingcontracts and pre-tax loss from settled contracts included in cost of goodssold for each of the reporting periods. The fair value of the foreign currencyforward contracts was estimated based on period-end spot rates.

| ** **                             | ** ** | **December 31,** | ** ** |
|----------------------------------------|------------|-----------------------|------------|
| ** **                             | ** ** | **2006**              | ** ** | **2005** | ** ** |
| Outstanding contracts (notional value) |       | $                     | 55.0       |   | $ | 47.0 |   |
| Fair value of contracts                |       | 0.2                   |       | (0.7 | ) |
|                                        |            |                       |            |  |  |  |  |

 

64

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements  (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

 

| ** **  | ** ** | **Successor**                              | ** ** | **Predecessor**                    | ** ** |
|-------------|------------|--------------------------------------------|------------|------------------------------------|------------|
| ** **  | ** ** | **Year Ended December 31,** | ** ** | **April 7-December 31,** | ** ** | **January 1-April 6,** | ** ** |
| ** **  | ** ** | **2006**                                   | ** ** | **2005**                           | ** ** | **2004** | ** ** | **2004** | ** ** |
| Pretax loss |       |                                       | $          | (2.0                               | )          |   |   | $ | (1.5 | ) |   |   | $ | (0.4 | ) |   |   | $ | (0.1 | ) |   |
|             |            |                                            |            |                                    |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

The fair value of the Company’s interest rate cap wasnot material as of December 31, 2005.

VWR’s financialinstruments are spread across a number of financial institutions whose creditratings we monitor and believe do not currently carry any risk ofnon-performance. None of the off-balance-sheet financial instruments wouldresult in a significant loss to VWR and its subsidiaries if the other partyfailed to perform according to the terms of its agreement, as any such losswould generally be limited to the extent of unrealized gain on any contract.

**(8) Inventories**

Inventories consistof purchased goods for sale and are valued at the lower of cost or market. Thetable below shows the percentage determined using the LIFO method and amountthat LIFO cost is less than current cost for each period.

| ** **                     | ** ** | **December 31,** | ** ** |
|--------------------------------|------------|-----------------------|------------|
| ** **                     | ** ** | **2006**              | ** ** | **2005** | ** ** |
| Percent using  LIFO method     |       | 58                    | %          | 61 | % |
| Amount less than current  cost |       | $                     | 3.3        |   | $ | 1.4 |   |
|                                |            |                       |            |  |  |  |  |

 

**The cost of the remaininginventories is determined using the average cost or FIFO methods.**

**(9) Property and Equipment**

Property and equipment,net, for each of the reporting periods is shown in the table below:

| ** **                       | ** ** | **December 31,** | ** ** |
|----------------------------------|------------|-----------------------|------------|
| ** **                       | ** ** | **2006**              | ** ** | **2005** | ** ** |
| Land                             |       | $                     | 13.6       |   | $ | 13.0 |   |
| Buildings and  improvements      |       | 96.8                  |       | 78.3 |   |
| Equipment and  computer software |       | 101.4                 |       | 94.4 |   |
| Capital additions  in process    |       | 4.8                   |       | 6.0 |   |
|                                  |       | 216.6                 |       | 191.7 |   |
| Less accumulated  depreciation   |       | (59.7                 | )          | (34.9 | ) |
| Net property and  equipment      |       | $                     | 156.9      |   | $ | 156.8 |   |

 

Depreciation expense foreach of the reporting periods is shown in the table below:

| ** **            | ** ** | **Successor**                              | ** ** | **Predecessor**                    | ** ** |
|-----------------------|------------|--------------------------------------------|------------|------------------------------------|------------|
| ** **            | ** ** | **Year Ended December 31,** | ** ** | **April 7-December 31,** | ** ** | **January 1-April 6,** | ** ** |
| ** **            | ** ** | **2006**                                   | ** ** | **2005**                           | ** ** | **2004** | ** ** | **2004** | ** ** |
| Depreciation  expense |       |                                       | $          | 25.9                               |       |   |   | $ | 19.1 |   |   |   | $ | 15.2 |   |   |   | $ | 8.5 |   |   |
|                       |            |                                            |            |                                    |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

 

65

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements  (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

**(10) AccountsPayable**

VWR maintains acentralized cash management system for certain U.S. accounts payable functions.Accordingly, included in accounts payable at December 31, 2006 and 2005 areapproximately $15.5 and $48.9, respectively, of uncleared payments.

**(11) AccruedExpenses**

Thecomponents of accrued expenses for each of the reporting periods is shown inthe table below:

| ** **                              | ** ** | **December 31,** | ** ** |
|-----------------------------------------|------------|-----------------------|------------|
| ** **                              | ** ** | **2006**              | ** ** | **2005** | ** ** |
| Other accrued expenses                  |       | $                     | 61.0       |   | $ | 46.2 |   |
| Employee-related  accruals              |       | 49.4                  |       | 33.3 |   |
| Income taxes payable                    |       | 23.9                  |       | 16.0 |   |
| Accrued interest                        |       | 15.1                  |       | 14.9 |   |
| Deferred income taxes                   |       | 14.2                  |       | 6.7 |   |
| Restructuring-related  accruals         |       | 4.1                   |       | 16.6 |   |
| Current portion of  pension liabilities |       | 1.4                   |       | 10.1 |   |
|                                    |       | $                     | 169.1      |   | $ | 143.8 |   |

 

**(12) Debt**

The following is a summary of our debt obligations: 

| ** **                                       | ** ** | **December 31,** | ** ** |
|--------------------------------------------------|------------|-----------------------|------------|
| ** **                                       | ** ** | **2006**              | ** ** | **2005** | ** ** |
| Senior Secured Credit  Facility                  |       | $                     | 448.7      |   | $ | 537.1 |   |
| 6.875% Unsecured Senior  Notes due 2012          |       | 200.0                 |       | 200.0 |   |
| 8% Unsecured Senior  Subordinated Notes due 2014 |       | 320.0                 |       | 320.0 |   |
| Loan from CDRV                                   |       | 16.5                  |       | — |   |
| Loan from CDRV Holdings,  Inc.                   |       | 0.6                   |       | 0.6 |   |
| Bank loans                                       |       | 0.3                   |       | 0.3 |   |
| Capital leases                                   |       | 5.8                   |       | 5.8 |   |
| Total debt                                       |       | 991.9                 |       | 1,063.8 |   |
| Less short-term portion                          |       | (38.3                 | )          | (45.5 | ) |
| Total long term-portion                          |       | $                     | 953.6      |   | $ | 1,018.3 |   |

 

66

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements  (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

The following tablesummarizes the maturities of our debt obligations as of December 31, 2006: 

| ** **                                       | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **Thereafter** | ** ** | **Total** | ** ** | ** ** |
|--------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------------|------------|-----------|------------|------------|
| Senior Secured Credit  Facility                  |       | $        | 20.5       |     | $          | 4.7      |       | $        | 4.7        |     | $          | 221.9          |       | $         | 196.9      |       |   | $ | — |   |   | $ | 448.7 |   |   |
| 6.875% Unsecured Senior  Notes due 2012          |       | —   |       | —   |       | —   |       | —   |       | —   |       |           | 200.0      |      |       | 200.0      |   |   |
| 8% Unsecured Senior  Subordinated Notes due 2014 |       | —   |       | —   |       | —   |       | —   |       | —   |       |           | 320.0      |      |       | 320.0      |   |   |
| Loan from CDRV                                   |       | 16.5     |       | —   |       | —   |       | —   |       | —   |       |           | —     |      |       | 16.5       |   |   |
| Loan from CDRV Holdings,  Inc.                   |       | —   |       | —   |       | —   |       | —   |       | —   |       |           | 0.6        |      |       | 0.6        |   |   |
| Bank loans                                       |       | 0.3      |       | —   |       | —   |       | —   |       | —   |       |           | —     |      |       | 0.3        |   |   |
| Capital leases                                   |       | 1.0      |       | 0.8      |       | 0.6      |       | 0.7      |       | 0.7      |       |           | 2.0        |      |       | 5.8        |   |   |
| Total                                            |       | $        | 38.3       |     | $          | 5.5      |       | $        | 5.3        |     | $          | 222.6          |       | $         | 197.6      |       |   | $ | 522.6 |   |   | $ | 991.9 |   |   |

 

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

The Senior Secured CreditFacility provides for aggregate maximum borrowings of approximately $598.7under (1) a term loan facility providing for a loan denominated in Eurosin an aggregate principal amount currently outstanding of $141.6 as of December 31,2006, (2) a term loan facility providing for a term loan denominated inU.S. dollars in an aggregate principal amount currently outstanding at $307.1,and (3) a multi-currency revolving credit facility, providing for up to$150.0 in multi-currency revolving loans (reduced by the amount of any standbyand commercial letters of credit drawn under that facility) outstanding at anytime. As of December 31, 2006, noamount was outstanding under the multi-currency revolving creditfacility, and we had $9.5 in undrawn letters of credit and up to $140.5 ofadditional debt that could be incurred as revolving loans or under standby andcommercial letters of credit. Undrawn amounts under the multi-currencyrevolving credit facility are available on a revolving credit basis for generalcorporate purposes. The Senior SecuredCredit Facility permits one or more of our foreign subsidiaries to becomeborrowers under the facility upon the satisfaction of certain conditions. InAugust of 2006, the Senior Secured Credit Facility was amended to allowfor $60.0 to be spent on acquisitions going forward, subject to annualincreases.

The term loan facilitieswill mature in 2011 and the multi-currency revolving credit facility willmature in 2009. The principal amount of the term loans are amortized in annualinstallments for the first six years and quarterly installments during theseventh year, subject to adjustment if the Company makes optional or mandatoryprepayments on the term loans.

Subjectto certain exceptions, the Senior Secured Credit Facility is subject tomandatory prepayment and reduction in an amount equal to:

·       Thenet proceeds of (1) any permitted receivables securitization program, (2) certaindebt offerings, (3) certain asset sales and (4) certain insurancerecovery and condemnation events; and

·       50%of excess cash flow net of any voluntary principal prepayments (as defined) forany fiscal year unless certain leverage ratio targets are met.

A$44.5 mandatory principal prepayment was made in March 2006 based onexcess cash flow (as defined) generated in 2005. A payment of $20.5 is due in March 2007based on excess cash flow generated in 2006. These amounts are included inshort-term debt in our consolidated balance sheets as of December 31, 2006and 2005, respectively. In September 2006, a $60.0 voluntary principalprepayment was made.

67

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued)December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

***Security; Guarantees***

The obligations under the Senior Secured CreditFacility are guaranteed by our parent, CDRV Holdings, Inc., and certain ofour domestic subsidiaries, as that term is defined in the credit agreement. TheSenior Secured Credit Facility and the guarantees thereunder are secured bysecurity interests in and pledges of or liens on substantially all of thetangible and intangible domestic assets of VWR.

The Senior Secured CreditFacility and the guarantees thereunder are also secured by a pledge of 65% ofthe capital stock of the foreign subsidiary holding companies of CDRV Holdings, Inc.and VWR, which in turn hold the capital stock of certain of our foreignsubsidiaries.

***Interest***

At our election, theinterest rates applicable to the U.S. dollar-denominated term loan can be basedon a fluctuating rate of interest measured by reference to either (1) anadjusted London inter-bank offered rate, or LIBOR, plus a borrowing margin or (2) analternate base rate, or ABR, plus a borrowing margin. The interest rateapplicable to the Euro-denominated term loan is based on a fluctuating rate ofinterest measured by reference to an adjusted EURIBOR plus a borrowing margin.As of December 31, 2006, the interest rates on the U.S. dollar-denominatedand Euro-denominated term loans were 7.63% and 6.28%, respectively.

***Covenants***

Our Senior Secured CreditFacility contains a number of covenants that, among other things, limit orrestrict our ability to dispose of assets, incur additional indebtedness, incurguarantee obligations, prepay other indebtedness, make acquisitions, engage inmergers or consolidations, change the business conducted by us taken as awhole, make capital expenditures, or engage in certain transactions withaffiliates. In addition, the Senior Secured Credit facility requires us tocomply with specified financial ratios and tests, including a minimum interestexpense coverage ratio, a maximum leverage ratio and a maximum capitalexpenditures test. As of December 31, 2006, the Company was in compliancewith all covenants.

***Subsequent Amendment***

In January 2007,we amended provisions in the credit agreement to provide us with moreflexibility to make dividends or other payments to CDRV Holdings, Inc. anddecreased the interest margin we pay on the Euro-denominated term loan by 50basis points. On March 1, 2007, we paid a dividend of $7.4 to CDRVHoldings, Inc.

***(b) The Senior and Senior Subordinated Notes***

The Senior Notes mature on April 15, 2012 and theSenior Subordinated Notes mature on April 15, 2014. Both the Senior andSenior Subordinated Notes require semiannual cash interest payments on April 15and October 15 to holders of record at the close of business as of thepreceding April 1 and October 1. The Senior Subordinated Notes aresubordinated in right of payment to all secured debt of the Company and theSenior Notes.

68

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued)December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

The Senior Notes are guaranteed on a senior basis byeach of our significant domestic subsidiaries. The Senior Subordinated Notesare guaranteed on a senior subordinated basis by each of our significantdomestic subsidiaries. As of December 31, 2006, neither notes areguaranteed by any of our subsidiaries because none constitute a significantdomestic subsidiary as defined in the indentures for these notes.

These notes contain a numberof covenants which, among other things, limit our ability to incur additionalindebtedness, make distributions of cash or property, make acquisitions, engagein transactions with affiliates and incur liens on assets. As of December 31,2006, the Company was in compliance with all covenants. Upon a change ofcontrol, holders of these notes have the right to require the Company torepurchase these notes at a purchase price equal to 101% of principal plusaccrued and unpaid interest through the date of repurchase. Subject to specificterms and conditions contained in the indentures for these notes, the SeniorNotes and Senior Subordinated Notes are redeemable at the Company’s optionprior to maturity.

***(c) Loan from CDRV***

The loan from CDRV is anunrestricted loan from CDRV that is due on demand and bears interest at  U.S. dollar LIBOR, which was 5.34% as of December 31,2006.

***(d) Bank Loans***

Bank loans consist ofamounts owed by certain foreign subsidiaries that are operating from time totime with and without formal lines of credit with local banks to fundshort-term needs. The bank loans had an average interest rate of 4.3% and 5.4%as of December 31, 2006 and December 31, 2005, respectively. Theborrowings available to and drawn from time to time by our foreign subsidiariesare limited in aggregate by certain covenants contained within our SeniorSecured Credit Facility, as noted above.

***(e) Interest on Push Down Debt***

The push down debtreflected the debt incurred by Merck KGaA as a result of its acquisition ofVWRSP. The push down debt was classified as long-term because Merck KGaA hadrepresented it would not require payment on the debt before 12 months. Theaverage interest rate on the push down debt was 2.0% for the period January 1,2004 to April 6, 2004. This interest rate reflects the rate charged byMerck KGaA related to intercompany borrowing. This debt was extinguished inconnection with the Acquisition.

***(f) Interest on Loans from Merck KGaA and Affiliates***

Prior to the Acquisition,VWR had various loans with Merck KGaA and its affiliates. Interest expense andaverage interest rate on these loans was $1.4 and 2.6% for the period January 1,2004 to April 6, 2004. This debt was extinguished in connection with theAcquisition.

69

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued)December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

**(13)   IncomeTaxes**

Taxes on incomebefore cumulative effect of a change in accounting principle are based onincome before income taxes as follows:

| ** **    | ** ** | **Successor**                                                                          | ** ** | **Predecessor**                                                                  | ** ** |
|---------------|------------|----------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **    | ** ** | ** **                                                                             | ** ** | ** **                                                                       | ** ** | **April 7–** | ** ** | **January 1–** | ** ** |
| ** **    | ** ** | **Year Ended December 31,**                                             | ** ** | **December 31,**                                                            | ** ** | **April 6,** | ** ** |
| ** **    | ** ** | **      2006       ** | ** ** | **      2005      ** | ** ** | **2004** | ** ** | **2004** | ** ** |
| United States |       |                                                                                   | $          | 52.9                                                                             |       |   |   | $ | 32.2 |   |   |   | $ | 26.7 |   |   |   | $ | 20.0 |   |   |
| Foreign       |       |                                                                                   | 60.1       |                                                                             |       |   | 40.6 |   |   |   | 28.7 |   |   |   | 15.8 |   |   |
| Total         |       |                                                                                   | $          | 113.0                                                                            |       |   |   | $ | 72.8 |   |   |   | $ | 55.4 |   |   |   | $ | 35.8 |   |   |

 

The provision forincome taxes is as follows: 

| ** **                              | ** ** | **Successor**                                                                    | ** ** | **Predecessor**                                                                        | ** ** |
|-----------------------------------------|------------|----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------|------------|
| ** **                              | ** ** | ** **                                                                       | ** ** | ** **                                                                             | ** ** | **April 7–** | ** ** | **January 1–** | ** ** |
| ** **                              | ** ** | **Year Ended December 31,**                                       | ** ** | **December 31,**                                                                  | ** ** | **April 6,** | ** ** |
| ** **                              | ** ** | **      2006      ** | ** ** | **       2005      ** | ** ** | **2004** | ** ** | **2004** | ** ** |
| Current:                                |       |                                                                             |       |                                                                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                                 |       | ** **                                                                       | $          | 11.7                                                                                   |       |   |   | $ | 4.5 |   |   |   | $ | 4.6 |   |   |   | $ | 10.1 |   |   |
| State                                   |       |                                                                             | 2.0        |                                                                                   |       |   | 0.5 |   |   |   | 1.6 |   |   |   | 0.5 |   |   |
| Foreign                                 |       |                                                                             | 22.4       |                                                                                   |       |   | 21.2 |   |   |   | 14.3 |   |   |   | 5.2 |   |   |
|                                    |       |                                                                             | 36.1       |                                                                                   |       |   | 26.2 |   |   |   | 20.5 |   |   |   | 15.8 |   |   |
| Deferred:                               |       |                                                                             |       |                                                                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                                 |       |                                                                             | 7.9        |                                                                                   |       |   | 10.5 |   |   |   | 4.5 |   |   |   | 0.3 |   |   |
| State                                   |       |                                                                             | 1.0        |                                                                                   |       |   | 2.6 |   |   |   | 0.2 |   |   |   | — |   |   |
| Foreign                                 |       |                                                                             | (0.7       | )                                                                                      |       |   | (8.3 | ) |   |   | (1.7 | ) |   |   | 0.6 |   |   |
|                                    |       |                                                                             | 8.2        |                                                                                   |       |   | 4.8 |   |   |   | 3.0 |   |   |   | 0.9 |   |   |
| Tax benefit on  push down debt interest |       |                                                                             | —     |                                                                                   |       |   | — |   |   |   | — |   |   |   | (1.6 | ) |   |
| Total tax  provision                    |       |                                                                             | $          | 44.3                                                                                   |       |   |   | $ | 31.0 |   |   |   | $ | 23.5 |   |   |   | $ | 15.1 |   |   |

 

The tax benefit on push down debt interest is anon-cash benefit, which is recorded in the statements of stockholders’ equity. 

Thereconciliation of tax computed at the U.S. federal statutory tax rate of 35% onincome before income taxes and cumulative effect of a change in accountingprinciple to the actual income tax provision is as follows:

| ** **                                     | ** ** | **Successor**                                                                    | ** ** | **Predecessor**                                                                  | ** ** |
|------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **                                     | ** ** | ** **                                                                       | ** ** | ** **                                                                       | ** ** | **April 7–** | ** ** | **January 1–** | ** ** |
| ** **                                     | ** ** | **Year Ended December 31,**                                       | ** ** | **December 31,**                                                            | ** ** | **April 6,** | ** ** |
| ** **                                     | ** ** | **      2006      ** | ** ** | **      2005      ** | ** ** | **2004** | ** ** | **2004** | ** ** |
| Statutory tax  expense                         |       |                                                                             | 35.0       | %                                                                                |       |   | 35.0 | % |   |   | 35.0 | % |   |   | 35.0 | % |   |
| State income  taxes net of federal tax benefit |       |                                                                             | 1.7        | %                                                                                |       |   | 2.7 | % |   |   | 1.9 | % |   |   | 0.1 | % |   |
| Foreign rate  differential                     |       |                                                                             | 0.6        | %                                                                                |       |   | (1.1 | )% |   |   | (3.4 | )% |   |   | — |   |   |
| Nondeductible  expenses                        |       |                                                                             | 0.5        | %                                                                                |       |   | 1.4 | % |   |   | 4.0 | % |   |   | 1.1 | % |   |
| Change in  valuation allowance                 |       |                                                                             | 0.3        | %                                                                                |       |   | 3.7 | % |   |   | 5.0 | % |   |   | 6.1 | % |   |
| Other, net                                     |       |                                                                             | 1.1        | %                                                                                |       |   | 0.9 | % |   |   | (0.1 | )% |   |   | (0.1 | )% |   |
| Total tax  provision                           |       |                                                                             | 39.2       | %                                                                                |       |   | 42.6 | % |   |   | 42.4 | % |   |   | 42.2 | % |   |

 

70

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued)December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

Deferredincome taxes have been classified in the consolidated balance sheets asfollows:

| ** **                                                    | ** ** | **December 31,** | ** ** |
|---------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                    | ** ** | **2006**              | ** ** | **2005** | ** ** |
| Deferred tax assets:                                          |       |                  |       |   |   |
| Pensions                                                      |       | $                     | 16.6       |   | $ | 25.0 |   |
| Other compensation benefits                                   |       | 6.4                   |       | 5.1 |   |
| Net operating loss carryforwards                              |       | 37.6                  |       | 22.2 |   |
| Foreign tax credit and alternative minimum tax  carryforwards |       | 3.6                   |       | 3.3 |   |
| Inventory overhead capitalization                             |       | 2.5                   |       | 3.0 |   |
| Accrued expenses                                              |       | 6.7                   |       | 5.5 |   |
| Receivables                                                   |       | 3.7                   |       | 1.9 |   |
| Other, net                                                    |       | —                |       | 0.5 |   |
|                                                          |       | 77.1                  |       | 66.5 |   |
| Valuation allowances                                          |       | (39.5                 | )          | (21.8 | ) |
| Total deferred tax assets, net of valuation  allowances       |       | 37.6                  |       | 44.7 |   |
| Deferred tax  liabilities:                                    |       |                  |       |   |   |
| Depreciation                                                  |       | 12.6                  |       | 14.1 |   |
| Goodwill amortization                                         |       | 32.0                  |       | 20.8 |   |
| Intangibles                                                   |       | 203.9                 |       | 207.3 |   |
| Inventory valuation                                           |       | 19.0                  |       | 18.6 |   |
| Total deferred tax liabilities                                |       | 267.5                 |       | 260.8 |   |
| Net deferred tax  liabilities                                 |       | $                     | 229.9      |   | $ | 216.1 |   |

 

Deferredincome taxes have been classified in the consolidated balance sheets asfollows:

| ** **                                                          | ** ** | **December 31,** | ** ** |
|---------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                          | ** ** | **2006**              | ** ** | **2005** | ** ** |
| Deferred tax  asset—current (incuded in other current assets)  |       | $                     | (4.1       | ) | $ | (1.4 | ) |
| Deferred tax  asset—noncurrent                                 |       | (7.2                  | )          | (8.4 | ) |
| Deferred tax  liability—current (included in accrued expenses) |       | 14.2                  |       | 6.7 |   |
| Deferred tax  liability—noncurrent                             |       | 227.0                 |       | 219.2 |   |
| Net deferred tax  liability                                         |       | $                     | 229.9      |   | $ | 216.1 |   |

 

VWR evaluates the realizability of deferred tax assetstaking into consideration such factors as the future reversals of existingtaxable temporary differences, projected future operating results, the availablecarryforward period, and other circumstances. Valuation allowances have beenrecorded for deferred tax assets related to foreign net operating losscarryforwards, foreign tax credit carryforwards and other deferred tax assetsthat are not expected to be realized. As of December 31, 2006, the Companyhad valuation allowances of $12.4 related to pre-Acquisition foreign operatinglosses and tax credit carryforwards. Should such losses ultimately berecovered, the resultant reduction in the valuation allowance will be recordedas a reduction to goodwill. During 2006, certain tax benefits amounting to $1.4reduced goodwill. With respect to the remaining deferred tax assets, managementbelieves it is more likely 

71

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued)December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

than not that VWR willrealize the benefits of these deductible differences, net of the existingvaluation allowances.

Neither income taxes nor foreign withholding taxeshave been provided on approximately $121.7 of cumulative undistributed earningsof foreign subsidiaries at December 31, 2006. These earnings areconsidered permanently invested in the business and, under the tax laws, arenot subject to such taxes until distributed.

As of December 31, 2006, VWR has U.S. state netoperating loss carryforwards of approximately $12.9 that expire at varioustimes through 2025. In addition, VWR has foreign net operating losscarryforwards of approximately $127.0, $2.0 that begin to expire in 2013 andanother $125.0 that have indefinite expirations. Of these foreign losses,approximately $57.0 arose from certain financing arrangements. These losseshave full valuation allowances. In the past, these amounts were presented netof the related valuation allowance. Further, as of December 31, 2006,there are U.S. foreign tax credit carryforwards of $3.6 that will expire atvarious times through 2016.

TheCompany participates in the filing of consolidated federal and certain statecombined income tax returns with our ultimate parent, CDRV. Based on provisionsof the Company’s tax sharing agreement, the Company remits its current taxliability determined on a separate return basis to CDRV. For 2006, this amountwas approximately $9.5. In addition, the Company owed  $3.2 to CDRV under this agreement for priorperiods. As of December 31, 2006, these liabilities of $12.7 werereclassified to debt in the form of a loan payable to CDRV.

**(14)   BenefitPrograms**

VWR sponsors various retirement plans for mostfull-time employees. During 2004, we launched a comprehensive study of our U.S.employee benefit programs. The study was designed to both benchmark ourbenefits from a competitive perspective and assess the balance of the programcomponents in terms of employee needs. The Board of Directors approved a numberof benefit changes during February 2005 that were implemented effective June 1,2005. The most significant changes involved the curtailment of our U.S. definedbenefit plan, improvements in the rate of employer matching contributions toour defined contribution plan, increased rates of employee contributions tofund ongoing medical benefits, and the elimination of carryover vacation daysby the end of 2006. These changes are expected to modestly reduce our benefitcosts prospectively.

72

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

***(a) Adoption of SFAS 158***

Asdiscussed in Note 2 (u), the Company adopted the provisions of SFAS 158 as of December 31,2006. The table below summarizes the incremental effects of the adoption ofSFAS 158 on the individual line-items in our consolidated balance sheet at December 31,2006:

| ** **                              | ** ** | **Pre SFAS 158** | ** ** | **SFAS 158** | ** ** | **Post SFAS 158** | ** ** |
|-----------------------------------------|------------|----------------------------|------------|-------------------|------------|-----------------------------|------------|
| ** **                              | ** ** | **Adoption**               | ** ** | **Adjustment**    | ** ** | **Adoption**                | ** ** |
| Assets:                                 |       |                       |       |              |       |                        |       |   |   |   |   |   |   |
| Deferred income taxes—noncurrent   |       |                       | $          | 5.7               |       |                        |       | $ | 1.5 |   |   |   | $ | 7.2 |   |   |
| Other assets—noncurrent            |       |                       | 36.2       |              |       |                        | (0.3       | ) |   |   | 35.9 |   |   |
| Liabilities:                            |       |                       |       |              |       |                        |       |   |   |   |   |   |   |
| Accrued expenses                        |       |                       | 176.3      |              |       |                        | (7.2       | ) |   |   | 169.1 |   |   |
| Other long-term liabilities             |       |                       | 69.8       |              |       |                        | 10.7       |   |   |   | 80.5 |   |   |
| Stockholders'  Equity:                  |       |                       |       |              |       |                        |       |   |   |   |   |   |   |
| Accumulated other  comprehensive income |       |                       | 53.1       |              |       |                        | (2.3       | ) |   |   | 50.8 |   |   |
|                                         |            |                            |            |                   |            |                             |            |  |  |  |  |  |  |  |  |  |

 

In accordance with SFAS158, our accounting and related disclosures for previous periods were notaffected by the adoption of this Standard. Subsequent changes in funded statuswill be recognized as a component of other comprehensive income to the extentthey have not yet been recognized as a component of net periodic benefit cost.

***(b) U.S. Defined Benefit Plan***

Pension plan benefits for the defined benefit plan arebased primarily on participants’ compensation and years of credited service. Ithas been VWR’s policy to fund the minimum amount required by local regulations.

As a result of the decision to curtail the plandiscussed above, future benefits were frozen effective May 31, 2005 formost participants. Most participants will earn no further benefits under theplan after that date. As a result, there was a reduction in the plan’sprojected benefit obligation of $19.4 that was recorded as a reduction topension liabilities at December 31, 2005. Goodwill and deferred tax assetswere also reduced by $11.9 and $7.5, respectively, at December 31, 2005.

73

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

VWR uses a December 31 measurement date for theplan. The change in benefit obligation, change in plan assets, andreconciliation of funded status of VWR’s defined benefit plan that previouslycovered substantially all of its U.S. employees, except for employees coveredby independently operated collective bargaining plans, were as follows:

 

| ** **                                         | ** ** | **Year Ended December 31,**   | ** ** |
|----------------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                         | ** ** | **   2006   ** | ** ** | **   2005   ** | ** ** |
| Change in benefit  obligation:                     |       |                                         |       |   |   |   |   |   |   |
| Benefit obligation—beginning of period        |       |                                         | $          | 150.4 |   |   |   | $ | 151.9 |   |   |
| Service cost                                       |       |                                         | 2.3        |   |   |   | 4.6 |   |   |
| Interest cost                                      |       |                                         | 8.3        |   |   |   | 8.2 |   |   |
| Actuarial loss (gain)                              |       |                                         | (7.7       | ) |   |   | 9.5 |   |   |
| Benefits paid                                      |       |                                         | (4.5       | ) |   |   | (4.4 | ) |   |
| Curtailment                                        |       |                                         | (1.4       | ) |   |   | (19.4 | ) |   |
| Benefit obligation—end of period              |       |                                         | 147.4      |   |   |   | 150.4 |   |   |
| Change in plan assets:                             |       |                                         |       |   |   |   |   |   |   |
| Fair value of plan assets—beginning of period |       |                                         | 107.1      |   |   |   | 105.1 |   |   |
| Actual gain on plan assets                         |       |                                         | 14.3       |   |   |   | 6.4 |   |   |
| Company contributions                              |       |                                         | 12.4       |   |   |   | — |   |   |
| Benefits paid                                      |       |                                         | (4.5       | ) |   |   | (4.4 | ) |   |
| Fair value of plan assets—end of period       |       |                                         | 129.3      |   |   |   | 107.1 |   |   |
| Funded status                                      |       |                                         | $          | (18.1 | ) |   |   | $ | (43.3 | ) |   |

 

Amounts recognized in the consolidated balance sheetwere as follows:

 

| ** **                                          | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------|------------|-----------------------|------------|
| ** **                                          | ** ** | **2006**              | ** ** | **2005** | ** ** |
| Accrued expenses                                    |       | $                     | —     |   | $ | (8.5 | ) |
| Other long-term  liabilities                        |       | (18.1                 | )          | (32.9 | ) |
| Accumulated other  comprehensive income—pretax |       | 4.4                   |       | 17.1 |   |
|                                                     |            |                       |            |  |  |  |  |

 

The amount in accumulated other comprehensive incomethat has not been recognized as net periodic pension cost at December 31,2006 relates to an actuarial loss. 

The accumulated benefit obligation was $147.4 and$148.5 at December 31, 2006 and 2005, respectively.

74

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

Net periodic pension cost includes the followingcomponents:

| ** **                      | ** ** | **Successor**                                                                    | ** ** | **Predecessor**                                                                  | ** ** |
|---------------------------------|------------|----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **                      | ** ** | ** **                                                                       | ** ** | ** **                                                                       | ** ** | **April 7-** | ** ** | **January 1-** | ** ** |
| ** **                      | ** ** | **Year Ended December 31,**                                       | ** ** | **December 31,**                                                            | ** ** | **April 6,** | ** ** |
| ** **                      | ** ** | **      2006      ** | ** ** | **      2005      ** | ** ** | **2004** | ** ** | **2004** | ** ** |
| Service cost                    |       |                                                                             | $          | 2.3                                                                              |       |   |   | $ | 4.6 |   |   |   | $ | 5.0 |   |   |   | $ | 1.8 |   |   |
| Interest cost                   |       |                                                                             | 8.3        |                                                                             |       |   | 8.2 |   |   |   | 5.9 |   |   |   | 2.2 |   |   |
| Expected return  on plan assets |       |                                                                             | (9.1       | )                                                                                |       |   | (8.5 | ) |   |   | (5.6 | ) |   |   | (2.5 | ) |   |
| Recognized net  actuarial loss  |       |                                                                             | 0.4        |                                                                             |       |   | — |   |   |   | — |   |   |   | 0.8 |   |   |
| Net periodic  pension cost      |       |                                                                             | $          | 1.9                                                                              |       |   |   | $ | 4.3 |   |   |   | $ | 5.3 |   |   |   | $ | 2.3 |   |   |

 

In addition to the net periodic cost above, thefollowing (decreases)/increases in the liability included in othercomprehensive income occurred:

| ** **                                                               | ** ** | **Successor**                                                                    | ** ** | **Predecessor**                                                                  | ** ** |              |
|--------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|-------------------|
| ** **                                                               | ** ** | ** **                                                                       | ** ** | ** **                                                                       | ** ** | **April 7-** | ** ** | **January 1-** | ** ** |   |
| ** **                                                               | ** ** | **Year Ended December 31,**                                       | ** ** | **December 31,**                                                            | ** ** | **April 6,** | ** ** |   |
| ** **                                                               | ** ** | **      2006      ** | ** ** | **      2005      ** | ** ** | **2004**          | ** ** | **2004** | ** ** |   |
| (Decrease) increase in  liability included in other comprehensive income |       |                                                                             | $          | (12.7                                                                            | )          |              |   | $ | 17.1 |   |   |   | $ | — |   |   |   | $ | — |   |   |
|                                                                          |            |                                                                                  |            |                                                                                  |            |                   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

Thenet periodic pension cost and the projected benefit obligation were based onthe following assumptions:

| ** **                                                                                         | ** ** | **Successor**                                                                    | ** ** | **Predecessor**                                                                  | ** ** |
|----------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **                                                                                         | ** ** | ** **                                                                       | ** ** | ** **                                                                       | ** ** | **April 7-** | ** ** | **January 1-** | ** ** |
| ** **                                                                                         | ** ** | **Year Ended December 31,**                                       | ** ** | **December 31,**                                                            | ** ** | **April 6,** | ** ** |
| ** **                                                                                         | ** ** | **      2006      ** | ** ** | **      2005      ** | ** ** | **2004** | ** ** | **2004** | ** ** |
| Discount rate for  benefit obligation                                                              |       |                                                                             | 5.95       | %                                                                                |       |   | 5.65 | % |   |   | 5.90 | % |   |   | 6.25 | % |   |
| Discount rate for  net periodic pension cost                                                       |       |                                                                             | 5.65       | %                                                                                |       |   | 5.90 | % |   |   | 6.25 | % |   |   | 6.25 | % |   |
| Expected rate of  return on plan assets for net periodic pension cost                              |       |                                                                             | 8.25       | %                                                                                |       |   | 8.25 | % |   |   | 8.25 | % |   |   | 9.00 | % |   |
| Assumed annual rate of  compensation increase for benefit obligation and net periodic pension cost |       |                                                                             | 4.00       | %                                                                                |       |   | 4.00 | % |   |   | 4.00 | % |   |   | 4.00 | % |   |

 

We select our discount rate by reviewing certain bondyield curves available as of year end with Moody’s or Standard & Poor’sratings of “Aa” or “AA”, respectively. Based on our review, at December 31,2006, we selected 5.95% to adjust for any differences between the terms of thebonds and the actual future benefit payments.

75

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

Thetable below shows the asset allocation target range and the December 31,2006 and 2005 positions for each asset class:

| ** **                 | ** ** | **Target**            | ** ** | ** **            | ** ** | ** ** | ** ** |
|----------------------------|------------|-----------------------|------------|-----------------------|------------|------------|------------|
| ** **                 | ** ** | **range at**     | ** ** | ** **            | ** ** | ** ** | ** ** |
| ** **                 | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
| ** **                 | ** ** | **2006**              | ** ** | **2006**              | ** ** | **2005**   | ** ** |
| Domestic equity  funds     |       |                  | 40%-60%    |                  |       |       | 59         | % |   |   | 61 | % |   |
| Fixed income fund          |       |                  | 20%-30%    |                  |       |       | 21         | % |   |   | 25 | % |   |
| International  equity fund |       |                  | 0%-10%     |                  |       |       | 12         | % |   |   | 11 | % |   |
| Money market  funds        |       |                  | 0-20%      |                  |       |       | 8          | % |   |   | 3 | % |   |
|                       |       |                  |       |                  |       |       | 100        | % |   |   | 100 | % |   |

 

The principal investment objective is to obtain thehighest return (defined as income plus realized and unrealized capital gainsand losses) consistent with the long-term security of anticipated benefitpayments. This is to be achieved by (a) investing a substantial portion offund assets in equity investments; (b) investment costs and volatilitywill be limited by investing the fund’s core assets in passive or commingledfunds that participate in a range of widely diversified equity and non-equityinvestments; (c) active managers will control no more than a third of thefund’s assets; (d) in order to increase the stability of fund performancewhile maintaining expected returns, non-callable bonds, annuities or guaranteedinsurance contracts may be purchased to cover payments to retired participantswhenever the rate of return offered by such contracts significantly exceeds theaverage returns projected for other fund assets and (e) fund contributionswill be set to meet an asset funding target of 125% of the present value ofaccumulated pension benefits. The expected rate of return on plan assets wasbased on our historical returns.

The Company expects to make contributions to the planof approximately $8.2 in 2007.

Thefollowing benefit payments, which reflect expected future service, are expectedto be paid:

| 2007                  |   | $    | 4.9    |   |
|-----------------------|--------|------|--------|--------|
| 2008                  |   | 5.3  |   |
| 2009                  |   | 5.7  |   |
| 2010                  |   | 6.1  |   |
| 2011                  |   | 6.5  |   |
| 2012 - 2016 |   | 41.6 |   |

 

 

76

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

***(c) Other U.S. Benefit Plans***

VWRalso sponsors defined contribution plans and a supplemental pension plan forcertain senior officers. In addition, certain employees are covered underunion-sponsored, collectively bargained plans. Expenses under theseunion-sponsored plans are determined in accordance with negotiated laborcontracts. Expenses incurred under these plan were as follows:

| ** **                  | ** ** | **Successor**                                                                    | ** ** | **Predecessor**                                                                  | ** ** |
|-----------------------------|------------|----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **                  | ** ** | ** **                                                                       | ** ** | ** **                                                                       | ** ** | **April 7-** | ** ** | **January 1-** | ** ** |
| ** **                  | ** ** | **Year Ended December 31,**                                       | ** ** | **December 31,**                                                            | ** ** | **April 6,** | ** ** |
| ** **                  | ** ** | **      2006      ** | ** ** | **      2005      ** | ** ** | **2004** | ** ** | **2004** | ** ** |
| Defined  contribution plans |       |                                                                             | $          | 6.2                                                                              |       |   |   | $ | 3.5 |   |   |   | $ | 1.6 |   |   |   | $ | 0.6 |   |   |
| Union-sponsored  plans      |       |                                                                             | 0.7        |                                                                             |       |   | 0.8 |   |   |   | 0.6 |   |   |   | 0.1 |   |   |
| Supplemental pension  plan  |       |                                                                             | 0.4        |                                                                             |       |   | 0.3 |   |   |   | 0.4 |   |   |   | 0.2 |   |   |

 

VWR provides healthbenefits to certain retirees and a limited number of active employees and theirspouses. These benefit plans are unfunded. Shown below are the accumulatedpostretirement benefit obligation and the weighted average discount rate usedin determining the accumulated postretirement benefit obligation. The annualcost of these plans is not material.

| ** **                                                                         | ** ** | **December 31,** | ** ** |
|------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                         | ** ** | **2006**              | ** ** | **2005** | ** ** |
| Postretirement  benefit obligations                                                |       | $                     | 2.6        |   | $ | 2.8 |   |
| Weighted average  discount rate                                                    |       | 5.95                  | %          | 5.65 | % |
| Health care cost  trend rate assumed for next year                                 |       | 10.50                 | %          | 11.00 | % |
| Rate to which the  cost trend rate is assumed to decline (the ultimate trend rate) |       | 5.00                  | %          | 5.00 | % |
| Year that the rate  reaches the ultimate trend rate                                |       | 2014                  |       | 2013 |   |
|                                                                                    |            |                       |            |  |  |  |  |

 

Assumed health care costtrend rates have a significant effect on the amounts reported for health careplans. A one-percentage-point change in assumed health care cost trend rateswould change our postretirement benefit obligation as of December 31, 2006by approximately $0.5.

***(d) Non-U.S. Benefit Plans***

VWR has defined benefit pension plans at variousforeign subsidiaries. Our significant Non-U.S. defined benefit plans are inGermany, the UK and France.

Our German subsidiary has an unfunded defined benefitpension plan for current employees and retirees. Prior to the Acquisition, ourUK subsidiary had employees that participated in Merck KGaA sponsored definedbenefit pension plans, which were treated as multiemployer plans. VWR’scontributions to these multiemployer plans were $0.2 for the period January 1,2004 to April 6, 2004. In connection with the Acquisition, Merck KGaAagreed to deliver fully funded plans to VWR if VWR withdrew from Merck KGaAsponsored defined benefit pension plans. Effective April 7, 2004, VWRwithdrew from the Merck KGaA sponsored plans and our UK subsidiary establishedtwo defined benefit plans to provide for the benefits previously covered underthe Merck KGaA sponsored defined benefit plans. Our French 

77

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

subsidiary has a definedbenefit pension plan for a certain group of employees that is closed to newparticipants.

Inaddition, VWR has several small defined benefit pension plans at other locations.VWR uses a December 31 measurement date for these plans. Combinedinformation for the German, French and the UK plans’ change in benefitobligation, change in plan assets, and reconciliation of funded status were asfollows:

| ** **                                         | ** ** | **Year Ended December 31,**                           | ** ** |
|----------------------------------------------------|------------|----------------------------------------------------------------------|------------|
| ** **                                         | ** ** | **     2006     ** | ** ** | **     2005     ** | ** ** |
| Change in benefit  obligation:                     |       |                                                                 |       |   |   |   |   |   |   |
| Benefit obligation—beginning of period        |       |                                                                 | $          | 88.9 |   |   |   | $ | 84.1 |   |   |
| Service cost                                       |       |                                                                 | 2.9        |   |   |   | 3.4 |   |   |
| Interest cost                                      |       |                                                                 | 4.3        |   |   |   | 4.0 |   |   |
| Plan participants' contributions                   |       |                                                                 | 0.4        |   |   |   | 0.5 |   |   |
| Actuarial loss                                     |       |                                                                 | 0.6        |   |   |   | 10.9 |   |   |
| Benefits paid                                      |       |                                                                 | (4.4       | ) |   |   | (3.8 | ) |   |
| Currency translation changes                       |       |                                                                 | 11.9       |   |   |   | (10.2 | ) |   |
| Benefit obligation—end of period              |       |                                                                 | 104.6      |   |   |   | 88.9 |   |   |
| Change in plan  assets:                            |       |                                                                 |       |   |   |   |   |   |   |
| Fair value of plan assets—beginning of period |       |                                                                 | 58.8       |   |   |   | 55.5 |   |   |
| Actual gain on plan assets                         |       |                                                                 | 5.0        |   |   |   | 9.5 |   |   |
| Company contributions                              |       |                                                                 | 2.4        |   |   |   | 3.4 |   |   |
| Plan participants' contributions                   |       |                                                                 | 0.5        |   |   |   | 0.5 |   |   |
| Benefits paid                                      |       |                                                                 | (4.4       | ) |   |   | (3.8 | ) |   |
| Currency translation changes                       |       |                                                                 | 8.4        |   |   |   | (6.3 | ) |   |
| Fair value of plan assets—end of period       |       |                                                                 | 70.7       |   |   |   | 58.8 |   |   |
| Funded status                                      |       |                                                                 | $          | (33.9 | ) |   |   | $ | (30.1 | ) |   |

 

Amounts recognized in theconsolidated balance sheet were as follows:

| ** **                                          | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------|------------|-----------------------|------------|
| ** **                                          | ** ** | **2006**              | ** ** | **2005** | ** ** |
| Other long-term  assets                             |       | $                     | —     |   | $ | 0.2 |   |
| Accrued expenses                                    |       | (0.9                  | )          | (1.6 | ) |
| Other long-term  liabilities                        |       | (33.0                 | )          | (24.8 | ) |
| Accumulated other  comprehensive income—pretax |       | 5.8                   |       | 2.0 |   |
|                                                     |            |                       |            |  |  |  |  |

 

The amount in accumulated other comprehensive incomethat has not been recognized as net periodic pension cost at December 31,2006 relates to actuarial losses. 

The combined accumulated benefit obligation was $97.4and $81.7 at December 31, 2006 and 2005, respectively.

78

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004  (Dollars in millions, except share data)**

Combinednet periodic pension cost includes the following components:

| ** **                      | ** ** | **Successor**             | ** ** | **Predecessor**         | ** ** |
|---------------------------------|------------|---------------------------|------------|-------------------------|------------|
| ** **                      | ** ** | **Year Ended ** | ** ** | **April 7 -** | ** ** | **January 1** | ** ** |
| ** **                      | ** ** | **December 31,**     | ** ** | **December 31,**   | ** ** | **April 6,** | ** ** |
| ** **                      | ** ** | **2006**                  | ** ** | **2005**                | ** ** | **2004** | ** ** | **2004** | ** ** |
| Service cost                    |       | $                         | 2.9        |                    | $          | 3.4 |   |   | $ | 1.7 |   |   |   | $ | 0.1 |   |   |
| Interest cost                   |       | 4.3                       |       | 4.0                     |       |   | 1.0 |   |   |   | 0.3 |   |   |
| Expected return  on plan assets |       | (3.9                      | )          | (3.5                    | )          |   | (0.1 | ) |   |   | — |   |   |
| Recognized net  actuarial loss  |       | 0.3                       |       | 0.1                     |       |   | — |   |   |   | — |   |   |
| Net periodic  pension cost      |       | $                         | 3.6        |                    | $          | 4.0 |   |   | $ | 2.6 |   |   |   | $ | 0.4 |   |   |

 

Thecombined net periodic pension cost and the combined projected benefitobligation were based on the following weighted average assumptions:

| ** **                                       | ** ** | **Successor**         | ** ** | **Predecessor**         | ** ** |
|--------------------------------------------------|------------|-----------------------|------------|-------------------------|------------|
| ** **                                       | ** ** | **Year Ended**   | ** ** | **April 7 **- | ** ** | **January 1** | ** ** |
| ** **                                       | ** ** | **December 31,** | ** ** | **December 31,**   | ** ** | **April 6,** | ** ** |
| ** **                                       | ** ** | **2006**              | ** ** | **2005**                | ** ** | **2004** | ** ** | **2004** | ** ** |
| Discount rate for  benefit obligation            |       | 4.83                  | %          | 4.56                    | %          |   | 5.05 | % |   |   | 5.72 | % |   |
| Discount rate for  net periodic pension cost     |       | 4.57                  | %          | 5.05                    | %          |   | 5.49 | % |   |   | 5.83 | % |   |
| Expected rate of return  on plan assets for net  |       |                  |       |                    |       |   |   |   |   |   |   |   |   |
| periodic pension cost (French and UK plans only) |       | 6.17                  | %          | 6.58                    | %          |   | 6.49 | % |   |   | 3.50 | % |   |
| Assumed annual rate of  compensation             |       |                  |       |                    |       |   |   |   |   |   |   |   |   |
| increase for benefit obligation                  |       | 3.37                  | %          | 3.19                    | %          |   | 3.36 | % |   |   | 3.00 | % |   |
| Assumed annual rate of  compensation             |       |                  |       |                    |       |   |   |   |   |   |   |   |   |
| increase for net  periodic pension cost          |       | 3.20                  | %          | 3.36                    | %          |   | 3.54 | % |   |   | 3.00 | % |   |

 

The Company expects tomake contributions to the French and UK plans of approximately $1.5 in 2007.

The table below shows thecombined asset allocation target and the combined December 31, 2006 and2005 positions for each asset class:

| ** **        | ** ** | **Target at**    | ** ** | ** **            | ** ** | ** ** | ** ** |
|-------------------|------------|-----------------------|------------|-----------------------|------------|------------|------------|
| ** **        | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
| ** **        | ** ** | **2006**              | ** ** | **2006**              | ** ** | **2005**   | ** ** |
| Equity securities |       |                  | 67         | %                     |       |       | 68         | % |   |   | 67 | % |   |
| Debt securities   |       |                  | 33         | %                     |       |       | 32         | % |   |   | 33 | % |   |
|              |       |                  |       |                  |       |       | 100        | % |   |   | 100 | % |   |

 

79

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004  (Dollars in millions, except share data)**

The following combinedbenefit payments, which reflect expected future service, as appropriate, areexpected to be paid:

| 2007           |   | $    | 3.1    |   |
|----------------|--------|------|--------|--------|
| 2008           |   | 2.6  |   |
| 2009           |   | 2.7  |   |
| 2010           |   | 2.9  |   |
| 2011           |   | 3.6  |   |
| 2012—2016 |   | 19.9 |   |

 

***(e) Other Non-U.S. Postemployment Benefits***

Certain of VWR’s European subsidiaries provide postemployment benefits in the form of lump-sum cash payments to employees whenthey leave VWR, regardless of their reason for leaving. VWR estimates andaccrues a liability for these benefits. The largest such plans are in Franceand Italy. The combined liability recorded for these plans was $1.5 and $1.6 atDecember 31, 2006 and 2005, respectively.

**(15) Stock-BasedCompensation**

***(a) CDRV Investors, Inc. Stock Incentive Plan***

Shortly after the Acquisition, CDRV adopted the CDRVInvestors, Inc. Stock Incentive Plan (the “Stock Plan”). Under the StockPlan, CDRV’s board of directors may grant rights to purchase shares of CDRVcommon stock, options to purchase shares of CDRV common stock, shares of CDRVcommon stock, restricted stock units and other share-based awards to any of ourexecutive officers or other employees and to our directors, who are not alsoour employees or associated with Clayton, Dubilier & Rice, Inc. (“CD&R”or “Outside Directors”). Options granted under the Stock Plan to date haveprovided for vesting in equal annual installments on each of the first fiveanniversaries of the grant date and expire ten years from the grant date.Restricted stock units granted under the Stock Plan represent a future right toreceive shares of CDRV common stock. Awards granted under the Stock Plan wouldall vest earlier if CDRV has a change in control or in certain othersituations.

As of December 31,2006, there were 1,026,591 shares of CDRV common stock authorized for all typesof awards under the Stock Plan. Based on shares issued, options outstanding andrestricted stock units granted under the Stock Plan as of December 31,2006, there are 126,632 of such authorized shares available for future awards.

To date, the net proceedsreceived by CDRV in connection with the Stock Plan have been contributed to theCompany as additional investment (See (f) below).

80

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004  (Dollars in millions, except share data)**

***(b) Stock and Option Activities under the Stock Plan***

2006 Activities

During the firstquarter of 2006, our President and Chief Executive Officer purchased19,643 shares at $56.00 per share. The offer to purchase the shares wasissued in the fourth quarter of 2005 when the fair market value was $75.00 pershare.

During the secondquarter of 2006, CDRV offered 85 of our officers and employees the opportunityto purchase 40,166 shares at $75.00 per share when the fair market value was$107.00 per share. Accordingly, $1.3 was charged to operations in the secondquarter of 2006 for these purchase options, which were valued in accordancewith the provisions of SFAS 123R. Fifty-one of our officers and employees ultimatelypurchased 25,070 shares in the second quarter of 2006. Coincident with thesepurchases, these officers and employees were to be granted two options, foreach share purchased. These options were instead granted in the third quarterof 2006, as noted below. As a result of the delay in the issuance of theoptions, these officers and employees received a special bonus totaling $2.2that was recorded as a compensation charge.

During the thirdquarter of 2006, our President and Chief Executive Officer purchased4,201 shares for $119.00 per share. Coincident with this purchase, thisexecutive was granted options to purchase 12,603 shares at an exercise price of$119.00 per share. Also during the third quarter of 2006, CDRV granted optionsto purchase 49,140 shares at an exercise price of $119.00 per share to 50 ofour officers and employees in connection with the second quarter of 2006offering discussed above.

In December 2006,CDRV used the net proceeds from the sale of its $350.0 aggregate principalamount of senior floating rate notes to pay a distribution to the holders ofits common stock. Under the terms of the Stock Plan, this distribution requiredan adjustment to the exercise price or other terms of all stock optionsoutstanding under the Stock Plan to the extent necessary or appropriate toreflect the distribution. Accordingly, the exercise price of all outstandingstock options was reduced, but, in consideration of applicable U.S. federal taxregulations, CDRV was not able to sufficiently lower the exercise price ofcertain stock options. As a result, the Company made cash payments in the formof special payments of approximately $13.5 to certain holders of vested andunvested stock options, to ensure that such holders maintained the same rightsand benefits under such options after the distribution as they had before thedistribution. Individual payments were equal to the difference, if any, betweenthe per share amount of the distribution and the amount by which the optionexercise price would otherwise have been reduced. These payments constitute apartial settlement of certain outstanding stock options and, in accordance withthe provisions of SFAS 123R, $1.4 of this payment was recorded as acompensation charge, which represents a portion of the unamortized grant datefair value of the unvested options that was accelerated as of the date ofpayment. In addition, we also charged $12.1 of the payment to additionalpaid-in capital in accordance with SFAS 123R, since there was no incrementalvalue being provided in connection with the transaction.

Also during 2006, CDRVissued 3,373 shares to Outside Directors for director compensation and issued25,660 shares at $50.52 per share in connection with the exercise of vestedstock options.

81

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004  (Dollars in millions, except share data)**

2005 Activities

During 2005, CDRVoffered certain of our officers and employees the opportunity to purchaseshares of CDRV common stock for a purchase price equal to $56.00 per share,which was the fair market value of a share on the offer date. Eighteen of ourofficers and employees, and one of our Outside Directors purchased a total of23,407 shares and were granted options to purchase 45,920 shares at $56.00per share. In connection with the acquisition of AI during 2005, discussed inNote 5(b), CDRV issued 8,929 shares, as consideration (for value of $0.5), andgranted options to purchase 17,858 shares. Because the option exercise pricesequaled the fair market value per share of CDRV common stock at the time ofgrants, under APB 25 no compensation expense related to these stock options isreflected in the Company’s 2005 income statement.

In November 2005,in connection with the hiring of our President and Chief Executive Officer,CDRV offered this executive officer the opportunity to purchase 35,714 sharesof CDRV common stock for a purchase price of $56.00 per share when the fairmarket value was $75.00 per share. As a result of this discount we recorded acompensation charge of $0.7 using the intrinsic value guidance in APB 25.

Also during 2005,CDRV issued 5,625 shares to Outside Directors for director compensation.

2004 Activities

Shortly after theAcquisition, CDRV made an initial offering of awards under the Stock Plan tocertain of our officers and employees. Such participants were offered theopportunity to purchase shares of CDRV common stock for a purchase price pershare, which we believe was the fair market value of a share on the offer dateand equal to the fair market value as of the acquisition date. As part of theoffer, participants who elected to purchase a number of shares within the rangeof shares offered to them were granted options under the Stock Plan to purchasetwo additional shares of CDRV common stock (certain of our named executiveofficers at that time were granted options to purchase three shares for eachshare they purchased). All options were granted with an exercise price pershare, which we believe was equal to the fair market value of CDRV’s commonstock on the date of grant.

As part of thisinitial offering, Outside Directors were offered the opportunity to purchase upto 2,500 shares of CDRV common stock. Such directors were not offered options.

CDRV closed theinitial offering in respect of 198 of our officers and employees, and 4 of ourdirectors. In the initial offering, these officers, employees, and directorspurchased a total of 239,835 shares and were granted options to purchase485,990 shares under the Stock Plan. Because the option exercise price equaledthe fair market value per share of CDRV common stock at the time of grant,under APB 25 no compensation expense related to the stock options is reflectedin the Company’s 2004 income statement.

In December 2004,CDRV used the net proceeds from the sale of its senior discount notes to pay aspecial dividend to the holders of its common stock and the original exerciseprice of $100.00 per share for each option was adjusted to $50.52 per sharepursuant to the antidilution provision of the Stock Plan. As a result of thespecial dividend distribution, the Company recorded compensation expense ofapproximately $1.2.

82

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004  (Dollars in millions, except share data)**

Also during 2004, CDRVissued 1,382 shares to Outside Directors for director compensation.

***(c) Restricted Stock Unit Grants under the Stock Plan***

In 2005, CDRV granted 21,333 CDRV restricted stockunits with a total fair market value of $1.6 to certain of our officers andother key executives that will vest in equal annual installments over afive-year period. The restricted units will vest earlier in certaincircumstances if CDRV has a change of control. The granting of these units wasreflected in the December 31, 2005 financial statements by increasingadditional paid-in capital by $1.6 and a contra-equity account of unamortizedvalue of restricted stock issued of $1.6. In accordance with the provisions ofSFAS 123R, the unamortized value of restricted stock issued of $1.6 as of theadoption date of January 1, 2006 was eliminated against additional paid-incapital. The unearned compensation is being recognized as compensation expenseover the five-year vesting period of the restricted units granted.Compensation expense related to these restricted stock units was $0.3 for theyear ended December 31, 2006.

In 2004, CDRVgranted 5,000 CDRV restricted stock units to one of our executive officers thatwould have vested on the seventh anniversary of his commencement of employmentwith the Company. The granting of these units has been reflected in the December 31,2004 financial statements by increasing additional paid-in capital by $0.3 anda contra-equity account of unamortized value of restricted stock units issuedof $0.3. The unearned compensation was being amortized as compensation expenseover the seven-year vesting period of the restricted stock units granted.As a result of this executive’s resignation in December 2005, thecompensation expense previously recorded and the $0.3 increases to additionalpaid-in capital and the contra-equity account of unamortized value ofrestricted stock issued have been reversed in the December 31, 2005financial statements.

***(d) Adoption of SFAS 123R***

As discussed inNote 2 (o) and (u), we adopted SFAS 123R effective January 1, 2006.Compensation costs related to the grant of stock-based compensation is recordedin our financial statements with a corresponding capital contribution fromCDRV.

The Company adopted SFAS 123R using the modifiedprospective transition method. Accordingly, compensation cost includes the costfor all options granted prior to, but not yet vested as of January 1, 2006and all prospective awards without restatement of prior periods. The impact ofadopting SFAS 123R, including the second quarter charge for the stock purchaseoptions of $1.3, the December charge of $1.4 discussed above andstock-based compensation associated with outstanding options of $1.9 for theyear ended December 31, 2006 was an increase to selling, general andadministrative expenses of $4.6, and a reduction to income tax provision of$1.8.

83

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004  (Dollars in millions, except share data)**

Had compensation expensefor CDRV stock options granted been determined based on the fair value at thegrant date for awards under the plan, consistent with the provisions of SFAS123R, the Company’s net income would have approximated the pro-forma amountsindicated below:

| ** **                                | ** ** | **Year Ended**   | ** ** | **April 7**-     | ** ** |
|-------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
| ** **                                | ** ** | **2005**              | ** ** | **2004**              | ** ** |
| Net income, as reported                   |       |                  | $          | 41.3                  |       |   |   | $ | 31.9 |   |   |
| Add: stock-based  compensation expense in |       |                  |       |                  |       |   |   |   |   |
| reported net income, net  of tax          |       |                  | 0.5        |                  |       |   | — |   |   |
| Deduct: stock-based  compensation expense |       |                  |       |                  |       |   |   |   |   |
| determined using fair  value based method |       |                  |       |                  |       |   |   |   |   |
| for all awards, net of  tax               |       |                  | (1.4       | )                     |       |   | (0.3 | ) |   |
| Pro-forma net income                      |       |                  | $          | 40.4                  |       |   |   | $ | 31.6 |   |   |

 

The fair value of each option was estimated using theBlack-Scholes option-pricing model. The weighted average fair value of optionsgranted and the assumptions used for each of the reporting periods are asfollows:

| ** **                     | ** ** | ** **                                 | ** ** | ** **            | ** ** | **April 7**- | ** ** |
|--------------------------------|------------|--------------------------------------------|------------|-----------------------|------------|-------------------|------------|
| ** **                     | ** ** | **Year Ended December 31,** | ** ** | **December 31,** | ** ** |
| ** **                     | ** ** | **2006**                                   | ** ** | **2005**              | ** ** | **2004**          | ** ** |
| Fair value of  options granted |       | $                                          | 43.07      |                  | $          | 25.56             |       |   | $ | 26.25 |   |   |
| Risk-free  interest rate       |       | 4.69                                       | %          | 4.11                  | %          |              | 3.79       | % |   |
| Expected life of  options      |       | 6.5 years                                  |       | 6.5 years             |       |              | 6.5 years  |   |   |
| Volatility                     |       | 34                                         | %          | 38                    | %          |              | 20         | % |   |
| Expected dividend yield        |       | 0.0                                        | %          | 0.0                   | %          |              | 0.0        | % |   |
|                                |            |                                            |            |                       |            |                   |            |  |  |  |  |  |

 

The risk-free interestrate is based on the U.S. treasury yield curve in effect at the time of grant,the expected life is calculated using the “simplified” method allowable underSEC Staff Accounting Bulletin No. 107, and volatility is estimated basedon historical peer group industry data.

84

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004  (Dollars in millions, except share data)**

We recognize compensation expense for the CDRV stockoptions granted to our employees that contain pro-rata vesting, on astraight-line basis.

Informationregarding CDRV stock options granted to our employees under the Stock Plan foreach of the reporting periods are as follows:

| ** **                                             | ** ** | ** ** | ** ** | **Weighted** | ** ** |
|--------------------------------------------------------|------------|------------|------------|--------------|------------|
| ** **                                             | ** ** | **Number** | ** ** | **Average**  | ** ** |
| ** **                                             | ** ** | **of**     | ** ** | **Exercise** | ** ** |
| ** **                                             | ** ** | **Shares** | ** ** | **Price**    | ** ** |
| Outstanding at April 7,  2004                          |       | —     |       |         | $          | — |   |   |
| Granted                                                |       | 485,990    |       |         | 50.52      |   |   |
| Forfeited                                              |       | (1,400     | )          |         | 50.52      |   |   |
| Outstanding at  December 31, 2004                      |       | 484,590    |       |         | 50.52      |   |   |
| Granted                                                |       | 63,778     |       |         | 56.00      |   |   |
| Forfeited                                              |       | (63,320    | )          |         | 50.52      |   |   |
| Canceled                                               |       | (1,320     | )          |         | 50.52      |   |   |
| Outstanding at  December 31, 2005                      |       | 483,728    |       |         | 51.24      |   |   |
| Granted                                                |       | 120,672    |       |         | 97.51      |   |   |
| Forfeited                                              |       | (57,485    | )          |         | 51.58      |   |   |
| Canceled                                               |       | (3,421     | )          |         | 52.17      |   |   |
| Exercised                                              |       | (25,660    | )          |         | 50.52      |   |   |
| Outstanding prior  to distribution                     |       | 517,834    |       |         | 62.04      |   |   |
| Repricing due to  distribution (See Note 15(b))   |       |       |       |         |       |   |   |
| Canceled                                               |       | (517,834   | )          |         | 62.04      |   |   |
| Granted                                                |       | 456,591    |       |         | 24.66      |   |   |
| Granted                                                |       | 61,243     |       |         | 59.64      |   |   |
| Forfeited                                              |       | (2,100     | )          |         | 24.66      |   |   |
| Outstanding at  December 31, 2006                      |       | 515,734    |       |         | 28.81      |   |   |
| Vested and expected to  vest at December 31, 2006 |       | 487,079    |       |         | 28.70      |   |   |
| Exercisable at December  31, 2006                      |       | 150,778    |       |         | 24.66      |   |   |

 

Cash received by CDRV as a result of CDRV stockoptions exercised was $1.3 and the tax benefit realized by the Company was $0.1for the year ended December 31, 2006. Total intrinsic value related toCDRV stock options exercised was $0.7 for the year ended December 31,2006. No options were exercised prior to 2006.

85

----

**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004  (Dollars in millions, except share data)**

Informationregarding unvested CDRV stock options for the year ended December 31, 2006is as follows:

| ** **                             | ** ** | ** ** | ** ** | **Weighted** | ** ** |
|----------------------------------------|------------|------------|------------|--------------|------------|
| ** **                             | ** ** | **Number** | ** ** | **Average**  | ** ** |
| ** **                             | ** ** | **of**     | ** ** | **Fair**     | ** ** |
| ** **                             | ** ** | **Shares** | ** ** | **Value**    | ** ** |
| Unvested options  at January 1, 2006   |       | 398,330    |       |         | $          | 17.18 |   |   |
| Granted                                |       | 120,672    |       |         | 43.07      |   |   |
| Forfeited                              |       | (59,585    | )          |         | 17.05      |   |   |
| Vested                                 |       | (94,461    | )          |         | 16.93      |   |   |
| Unvested options at  December 31, 2006 |       | 364,956    |       |         | 25.83      |   |   |

 

Thefollowing is a summary of outstanding CDRV stock options as of December 31,2006. The exercise prices below reflect the reduction that occurred as a resultof the distribution in December 2006, discussed in Note 15 (b).

| ** **   | ** ** | **Weighted**                                                          | ** ** | ** **                                                 | ** ** | ** **                                                    | ** ** | ** **                                                 | ** ** | ** **                                                    | ** ** |
|--------------|------------|-----------------------------------------------------------------------|------------|------------------------------------------------------------|------------|---------------------------------------------------------------|------------|------------------------------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **   | ** ** | **Average**                                                           | ** ** | **Options Outstanding**                               | ** ** | **Options Exercisable**                                  | ** ** |
| ** **   | ** ** | **Remaining**                                                         | ** ** | **    Number    ** | ** ** | **    Aggregate    ** | ** ** | **    Number    ** | ** ** | **    Aggregate    ** | ** ** |
| **Price**    | ** ** | **Contractual**                                                       | ** ** | **of**                                                     | ** ** | **Intrinsic**                                                 | ** ** | **of**                                                     | ** ** | **Intrinsic**                                                 | ** ** |
| **Exercise** | ** ** | **    Life (Years)    ** | ** ** | **Shares**                                                 | ** ** | **Value**                                                     | ** ** | **Shares**                                                 | ** ** | **Value**                                                     | ** ** |
| $24.66       |       |                                                                  | 8.0        |                                                       |       |                                                          | 454,491    |                                                       |       |                                                          | $          | 33.6 |   |   |   | 150,778 |   |   |   | $ | 11.2 |   |   |
| $59.64       |       |                                                                  | 9.5        |                                                       |       |                                                          | 61,243     |                                                       |       |                                                          | 2.4        |   |   |   | — |   |   |   | — |   |   |
|         |       |                                                                  |       |                                                       |       |                                                          | 515,734    |                                                       |       |                                                          | $          | 36.0 |   |   |   | 150,778 |   |   |   | $ | 11.2 |   |   |

 

As of December 31, 2006, the aggregate estimatedfuture compensation expense related to unvested options outstanding and theunamortized value of restricted stock units issued is $8.0. This expense willbe recognized over a weighted average period of 3.8 years.

It is CDRV’s policy toissue new shares upon share option exercises, and it expects to issue newshares upon the settlement of restricted stock units.

***(e) Guaranteed Loans***

In connection with certain of the offerings discussedabove for participants who are not also executive officers, we arranged througha third-party financial institution to help these participants purchase theirshares. We have guaranteed an aggregate principal amount of $0.5 and $2.6 as ofDecember 31, 2006 and 2005, respectively, borrowed by individuals underthis arrangement. The Company would become liable for such amounts in the eventthat a participant would fail to repay the principal and interest when due.These loans mature on November 5, 2008 and bear interest at the one monthLIBOR plus 2.05%. In accordance with FASB Interpretation No. 45, *Guarantor’s**Accounting and Disclosure Requirements for Guarantees, IncludingIndirect Guarantees of Indebtedness of Others,* the Company hasdetermined that the obligation for the fair value of the guarantee isimmaterial. We recorded compensation expense and a corresponding increase inpaid-in-capital of $0.1, for the period April 7, 2004 to December 31,2004 for the favorable interest rate provided to individuals who have utilizedthe loan facility.

86

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004  (Dollars in millions, except share data)**

Given our guarantee of theloan balances, we have considered the proceeds received from the sale of theCDRV common stock to represent an obligation that may be redeemable upon theoccurrence of an event that is not within our control in accordance withAccounting Series Release No. 268 issued by the SEC. Therefore, tothe extent the loans guaranteed by the Company are outstanding, we havepresented the balance that may become due under the guarantee outside ofstockholders’ equity. As loans are repaid by the employees, the amountclassified outside of stockholders’ equity is reclassified to additionalpaid-in capital.

***(f) Capital Contributions***

Capitalcontributions for the reporting periods subsequent to the Acquisition consistof the following:

| ** **                                                       | ** ** | ** **                                               | ** ** | ** **                                               | ** ** | ** ** | ** ** |
|------------------------------------------------------------------|------------|----------------------------------------------------------|------------|----------------------------------------------------------|------------|------------|------------|
| ** **                                                       | ** ** | **Year Ended  December 31,**                   | ** ** | **April 7–  December 31,**                | ** ** |
| ** **                                                       | ** ** | **    2006    ** | ** ** | **    2005    ** | ** ** | **2004**   | ** ** |
| Issuance of CDRV  common stock for cash, net of fees             |       |                                                     | $          | 4.8                                                      |       |       |       | $ | 1.3 |   |   |   | $ | 20.6 |   |   |
| Issuance of CDRV  common stock in connection with AI acquisition |       |                                                     | —     |                                                     |       |       | 0.5        |   |   |   | — |   |   |
| Issuance of CDRV  common stock for Board of Director service     |       |                                                     | 0.4        |                                                     |       |       | 0.3        |   |   |   | 0.1 |   |   |
| Equity  compensation expense related to CDRV common stock        |       |                                                     | 3.4        |                                                     |       |       | 1.4        |   |   |   | 0.8 |   |   |
|                                                             |       |                                                     | $          | 8.6                                                      |       |       |       | $ | 3.5 |   |   |   | $ | 21.5 |   |   |

 

**(16)** Commitments andContingencies

VWRleases office and warehouse space and computer equipment under operatingleases, certain of which extend up to 15 years, subject to renewal options.Rental expense is shown in the table below:

| ** **     | ** ** | **Successor**                                            | ** ** | **Predecessor**                                          | ** ** |
|----------------|------------|----------------------------------------------------------|------------|----------------------------------------------------------|------------|
| ** **     | ** ** | **Year Ended  December 31,**                   | ** ** | **April 7–  December 31,**                | ** ** | **January 1–  April 6,** | ** ** |
| ** **     | ** ** | **    2006    ** | ** ** | **    2005    ** | ** ** | **2004** | ** ** | **2004** | ** ** |
| Rental expense | ** ** |                                                     | $          | 31.3                                                     |       |   |   | $ | 33.4 |   |   |   | $ | 24.9 |   |   |   | $ | 9.1 |   |   |
|                |            |                                                          |            |                                                          |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

87

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004  (Dollars in millions, except share data)**

Futureminimum lease payments as of December 31, 2006, under noncancelableoperating leases having initial lease terms of more than one year are asfollows:

| Years ended December 31: |   |   |   |
|--------------------------|--------|--------|--------|
| 2007                     |   | $      | 28.5   |   |
| 2008                     |   | 22.1   |   |
| 2009                     |   | 17.8   |   |
| 2010                     |   | 15.6   |   |
| 2011                     |   | 11.7   |   |
| Thereafter               |   | 37.3   |   |
| Total minimum payments   |   | $      | 133.0  |   |

 

VWR is involved in various environmental, contractualand product liability cases and claims which are considered routine to VWR’sbusiness and from time to time VWR is named as a defendant in cases as a resultof our distribution of scientific supplies, including litigation resulting fromthe distribution of products containing asbestos by VWR and certain of itspredecessors. While the impact of this litigation has typically beenimmaterial, there can be no assurance that the impact of the pending and anyfuture claims will not be material to our business, financial condition andresults of operations 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. In January 2007, the German Federal Cartel Officerequested additional information which we have recently provided. At thecurrent time, we cannot assess the likely outcome of the investigation orpotential economic impact associated with an adverse ruling. In connection withthe Acquisition, we recorded intangible assets related to our EuropeanDistribution Agreement with Merck KGaA. As of December 31, 2006, theunamortized net book value of these intangible assets is approximately  $23.6.

In March 2006, theCompany was served with a complaint filed in the United States District Court,Western District of New York, by Corning Incorporated (“Corning”) alleging abreach of contract and unliquidated damages. In April 2006, Corningamended its complaint to allege trademark and unfair competition claims. In November 2006,the Court dismissed Corning’s breach of contract claim, but in March 2007,reconsidered its ruling and has now permitted Corning to proceed with theclaim. In January 2007, the Company filed counterclaims for breach ofrebate obligation, unfair competition and tortious interference. The Companybelieves Corning’s claims are without merit and will vigorously defend itselfon those claims and pursue its counterclaims.

88

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004  (Dollars in millions, except share data)**

**(17)** Transactions withRelated Parties (Merck KGaA was a Related Party Prior to the Acquisition)

***(a)***         MerckKGaA

Merck KGaA (Merck KGaAand/or affiliates) and VWR have entered into various transactions andagreements in the ordinary course of business. Prior to the entering intoagreements with Merck KGaA, VWR and Merck KGaA conducted business with eachother in a manner that was not materially different than those described below.In connection with the Acquisition, the Company entered into new agreementswith Merck KGaA that are described below. The following summarizes significanttransactions between VWR and Merck KGaA:

*Sales to Merck KGaA*

VWR sells products toMerck KGaA for which it is paid in the normal course of business.

*Purchases from Merck KGaA*

VWR purchases certain chemical products for resalefrom Merck KGaA for which it pays Merck KGaA in the normal course of business.VWR and Merck KGaA have entered into contracts that provide for VWR to be thedistributor of certain Merck KGaA products in certain countries. These twocontracts for North American and European territories expire on April 6,2009 and may be extended for an additional five-year term subject to theoccurrence of certain conditions.

In connection with theAcquisition, we also entered into other distribution agreements with MerckKGaA, including five-year distribution agreements with Merck KGaA to distributeits bioscience products in Europe and North America. In addition, we haveentered into a supply agreement with Merck KGaA, pursuant to which it agreed tocontinue to manufacture certain of our private label products for a period ofthree years from April 7, 2004, and thereafter to provide technicalassistance in transitioning their manufacture to other manufacturers. During2005, this supply agreement was extended through December 31, 2007.

*Logistics Services in Europe*

Under the terms ofan agreement that expires on December 31, 2007, Merck KGaA continues toprovide logistics services to certain of our subsidiaries. Unless earlierterminated following a notice period, such logistics service agreements will beautomatically renewed for an additional three years.

Systems/TechnologyServices

Prior to theAcquisition, we and Merck KGaA had historically performed certain informationtechnology functions for each other. In order to maintain continuous andefficient operations, effective as of April 7, 2004, we entered into aninformation services master agreement with Merck KGaA to maintain theserelationships following the Acquisition until such time as these services canbe obtained internally or from other sources. We and Merck KGaA have continuedto provide certain information technology services to each other consistentwith the arrangements in place prior to the Acquisition, including Merck KGaA’soperation and support of the main enterprise resource planning and business warehousesoftware and databases for our European companies. The information servicesmaster agreement has an initial five-

89

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued) December 31, 2006, 2005 and 2004  (Dollars in millions, except share data)**

year term and will expirein April 2009, although individual services may be terminated during thisterm following a notice period.

***OtherServices Provided by VWR and by Merck KGaA***

Certain subsidiaries of Merck KGaA and certain of oursubsidiaries have continued to lease or sublease from one another, or otherwiseshare, space in various offices and warehouses in Europe since the completionof the Acquisition. The terms of these leasing and subleasing arrangementsrange from less than one year to up to six or more years and are generally atmarket rents and conditions. Certain other existing contracts with Merck KGaAhave also remained in place since the Acquisition.

Thefollowing table summarized the transactions between VWR and Merck KGaA duringthe periods when VWR was a wholly-owned subsidiary of Merck KGaA:

| ** **                                                                                 | ** ** | **January 1–** | ** ** |
|--------------------------------------------------------------------------------------------|------------|--------------------------|------------|
| ** **                                                                                 | ** ** | **April 6,**        | ** ** |
| ** **                                                                                 | ** ** | **2004**                 | ** ** |
| Sales to Merck  KGaA, included in net sales                                                |       |                     | $          | 8.4 |   |   |
| Purchases from  Merck KGaA, included in cost of goods sold and inventory                   |       |                     | 80.7       |   |   |
| Services provided  by Merck KGaA, included in selling, general and administrative expenses |       |                     | 3.3        |   |   |
| Services provided to  Merck KGaA, included in selling, general and administrative expenses |       |                     | 1.5        |   |   |

 

Merck KGaA continues to be a significant supplier toVWR. Purchases from Merck KGaA, included in cost of goods sold and inventory,were approximately $283.3 for the year ended December 31, 2006, $288.7 forthe year ended December 31, 2005 and $204.9 for the period April 7,2004 to December 31, 2004.

90

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued)December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

***(b) Transactions with CD&R***

Underthe terms of a consulting agreement between the Company and CD&R dated April 7,2004 the Company paid CD&R $18.0 for transaction services rendered inconnection with the Acquisition. In addition, the consulting agreement includesan annual consulting fee of $1.5 for financial advisory and managementconsulting services and a provision that CD&R would be paid an additionalfee of $0.5 for any period CD&R provided the Company with an individual tobe our Chief Executive Officer. In accordance with this provision, we paid $0.3to CD&R in 2005. The consulting agreement terminates upon the earlier of (1) April 7,2014; (2) the date on which an investment fund managed by CD&R nolonger owns, directly or indirectly, any shares of common stock of the Companyor its successor company; or (3) upon thirty days written notice of eitherparty.

***(c) Services performed by Debevoise &Plimpton LLP***

TheCompany is provided legal services by Debevoise & Plimpton LLP. Asenior member of that law firm is related to an individual that was a formermember of our Board of Directors and a principal of CD&R. Total fees forservices rendered during 2006, 2005 and 2004 were approximately $0.6, $0.3 and$7.4, respectively.

***(d) Services performed by SIRVA, Inc.***

The Company is provided with product transportationand relocation services by SIRVA, Inc. (“SIRVA”). Three members of theCompany’s Board of Directors are also members of SIRVA’s Board of Directors.SIRVA is a related party because certain funds managed by CD&R, includingClayton, Dubilier & Rice Fund VI Limited Partnership that ownsapproximately 70% of CDRV’s outstanding common stock as of December 31,2006, have equity interests in SIRVA. Total expenses incurred with SIRVA during2006, 2005 and 2004 were approximately $1.7, $1.7 and $1.0, respectively.

In December 2006,the Company and John Ballbach, our President and Chief Executive Officer,entered into an agreement, under which SIRVA would purchase Mr. Ballbach’sformer house at its current fair market value of $1.0. As of December 31,2006, the Company recorded an other current asset and an accrued expense of$1.0 to SIRVA under this agreement.

** (18)   Segment and Geographical FinancialInformation**

VWR reports financial results on the basis of the followingthree business segments: North American laboratory distribution (“NorthAmerican Lab”), European laboratory distribution (“European Lab”), and ScienceEducation. Asia Pacific operations are embedded within the North American Laband European Lab segments. Both the North American Lab and European Labsegments are comprised of the distribution of supplies to customers in majorpharmaceutical, biotechnology, chemical, technology, food processing andconsumer products industries, as well as governmental agencies, universitiesand research institutes and environmental organizations. Science Education iscomprised of the manufacture and distribution of scientific supplies andspecialized kits principally to primary and secondary schools in North America.

91

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued)December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

The Company’s operating segments have been identifiedgiving consideration to both geographic areas and the nature of products amongbusinesses within its geographic area. North American Lab and European Lab areorganized as distinct operating segments primarily because of geographicdispersion and the inherent differences in business models. The North AmericanLab segment is highly standardized and operated as an integrated business,whereas the European Lab business is more fragmented and its customer marketsmore localized. The Science Education operating segment has been differentiatedfrom the North American Lab segment because of its unique and specializedproduct lines, concentration of customers in the educational sector and becauseit has higher gross margins. Operations within North America (excluding ScienceEducation) have been aggregated due to the similarity of economiccharacteristics, product lines, customers and distribution methods. Similarly,operations within the European Lab segment have been aggregated because ofcommon economic characteristics as well as the similarity among products,customers and distribution networks.

The Companyallocates its centralized management of corporate costs to its operatingsegments as follows:

·       Corporatecosts are allocated to its North American Lab and Science Education operatingsegments using allocation factors that management considers reasonable todistribute costs on the basis of usage.

·       Centralizedcosts related to the management of the European Lab operating segment areincurred within the segment structure and no inter-segment allocation isrequired.

Selected business segment financial information ispresented below. Inter-segment activity has been eliminated. Therefore,revenues reported for each operating segment are substantially all fromexternal customers.

92

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued)December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

 

| ** **                         | ** ** | **Successor**                                                                    | ** ** | **Predecessor**                                                                        | ** ** |
|------------------------------------|------------|----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------|------------|
| ** **                         | ** ** | ** **                                                                       | ** ** | ** **                                                                             | ** ** | **April 7–** | ** ** | **January 1–** | ** ** |
| ** **                         | ** ** | **Year Ended December 31,**                                       | ** ** | **December 31,**                                                                  | ** ** | **April 6,** | ** ** |
| ** **                         | ** ** | **      2006      ** | ** ** | **       2005      ** | ** ** | **2004** | ** ** | **2004** | ** ** |
| **Net Sales**                      |       |                                                                             |       |                                                                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| North American Lab                 |       |                                                                             | $          | 1,966.0                                                                                |       |   |   | $ | 1,902.4 |   |   |   | $ | 1,350.7 |   |   |   | $ | 486.5 |   |   |
| European Lab                       |       |                                                                             | 1,137.6    |                                                                                   |       |   | 1,089.8 |   |   |   | 752.3 |   |   |   | 283.0 |   |   |
| Science Education                  |       |                                                                             | 154.0      |                                                                                   |       |   | 146.0 |   |   |   | 109.2 |   |   |   | 23.7 |   |   |
| Total                              |       |                                                                             | $3,257.6   |                                                                                   |       |   | $ | 3,138.2 |   |   |   | $ | 2,212.2 |   |   |   | $ | 793.2 |   |   |
| **Operating  Income**              |       |                                                                             |       |                                                                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| North American Lab                 |       |                                                                             | $          | 112.3                                                                                  |       |   |   | $ | 91.1 |   |   |   | $ | 65.3 |   |   |   | $ | 28.5 |   |   |
| European Lab                       |       |                                                                             | 59.4       |                                                                                   |       |   | 38.1 |   |   |   | 24.1 |   |   |   | 13.1 |   |   |
| Science Education                  |       |                                                                             | 19.4       |                                                                                   |       |   | 14.0 |   |   |   | 14.7 |   |   |   | (0.1 | ) |   |
| Total                              |       |                                                                             | $          | 191.1                                                                                  |       |   |   | $ | 143.2 |   |   |   | $ | 104.1 |   |   |   | $ | 41.5 |   |   |
| **Capital  Expenditures**          |       |                                                                             |       |                                                                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| North American Lab                 |       |                                                                             | $          | 15.7                                                                                   |       |   |   | $ | 10.8 |   |   |   | $ | 6.5 |   |   |   | $ | 1.2 |   |   |
| European Lab                       |       |                                                                             | 5.8        |                                                                                   |       |   | 6.9 |   |   |   | 6.2 |   |   |   | 2.1 |   |   |
| Science Education                  |       |                                                                             | 2.1        |                                                                                   |       |   | 0.7 |   |   |   | 0.4 |   |   |   | — |   |   |
| Total                              |       |                                                                             | $          | 23.6                                                                                   |       |   |   | $ | 18.4 |   |   |   | $ | 13.1 |   |   |   | $ | 3.3 |   |   |
| **Depreciation  and Amortization** |       |                                                                             |       |                                                                                   |       |   |   |   |   |   |   |   |   |   |   |   |   |
| North American Lab                 |       |                                                                             | $          | 22.5                                                                                   |       |   |   | $ | 19.8 |   |   |   | $ | 15.4 |   |   |   | $ | 5.1 |   |   |
| European Lab                       |       |                                                                             | 17.3       |                                                                                   |       |   | 12.7 |   |   |   | 9.3 |   |   |   | 3.6 |   |   |
| Science Education                  |       |                                                                             | 1.6        |                                                                                   |       |   | 1.4 |   |   |   | 1.1 |   |   |   | 0.2 |   |   |
| Total                              |       |                                                                             | $          | 41.4                                                                                   |       |   |   | $ | 33.9 |   |   |   | $ | 25.8 |   |   |   | $ | 8.9 |   |   |

 

| ** **         | ** ** | **December 31,** | ** ** |
|--------------------|------------|-----------------------|------------|
| ** **         | ** ** | **2006**              | ** ** | **2005** | ** ** |
| **Assets**         |       |                  |       |   |   |
| North American Lab |       | $                     | 1,609.7    |   | $ | 1,672.0 |   |
| European Lab       |       | 833.2                 |       | 690.6 |   |
| Science Education  |       | 158.8                 |       | 165.9 |   |
| Total              |       | $                     | 2,601.7    |   | $ | 2,528.5 |   |

 

93

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**VWR INTERNATIONAL, INC.  Notes to Consolidated Financial Statements (Continued)December 31, 2006, 2005 and 2004 (Dollars in millions, except share data)**

Thefollowing is a reconciliation of reported operating income by segment to incomebefore income taxes and cumulative effect of a change in accounting principle: 

| ** **                                                                            | ** ** | **Successor**                                                                    | ** ** | **Predecessor**                                                                  | ** ** |
|---------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **                                                                            | ** ** | ** **                                                                       | ** ** | ** **                                                                       | ** ** | **April 7–** | ** ** | **January 1–** | ** ** |
| ** **                                                                            | ** ** | **Year Ended December 31,**                                       | ** ** | **December 31,**                                                            | ** ** | **April 6,** | ** ** |
| ** **                                                                            | ** ** | **      2006      ** | ** ** | **      2005      ** | ** ** | **2004** | ** ** | **2004** | ** ** |
| Operating income,  as reported                                                        |       |                                                                             |       |                                                                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| North American Lab                                                                    |       |                                                                             | $          | 112.3                                                                            |       |   |   | $ | 91.1 |   |   |   | $ | 65.3 |   |   |   | $ | 28.5 |   |   |
| European Lab                                                                          |       |                                                                             | 59.4       |                                                                             |       |   | 38.1 |   |   |   | 24.1 |   |   |   | 13.1 |   |   |
| Science Education                                                                     |       |                                                                             | 19.4       |                                                                             |       |   | 14.0 |   |   |   | 14.7 |   |   |   | (0.1 | ) |   |
| Total                                                                                 |       |                                                                             | 191.1      |                                                                             |       |   | 143.2 |   |   |   | 104.1 |   |   |   | 41.5 |   |   |
| Interest income                                                                       |       |                                                                             | (6.7       | )                                                                                |       |   | (2.7 | ) |   |   | (0.8 | ) |   |   | (0.2 | ) |   |
| Interest expense                                                                      |       |                                                                             | 83.3       |                                                                             |       |   | 77.0 |   |   |   | 51.5 |   |   |   | 5.8 |   |   |
| Other expense  (income), net                                                          |       |                                                                             | 1.5        |                                                                             |       |   | (3.9 | ) |   |   | (2.0 | ) |   |   | 0.1 |   |   |
| Income before  income taxes and cumulative effect of a change in accounting principle |       |                                                                             | $113.0     |                                                                             |       |   | $  | 72.8 |   |   |   | $  | 55.4 |   |   |   | $  | 35.8 |   |   |
|                                                                                       |            |                                                                                  |            |                                                                                  |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

Netsales, long-lived assets and total assets by geographic area are as follows: 

| ** **     | ** ** | **Successor**                                                                    | ** ** | **Predecessor**                                                                  | ** ** |
|----------------|------------|----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **     | ** ** | ** **                                                                       | ** ** | ** **                                                                       | ** ** | **April 7–** | ** ** | **January 1–** | ** ** |
| ** **     | ** ** | **Year Ended December 31,**                                       | ** ** | **December 31,**                                                            | ** ** | **April 6,** | ** ** |
| ** **     | ** ** | **      2006      ** | ** ** | **      2005      ** | ** ** | **2004** | ** ** | **2004** | ** ** |
| **Net  Sales** |       |                                                                             |       |                                                                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| United States  |       |                                                                             | $          | 1,871.7                                                                          |       |   |   | $ | 1,813.1 |   |   |   | $ | 1,322.6 |   |   |   | $ | 456.5 |   |   |
| International  |       |                                                                             | 1,385.9    |                                                                             |       |   | 1,325.1 |   |   |   | 889.6 |   |   |   | 336.7 |   |   |
| Total          |       |                                                                             | $          | 3,257.6                                                                          |       |   |   | $ | 3,138.2 |   |   |   | $ | 2,212.2 |   |   |   | $ | 793.2 |   |   |

 

| ** **            | ** ** | **December 31,** | ** ** |
|-----------------------|------------|-----------------------|------------|
| ** **            | ** ** | **2006**              | ** ** | **2005** | ** ** |
| **Long-lived Assets** |       |                  |       |   |   |
| United States         |       | $                     | 1,049.2    |   | $ | 1,067.3 |   |
| International         |       | 644.5                 |       | 612.7 |   |
| Total                 |       | $                     | 1,693.7    |   | $ | 1,680.0 |   |
| **Assets**            |       |                  |       |   |   |
| United States         |       | $                     | 1,497.8    |   | $ | 1,530.5 |   |
| International         |       | 1,103.9               |       | 998.0 |   |
| Total                 |       | $                     | 2,601.7    |   | $ | 2,528.5 |   |

 

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued)December 31, 2006, 2005 and 2004(Dollars in millions, except share data)**

**(19) Unaudited QuarterlyFinancial Information**

| ** **                                                                            | ** ** | **2006**  | ** ** |
|---------------------------------------------------------------------------------------|------------|-----------|------------|
| ** **                                                                            | ** ** | **First** | ** ** | **Second** | ** ** | **Third** | ** ** | **Fourth(1)** | ** ** |
| Net sales                                                                             |       | $         | 795.8      |   | $ | 815.0 |   | $ | 817.6 |   |   | $ | 829.2 |   |   |
| Gross profit                                                                          |       | 214.4     |       | 219.1 |   | 223.6 |   |   | 226.2 |   |   |
| Operating  income(3)                                                                  |       | 46.1      |       | 45.6 |   | 54.7 |   |   | 44.7 |   |   |
| Interest expense,  net                                                                |       | 19.4      |       | 18.8 |   | 19.5 |   |   | 18.9 |   |   |
| Other expense  (income), net                                                          |       | 0.8       |       | (0.4 | ) | (0.1 | ) |   | 1.2 |   |   |
| Income before  income taxes and cumulative effect of a change in accounting principle |       | 25.9      |       | 27.2 |   | 35.3 |   |   | 24.6 |   |   |
| Net income                                                                            |       | 16.1      |       | 18.3 |   | 21.4 |   |   | 12.9 |   |   |
|                                                                                       |            |           |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

| ** **                                                                            | ** ** | **2005**  | ** ** |
|---------------------------------------------------------------------------------------|------------|-----------|------------|
| ** **                                                                            | ** ** | **First** | ** ** | **Second** | ** ** | **Third** | ** ** | **Fourth(2)** | ** ** |
| Net sales                                                                             |       | $         | 754.1      |   | $ | 794.8 |   | $ | 812.0 |   |   | $ | 777.3 |   |   |
| Gross profit                                                                          |       | 192.7     |       | 200.8 |   | 209.6 |   |   | 200.6 |   |   |
| Operating income                                                                      |       | 25.1      |       | 32.7 |   | 47.3 |   |   | 38.1 |   |   |
| Interest expense,  net                                                                |       | 17.8      |       | 18.4 |   | 18.7 |   |   | 19.4 |   |   |
| Other expense  (income), net                                                          |       | (1.0      | )          | (0.9 | ) | (1.3 | ) |   | (0.7 | ) |   |
| Income before  income taxes and cumulative effect of a change in accounting principle |       | 8.3       |       | 15.2 |   | 29.9 |   |   | 19.4 |   |   |
| Cumulative effect  of a change in accounting principle                                |       | —    |       | — |   | — |   |   | (0.5 | ) |   |
| Net income                                                                            |       | 5.1       |       | 9.2 |   | 17.6 |   |   | 9.4 |   |   |
|                                                                                       |            |           |            |  |  |  |  |  |  |  |  |  |  |  |  |

----

(1)          Operating income in thefourth quarter of 2006 includes net charges of $5.8 primarily to correctaccounting errors related to the accounting for fixed assets as well as variousaccounting errors related to one of our European subsidiaries. Depreciationexpense and loss on disposal of assets were increased by $6.0 and $0.4,respectively, due to accounting errors related to fixed assets acquired as partof the Acquisition, and selling, general and administrative expense wasdecreased by $2.4 due to the inadvertent expensing of certain portable assetssince the Acquisition. Additionally, $1.7 of accounting errors related to oneof our foreign subsidiaries were identified and corrected in connection withthe conversion to a new accounting system during the fourth quarter of 2006,which resulted in increases to cost of goods sold; selling, general andadministrative expenses; and other expense (income), net of $0.9, $0.2, and$0.6, respectively.

                           The effectof the adjustments on the cumulative results of operations were charges of $2.4for the period from the Acquisition through December 31, 2005. Theremaining charge of $3.4 would have (decreased)/increased the first, second andthird quarter 2006 results by ($2.3), ($3.1), and $2.0, respectively. Managementdoes not believe the errors are material to the current annual or previouslyreported annual and interim periods.

                           Operatingincome in the fourth quarter of 2006 also includes a reduction in 2006 accruedbonuses of approximately $2.5 resulting from a change in accounting estimate.

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**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued)December 31, 2006, 2005 and 2004(Dollars in millions, except share data)**

(2)          Operating income in thefourth quarter of 2005 includes a reduction in 2005 accrued bonuses ofapproximately $4.1 and a charge of $1.7 to write-off deferred costs associatedwith the termination of a customer contract by the Company during the quarter.

(3)          Operating incomeincludes stock-based compensation expense related to our adoption of SFAS 123Rof $0.4, $1.8, $0.4 and $2.0 for the first, second, third and fourth quartersof 2006, respectively.

**(20) Subsequent Events**

On March 12, 2007, we announced that investmentbanks Goldman Sachs & Co. and Banc of America Securities LLChave been retained to explore strategic options for us.

During March 2007, we agreed to acquire the remaining76% interest in KMF, an equity affiliate of the Company, effective April 1,2007. KMF is a German-based scientific laboratory supply distribution firm thatoffers highly diversified chemicals and consumable products to the laboratoryindustry in Germany. The purchase price, including the assumption of debt, isapproximately $21.0 and will be funded from our operating cash flows.

 

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**ITEM9.**                CHANGES IN ANDDISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

**ITEM9A.**        CONTROLS AND PROCEDURES

*Management’s Evaluation of Disclosure Controls andProcedures*

The Company’s management,with the participation of the Company’s Chief Executive Officer and ChiefFinancial Officer, evaluated the effectiveness of the Company’s disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and15d-15(e)) as of December 31, 2006. Based on this evaluation, theCompany’s Chief Executive Officer and Chief Financial Officer concluded that,as of December 31, 2006, the Company’s disclosure controls and procedureswere effective in providing reasonable assurance that information required tobe disclosed by the Company in the reports that it files or submits under theExchange Act is recorded, processed, summarized, reported and accumulated andcommunicated to the Company’s management, including its Chief Executive Officerand Chief Financial Officer, as appropriate to allow timely decisions regardingrequired disclosure.

*Management’s Annual Report on Internal Control OverFinancial Reporting*

The Company’s management,including the Company’s Chief Executive Officer and Chief Financial Officer, isresponsible for establishing and maintaining adequate internal control overfinancial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the Company. Internal control over financial reporting isa process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles. TheCompany’s management conducted an assessment of the effectiveness of theCompany’s internal control over financial reporting as of December 31,2006 based on criteria established in *InternalControl - Integrated Framework* issued by the Committee of SponsoringOrganizations of the Treadway Commission. Based on this assessment, the Company’smanagement concluded that, as of December 31, 2006, the Company’s internalcontrol over financial reporting was effective.

The Company’s independentregistered public accounting firm, KPMG LLP, has audited the effectiveness ofthe Company’s internal control over financial reporting and management’sassessment of the effectiveness of the Company’s internal control overfinancial reporting as of December 31, 2006, as stated in their reportbelow.

*Changes in Internal Control over Financial Reporting*

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) duringthe fiscal quarter ended December 31, 2006, that have materially affectedor are reasonably likely to materially affect the Company’s internal controlover financial reporting.

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*Report ofIndependent Registered Public Accounting Firm*

The Board of Directors and StockholdersVWR International, Inc.:

We have auditedmanagement’s assessment, included in the accompanying annual report on internal control over financial reporting*,*that VWR International, Inc.and subsidiaries maintained effective internal control over financial reportingas of December 31, 2006, based on criteriaestablished in *Internal Control—IntegratedFramework*issued by the Committee of Sponsoring Organizations of theTreadway Commission (COSO)*.*VWRInternational, Inc.’s management is responsible for maintaining effectiveinternal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting. Our responsibilityis to express an opinion on management’s assessment and an opinion on theeffectiveness of the Company’s internal control over financial reporting basedon our audit.

We conducted our audit in accordance with thestandards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting wasmaintained in all material respects. Our audit included obtaining anunderstanding of internal control over financial reporting, evaluatingmanagement’s assessment, testing and evaluating the design and operatingeffectiveness of internal control, and performing such other procedures as weconsidered necessary in the circumstances. We believe that our audit provides areasonable basis for our opinion.

A company’s internal control over financial reportingis a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles. A company’sinternal control over financial reporting includes those policies andprocedures that (1) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accountingprinciples, and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of thecompany’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal controlover financial reporting may not prevent or detect misstatements. Also,projections of any evaluation of effectiveness to future periods are subject tothe risk that controls may become inadequate because of changes in conditions,or that the degree of compliance with the policies or procedures maydeteriorate.

In our opinion, management’s assessment that VWRInternational, Inc. maintained effective internal control over financialreporting as of December 31, 2006, is fairly stated, in all materialrespects, based on criteriaestablished in *Internal Control—IntegratedFramework* issued by the Committee of Sponsoring Organizations of theTreadway Commission (COSO)*.*Also,in our opinion, VWR International, Inc. maintained, in all materialrespects, effective internal control over financial reporting as of December 31,2006, based on criteriaestablished in *Internal Control—IntegratedFramework*issued by the Committee of Sponsoring Organizations of the TreadwayCommission (COSO)*.*

We also have audited, in accordance with the standardsof the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of VWRInternational, Inc. andsubsidiaries (Successor) as of December 31, 2006 and 2005, and therelated consolidated statementsof operations, stockholders’ equity and other comprehensive income, and cashflows for the years ended December 31, 2006 and 2005 and for the period April 7,2004 to December 31, 2004 (Successor periods) and from January 1,2004 to April 6, 2004 (Predecessor period), and our report dated March 30, 2007**expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Philadelphia, PennsylvaniaMarch 30, 2007

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**ITEM9B.**       OTHER INFORMATION

None.

**PART III**

**ITEM 10.**         DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

**Directors andExecutive Officers**

The following chart sets forth certain informationregarding our directors and executive officers:
| Name                         | ** ** | ** ** | ** ** | **Age**                                                                                       | ** ** | **Position** |
|------------------------------|------------|------------|------------|-----------------------------------------------------------------------------------------------|------------|--------------|
| John M. Ballbach             |       | 46         |       | President, Chief  Executive Officer and Director                                              |
| Jack L. Wyszomierski         |       | 51         |       | Executive Vice President  and Chief Financial Officer                                         |
| Matthew Malenfant            |       | 45         |       | Senior Vice President  and President of North America, Lab Distribution and Services          |
| Manuel Brocke-Benz           |       | 48         |       | Senior Vice  President & Managing Director of Europe, Lab Distribution and  Services |
| George Van Kula              |       | 43         |       | Senior Vice President,  General Counsel and Secretary                                         |
| Charles F. Canfield          |       | 57         |       | Senior Vice President,  Human Resources                                                       |
| Theodore C. Pulkownik        |       | 49         |       | Senior Vice President,  Corporate Development, Asia/Pacific and Export                        |
| Kevin P. Leak                |       | 47         |       | Senior Vice President,  Category Management, Marketing and Supply Chain Management            |
| Jon Michael Colyer           |       | 33         |       | Vice President and  General Manager of Science Education                                      |
| Gregory L. Cowan             |       | 53         |       | Vice President and  Corporate Controller                                                      |
| B. Charles Ames              |       | 81         |       | Director                                                                                      |
| Charles A. Banks             |       | 66         |       | Chairman                                                                                      |
| Robert L. Barchi             |       | 60         |       | Director                                                                                      |
| Alan W. Dunton               |       | 52         |       | Director                                                                                      |
| Joseph F.  Eckroth, Jr. |       | 48         |       | Director                                                                                      |
| Lewis S. Edelheit            |       | 64         |       | Director                                                                                      |
| George K. Jaquette           |       | 32         |       | Director                                                                                      |
| Brian P. Kelley              |       | 46         |       | Director                                                                                      |
| Richard J. Schnall           |       | 37         |       | Director                                                                                      |
| Carl T. Stocker              |       | 63         |       | Director                                                                                      |
| Robert J. Zollars            |       | 49         |       | Director                                                                                      |

 

Each of our directors will hold office until our nextannual meeting or until a successor is elected or appointed. None of ourexecutive officers or directors has any familial relationship with any otherdirector or executive officer. “Familial relationship” for the purposes of thissection means any relationship by blood, marriage or adoption, not more remotethan first cousin.

*John M. Ballbach* is our President and Chief Executive Officer, aswell as one of our directors, positions he has held since November 2005.Before joining us, Mr. Ballbach was a private investor since April 2004,and President of Ballbach Consulting LLC since June 2004. Prior to that,he was an officer of The Valspar Corporation, a global coatings and paintmanufacturer and distributor, and served as its President and Chief OperatingOfficer from 2002 until January 2004. From 2000 to 2002, Mr. Ballbachserved as the Senior Vice President of EPS, Color Corporation and Operations,of The Valspar Corporation. Mr. Ballbach joined the Valspar Corporation in1990 and had been its group Vice President, Packaging, since 1998. Mr. Ballbachholds a Bachelor of Arts from Georgetown College and a Masters of BusinessAdministration from the Harvard Business School.

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*Jack L. Wyszomierski* is our Executive Vice President and Chief FinancialOfficer, a position he has held since June 2004. Prior to joining us in2004, Mr. Wyszomierski spent over 20 years at Schering-Plough Corporation,a corporation that develops and markets prescription drugs, animal healthproducts, over-the-counter drugs and personal care products. Mr. Wyszomierskiheld a variety of positions at Schering-Plough, most recently serving asExecutive Vice President and Chief Financial Officer from 1996 until 2003. Mr. Wyszomierskiis a member of the Board of Directors and the Chairman of the Audit Committeeof Exelixis, Inc. Mr. Wyszomierski holds a Bachelor of Science and aMasters of Science from Carnegie Mellon University.

*Matthew Malenfant* is our Senior Vice President, and President of NorthAmerica, Lab Distribution and Services, a position he has held since January 2006.Mr. Malenfant joined us in 1995 when we acquired Baxter International’sindustrial distribution business, which was the successor to American HospitalSupply Corporation. Prior to assuming his present position with us, Mr. Malenfantserved as our Senior Vice President of Sales for the Eastern Zone from 1997 to1999, as our Senior Vice President Marketing and Global Sourcing from 1999 to2004, as our Senior Vice President Global Marketing from 2004 to 2005, and asour Senior Vice President, Supplier Management and Services during 2005. Mr. Malenfantgraduated from Arizona State University in 1985 with a Bachelor of Arts inMarketing and a Bachelor of Science in Communication.

*Manuel Brocke-Benz* is our Senior Vice President & ManagingDirector of Europe, Lab Distribution and Services, a position he has held sinceJanuary 2006. Mr. Brocke-Benz joined the company in 1987. Prior toassuming his present position, Mr. Brocke-Benz served as our Senior VicePresident and General Manager Continental Europe from 2003 to 2005 and as ourCorporate Senior Vice President Process Excellence from 2001 to 2003. Duringthe years 1996 to 2001 he served as General Manager Benelux countries, VPEuropean Key Accounts, VP European Marketing and Corporate Senior VP GlobalE-business. Mr. Brocke-Benz holds a law degree from Albert-LudwigsUniversity in Freiburg, Germany.

*George Van Kula*is our Senior Vice President, General Counsel andSecretary, a position he has held since May 2006. Prior to joining us in2006, Mr. Van Kula worked for Honeywell International Inc., where he spentapproximately ten years and most recently was Vice President and GeneralCounsel, Europe, Middle East and Africa, based in Brussels, Belgium. Prior toHoneywell, Mr. Van Kula began his legal career with Latham &Watkins in the Los Angeles and London offices. Mr. Van Kula received hislaw degree from the University of Michigan Law School and has a Bachelor ofArts degree from the University of Notre Dame.

*Charles F. Canfield* is our Senior Vice President, Human Resources, aposition he has held since July 2004. Prior to joining us in 2004, Mr. Canfieldwas the Senior Vice President, Human Resources and Communications, of the OndeoNalco Company from 2001 until 2003. Before joining Ondeo Nalco, Mr. Canfieldhad a long tenure with Moore Corporation Limited, a company specializing in themanufacture of business forms. Mr. Canfield began his career at Moore in1973, most recently serving as the President of Moore’s Canadian operatingdivision from 1997 until 1998, and as Moore’s Vice President, Corporate HumanResources and Communications, from 1988 until 1997 and from 1998 until 2001. Mr. Canfieldholds a Bachelor of Science from California State University and a Masters ofBusiness Administration from the University of Toronto.

*Theodore C. Pulkownik* is our Senior Vice President, Corporate Development,Asia/Pacific and Export, a position he has held since July 2004. Prior tojoining us in 2004, Mr. Pulkownik held two positions with Standard &Poors, which is a division of the McGraw-Hill Companies. From 2002 until 2004, Mr. Pulkownikwas a Managing Director of Standard & Poors Corporate ValueConsulting, and from 2000 to 2002, Mr. Pulkownik was the Senior VicePresident, Business Development, for Standard & Poors. Before joiningStandard & Poors, Mr. Pulkownik was a Senior Vice President forHolberg Industries, a diversified private holding company located in Greenwich,Connecticut, from 1999 until 2000. From 1997 

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*until1999, Mr. Pulkownik was a Managing Director, Corporate Business andDevelopment, for General Electric Capital Corporation. Prior to GE, Mr. Pulkownikspent five years at McKinsey and Co. and nine years at Procter and Gamble. Mr. Pulkownikholds a Bachelor of Business Administration from the University of Wisconsinand a Masters of Business Administration from the University of Michigan.*

*Kevin P. Leak* is our Senior Vice President, Category Management,Marketing and Supply Chain Management, a position he has held since January 2006.Mr. Leak joined us in 1995 when we acquired Baxter International’sindustrial distribution business. Prior to assuming his current position, Mr. Leakserved as our Vice President of Global Strategic Sourcing & SupplyChain Management from 2004 to 2005, the North America Vice President ofMarketing from 2000 to 2004, and Vice President of Marketing for our ProductionSupplies & Services business from 1998 to 2000. Mr. Leak is aformer United States Army officer where he held several positions in bothcommand and staff. He is a graduate of Pace University with a Bachelor ofBusiness Administration in Management and Masters of Business Administration inMarketing.

*Jon Michael Colyer* is our Vice President and General Manager of ScienceEducation, a position he has held since May 2005. Mr. Colyer joinedus in 2004 as our Vice President North American Call Centers. Prior to joiningus, Mr. Colyer worked for Textron, a large industrial conglomerate, as theDirector for Enterprise Excellence and Director of Bell Helicopter’s CompositeManufacturing facility. Prior to Textron, Mr. Colyer spent five years withGE in various roles including Six Sigma Black Belt, E-commerce Program Manager,and Leadership Development Program Member. Mr. Colyer graduated from theUniversity at Buffalo in 1996 with a Bachelor of Science in Civil Engineeringand Masters of Business Administration in Corporate Finance.

*Gregory L. Cowan* is our Vice President andCorporate Controller, a position he has held since December 2004. Prior tojoining us, Mr. Cowan spentapproximately five years at CDI Corporation in various senior financialpositions and most recently as Senior Vice President and Chief AccountingOfficer. Prior to CDI Corporation, Mr. Cowan was Vice President ofInternal Audit at Crown Cork and Seal Company Inc. for approximately six yearsand a senior manager at PricewaterhouseCoopers LLC, where he served in variousaudit capacities for eleven years. Mr. Cowan graduated from RutgersUniversity with a degree in Accounting. Mr. Cowan is also a CertifiedPublic Accountant.

*B. Charles Ames* is one of our directors, a position he has heldsince the Acquisition. Mr. Ames is Vice Chairman and an operatingprincipal of CD&R. Prior to joining CD&R in 1987, Mr. Ames servedas Chairman and President and Chief Executive Officer of Reliance ElectricCompany, Chief Executive Officer of Acme Cleveland Corporation, and ChiefExecutive Officer and Chairman of The Uniroyal Goodrich Tire Company. Mr. Ames’family trust is a limited partner of CD&R Associates VI LimitedPartnership. Mr. Ames is a director and stockholder of CD&R InvestmentAssociates VI, Inc. He also serves on the Board of Directors of RemingtonArms Company, Inc. Mr. Ames holds a Ph.B. from Illinois WesleyanUniversity and a Masters of Business Administration from Harvard BusinessSchool.

*Charles A. Banks* is our Chairman, a position he has held since December 2006.Mr. Banks is an operating principal at CD&R. Prior to joiningCD&R, he served as Chief Executive Officer at Wolseley, the world’s largestspecialist trade distributor of plumbing and heating products to professionalcontractors and a leading supplier of building materials in North America, UKand Continental Europe. He was appointed to the Board of Directors of Wolseleyin 1992. Prior to Wolseley, Mr. Banks held a number of executive positionsat Ferguson Enterprises, a subsidiary of Wolseley and a distributor of plumbingsupplies, pipes, valves and fittings and a distributor of heating and coolingequipment in the U.S. Mr. Banks is a member of the Board of Directors ofBunzl plc, a worldwide distribution company, and of Townebank Peninsula,formerly Harbor Bank. Mr. Banks also sits on the College of William andMary Board of Visitors and is a member of the Board of Regents, HarrisManchester College, Oxford 

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*University.He graduated from Brown University, after which he spent two years in the U.S.Navy on active duty attaining the rank of Lieutenant JG.*

*Robert L. Barchi*is one of our directors, a position he has heldsince May 2006. Dr. Barchi is currently the President of ThomasJefferson University. Prior to coming to Thomas Jefferson University, Dr. Barchiwas the Provost of the University of Pennsylvania, having spent much of hisprior academic career in the University of Pennsylvania’s School of Medicine.As the Provost and Chief Academic Officer, Dr. Barchi was responsible forthe oversight of University of Pennsylvania’s twelve schools and its researchenterprise, academic policies and student activities. Dr. Barchi is adirector of Covance, Inc., a trustee of Ursinus College, and serves on theeditorial boards and numerous journals in the field of neuroscience andneurology. Dr. Barchi received Bachelor and Master of Science degrees fromGeorgetown University, as well as a Doctor of Philosophy degree and a Doctor ofMedicine degree, both from the University of Pennsylvania.

*Alan W. Dunton* is one of our directors, a position he has heldsince May 2006. Dr. Dunton has served as the Chief Executive Officerand a director of Panacos Pharmaceuticals, Inc., a biotechnology company,since January 2007. He also has been a principal consultant with Danerius,LLC, a healthcare consulting company, since January 2006. During 2006, Dr. Duntonserved as the non-executive chairman of the Board of Directors at ActivBiotics, Inc.,a privately held biopharmaceutical company. Previously, he held executivepositions as President and Chief Executive Officer of Metaphore Pharmaceuticals(from 2003 until 2005, when it merged with ActivBiotics), a privately heldpharmaceutical company that developed drugs for the treatment of pain,autoimmune disorders and inflammation, President and Chief Operating Officer ofEmisphere Technologies, Inc. (from January through December 2002),and President and Managing Director of the Janssen Research Foundation, aJohnson & Johnson company. Dr. Dunton is also a member of theBoard of Directors of Adams Respiratory Therapeutics, Inc., MediciNova, Inc.and Targacept, Inc. Dr. Dunton received his medical degree from theNew York University School of Medicine.

*Joseph F. Eckroth, Jr.*is one of our directors, a position he has held sinceNovember 9, 2004. Mr. Eckroth is the Executive Vice President andChief Operating Officer for New Century Financial Corporation. Prior to joiningNew Century, Mr. Eckroth served as the Chief Information Officer forMattel, Inc., a position he held from 2000 until 2005. Prior to joiningMattel, Inc., Mr. Eckroth served as an information technologyexecutive for the General Electric Company from 1996 until 2000, where he wasthe Chief Information Officer for GE Medical Systems and GE Industrial Systemsbusiness units. Prior to joining General Electric, Mr. Eckroth served in avariety of senior leadership positions for the Northrop Grumman Corporationfrom 1985 until 1996, most recently as Director of Information Systems andTechnology. Mr. Eckroth holds a Bachelor of Science from the University ofLa Verne and a Masters of Business Administration from Pepperdine UniversitySchool of Business and Management.

*Dr. Lewis S. Edelheit* is one of our directors, a position he has heldsince August 31, 2004. Dr. Edelheit retired from his position as theSenior Vice President, Corporate Research and Development, for the GeneralElectric Company in 2001. Dr. Edelheit began his long tenure at GeneralElectric as a physicist in the General Electric Research and Development Centerin 1969, and returned to General Electric in 1991 to head its research anddevelopment efforts after a stint as the President and Chief Executive Officerof Quantum Medical Systems from 1986 until 1991. Dr. Edelheit is a memberof the National Academy of Engineering, and a Fellow of the American PhysicalSociety. Dr. Edelheit serves as a director of Sonic Innovations, Inc.and Hubspan, Inc. Dr. Edelheit holds a Bachelor of Science, a Mastersof Science and a Ph.D. from the University of Illinois.

*George K. Jaquette*is one of our directors, a position he has held sinceDecember 2006. Mr. Jaquette is a professional employee of CD&R.Prior to joining CD&R, Mr. Jaquette worked in the Principal InvestmentArea and Investment Banking Division of Goldman, Sachs & Co. He alsoworked at K Capital 

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*Management,a multi-strategy investment firm. Mr. Jaquette holds a Bachelor of Sciencefrom Bucknell University and Masters of Business Administration from HarvardBusiness School.*

*Brian P. Kelley* is one of our directors, a position he has heldsince August 31, 2004. Mr. Kelley currently is the President andChief Executive Officer of SIRVA, Inc., a position he has held since 2002.He also currently serves as a director of SIRVA, Inc. Mr. Kelleyresigned in his capacity as an officer and director of SIRVA, Inc.effective April 1, 2007 to become President, Coca-Cola CompanyNon-Carbonated Beverages. Prior to joining SIRVA, Inc., Mr. Kelleywas an executive for the Ford Motor Company, serving as the President of Ford’sLincoln Mercury business from 2001 until 2002, and as Ford’s Vice President ofGlobal Consumer Services from 1999 until 2001. Prior to joining Ford, Mr. Kelleywas a senior executive for General Electric Company from 1994 until 1999. Mr. Kelleybegan his career at Procter & Gamble in 1983, where he was ultimatelyresponsible for some of the company’s most recognized brand names. Mr. Kelleyreceived a Bachelor of Arts in economics from The College of Holy Cross.

*Richard J. Schnall* is one of our directors, a position he has heldsince the Acquisition. Mr. Schnall is a financial principal of CD&R.Prior to joining CD&R in 1996, he worked in the Investment Banking divisionof Donaldson, Lufkin & Jenrette, Inc. and Smith Barney &Co. Mr. Schnall is a limited partner of CD&R Associates VI LimitedPartnership, and a director and stockholder of CD&R Investment AssociatesVI, Inc. He serves as a director of SIRVA, Inc and Sally BeautyHoldings. Mr. Schnall is a graduate of the Wharton School of Business atthe University of Pennsylvania and holds a Masters of Business Administrationfrom Harvard Business School.

*Carl T. Stocker* is one of our directors, a position he has heldsince August 31, 2004. Since 1997, Mr. Stocker has owned and managedhis own acquisition, investment and consulting company, CTS Enterprises, LLC.Prior to that time, Mr. Stocker served as the chief financial executive ofGeneral Electric’s Industrial Systems business from 1990 until 1996, andconcurrently served as chief information technology executive from 1992 until1996. Mr. Stocker was also a member of General Electric’s CorporateFinance and Information Technology Councils during these same periods, andserved as the senior integration leader for the Space Systems Division createdby General Electric’s acquisition and merger of RCA’s Aero Space Group. Mr. Stockeris a director of SIRVA, Inc. Mr. Stocker graduated from Wright StateUniversity in 1970 after serving with the U.S. Army.

*Robert J. Zollars*isone of our directors, a position he has held since August 31, 2004. Since July 2006,he has served as the President and Chief Executive Officer and a director ofWound Care Solutions, LLC, a private equity backed business serving the chronicwound care segment of healthcare. From 1999 until March of 2006, Mr. Zollarswas the Chairman and CEO of Neoforma, Inc., a healthcare technologycompany focusing on the supply chain. Prior to joining Neoforma, Mr. Zollarswas the EVP and Group President of Cardinal Health, Inc., from 1997 until1999, and was responsible for five of their wholly-owned subsidiaries. From1992 until 1996, Mr. Zollars was the President of the Hospital Supply andScientific Product distribution business at Baxter International. Mr. Zollarsserves as a director of For Health Technologies and Diamond Foods. Mr. Zollarsis the Chairman of the Center for Services Leadership at Arizona StateUniversity, and is a member of the Young Presidents Organization. Mr. Zollarsis a graduate of Arizona State University and holds a Masters of BusinessAdministration from John F. Kennedy University.

**Composition of ourBoard of Directors**

Our business and affairsare managed under the direction of our board of directors. Our board iscomposed of twelve directors, none of whom, with the exception of Mr. Ballbach,are executive officers of our company.

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**Audit Committee**

Our audit committeecurrently consists of Alan W. Dunton,Dr. Lewis S. Edelheit, George K.Jaquette Richard J. Schnall, and Carl T. Stocker. Our board of directorshas determined that Carl T. Stocker is the current audit committee financialexpert serving on the audit committee for purposes of the Securities andExchange Act of 1934. Mr. Stocker is an independent director within themeaning of the Securities and Exchange Act of 1934. Our audit committee hasresponsibility for, among other things, assisting our board of directors inmonitoring:

·       thequality of our financial reporting and other internal control processes,

·       thequality and integrity of our financial statements,

·       theindependent auditors’ qualifications and independence,

·       theperformance of our internal audit function and independent auditors, and

·       our compliance with legaland regulatory requirements and our Code of Ethics and Conduct.

**Code of Ethics**

The Company has adopted the VWRInternational, Inc. Code of Ethics and Conduct (the “Code”), a code ofethics as defined under Regulation S-K promulgated under the Securities Act of1933, that applies to all of the Company’s employees including the Company’sChief Executive Officer, Chief Financial Officer, Corporate Controller and allprofessionals in finance and finance-related departments. This Code isavailable on the Company’s website at *www.vwr.com* onthe About VWR portion of the site. The Company intends to satisfy itsdisclosure obligations under Item 10 of Form 8-K by postinginformation about amendments to, or waivers from, a provision of the Code thatapply to the Company’s Chief Executive Officer, Chief Financial Officer, andCorporate Controller on the Company’s website at the address above.

**ITEM 11.**         EXECUTIVE COMPENSATION

*CompensationDiscussion and Analysis*

**Overview**

We are an indirect, whollyowned subsidiary of CDRV Investors. CDRV Investors does not have its ownemployees, and the same individuals serve on both CDRV Investors’ and our Boardof Directors (and committees thereof) and senior management team. TheCompensation Committee of our Board of Directors (the “Committee”) has overallresponsibility for evaluating the Company’s compensation and benefit plans andensuring overall alignment to the Company’s compensation philosophy. Indeveloping the executive officer compensation program, the Committee works inconsultation with an outside consulting firm and with our Chief ExecutiveOfficer (other than with respect to his own compensation), and then submits itsrecommendations to the Board of Directors for approval.

**CompensationPhilosophy and Objectives**

We believe that the compensation program for ourexecutive officers should primarily reward the achievement of specific annual,long-term and strategic goals by the Company, and align executive officers’interests with those of the stockholders by providing opportunities to share inthe gains in equity value. Accordingly, a significant percentage of totalannual compensation has been allocated to performance-based cash incentivesbecause these are directly linked to the achievement of our business objectives.In addition, all of our executive officers have purchased stock in CDRVInvestors and have received grants of equity-based awards from CDRV Investors,thereby directly linking their interests with those of CDRV Investors’stockholders.

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Wereview and evaluate both performance and compensation at least annually toensure that the Company maintains its ability to attract and retain highlyqualified executive officers. As part of this evaluation process, we engage anoutside global human resources consulting firm to conduct an annual review ofthe compensation program for all executive officers. This firm provides us withrelevant market data, including information regarding the compensation programsimplemented by a peer group of companies for comparison purposes. In connectionwith our 2006 review of the compensation program, we considered the followingpeer group of companies:

| Agilent Technologies, Inc.            |   | Owens & Minor, Inc. |
|--------------------------------------------|--------|-----------------------------------|
| Amgen, Inc.                           |   | Patterson Companies Inc.          |
| Applied Industrial Technologies, Inc. |   | PSS World Medical Inc.            |
| Becton Dickinson & Co.            |   | Henry Schein, Inc                 |
| Cintas Corp.                               |   | Sigma-Aldrich Corp.               |
| Genentech, Inc.                       |   | Thermo Fisher Scientific Inc.     |
| Grainger (W.W.) Inc.                       |   | Waters Corp.                      |
| Hospira Inc.                               |   | Wesco International               |
| Omnicare, Inc.                        |   |                              |

 

We believe that these companies are an appropriatepeer group for comparison purposes because they have business models similar toours and/or they represent an appropriate cross-section of the industries inwhich we are engaged or serve (i.e., they include companies in the biotech,distribution, medical instrument, medical supply and pharmaceutical industries).We adjust the compensation information concerning these companies, asappropriate, to reflect the relative size of each company versus our size (interms of annual revenues), so that a proper comparison of compensation programscan be made.

When setting total compensation for each of theexecutive officers, the Committee reviews tally sheets that reflect theexecutive officer’s current compensation, including incentive compensation. Wetarget base salaries at or near the median, or 50th percentile, of our peer group because webelieve this strategy is necessary to retain our executives or, when necessary,attract a new executive. We set performance-based cash incentive compensationat or near the 75th percentile of our peer group because webelieve that a substantial piece of the overall annual cash compensation shouldbe dependent on meeting or exceeding the annual performance targets related tokey business objectives for that year.

The discussion belowprimarily addresses the compensation of the individuals who served as theCompany’s Chief Executive Officer and Chief Financial Officer during 2006, aswell as the other individuals included in the Summary Compensation Table (collectively,the “named executive officers”). However, the types of compensation andbenefits provided to the named executive officers are similar to those providedto other executive officers.

**Components ofCompensation**

For 2006, theprincipal components of compensation for the named executive officers were:

·       basesalary;

·       performance-basedcash incentive compensation;

·       aspecial bonus payment and a retention bonus plan that we instituted as a resultof CDRV Investors’ December 2006 recapitalization;

·       investmentopportunities and equity incentive compensation;

·       retirementand other benefits; and

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·       perquisites and other personalbenefits.

*Base Salary*

As is customary, weprovide a base salary to our named executive officers. In 2006, we reviewed thebase salaries of our named executive officers. During such review, we took intoaccount the following:

·       marketdata provided by our outside consulting firm;

·       theexecutive officer’s position and responsibilities;

·       internalreview of the executive officer’s compensation, both individually and relativeto other officers; and

·       individualperformance of the executive officer.

As a resultof such review, we established the annualized base salaries of our namedexecutive officers for 2006, in comparison to 2005, as follows:

| Name                                                                                        | ** ** | ** ** | ** ** | **Year** | ** ** | **Salary ($)** | ** ** |
|---------------------------------------------------------------------------------------------|------------|------------|------------|----------|------------|---------------------|------------|
| John M. Ballbach                                                                            |       |       |       |     |       |
| Director, President and Chief  Executive Officer(1)                                         |       | 2006       |       | $        | 650,000    |                |
|                                                                                             |       | 2005       |       | 650,000  |       |
| Jack L. Wyszomierski                                                                        |       |       |       |     |       |
| Executive Vice  President and Chief Financial Officer                                       |       | 2006       |       | 385,000  |       |
|                                                                                        |       | 2005       |       | 350,000  |       |
| George Van Kula                                                                             |       |       |       |     |       |
| Senior Vice President, General  Counsel and Secretary(2)                                    |       | 2006       |       | 325,000  |       |
|                                                                                             |       | 2005       |       | —   |       |
| Theodore C. Pulkownik                                                                       |       |       |       |     |       |
| Senior Vice  President, Corporate Development, Asia/Pacific & Export 101 |       | 2006       |       | 280,008  |       |
|                                                                                        |       | 2005       |       | 250,000  |       |
| Charles F. Canfield                                                                         |       |       |       |     |       |
| Senior Vice  President, Human Resources                                                     |       | 2006       |       | 280,000  |       |
|                                                                                        |       | 2005       |       | 250,000  |       |
|                                                                                             |            |            |            |          |            |                     |            |  |

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(1)          Mr. Ballbach joinedthe Company in his current position in November 2005.

(2)          Mr. Van Kula joinedthe Company in his current position in May 2006.

At its February 2007meeting, the Committee approved the following annualized base salaries for thenamed executive officers, effective September 1, 2007:  Mr. Ballbach - $750,000; Mr. Wyszomierski- $415,800; Mr. Van Kula - $344,500; Mr. Pulkownik - $299,600; and Mr. Canfield- $288,400.

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*Performance-Based Cash IncentiveCompensation*

The Company has established an annualperformance-based cash incentive compensation program referred to as theManagement Incentive Plan (the “MIP”). Under the MIP, performance targets,expressed as a percentage of base salary, are established for the participantsin February of each year. Payments under the MIP for a given year are thendetermined based on the achievement by the Company and the participants ofpredetermined performance measures.

For 2006, the namedexecutive officers’ target bonuses under the 2006 MIP, expressed as percentagesof their respective base salaries, were as follows:

| ** **             | ** ** | **% of Base** | ** ** |
|------------------------|------------|-------------------------|------------|
| **Name**               | ** ** | ** **              | ** ** | **Salary** | ** ** |
| John M. Ballbach       |       |                    | 100        | % |   |
| Jack L. Wyszomierski   |       |                    | 85         | % |   |
| George Van Kula        |       |                    | 75         | % |   |
| Theodore C.  Pulkownik |       |                    | 75         | % |   |
| Charles F. Canfield    |       |                    | 75         | % |   |
|                        |            |                         |            |  |  |  |  |

 

For 2006, eachnamed executive officer’s cash bonus award was based upon achievement of thefollowing factors or criteria:

(1)          An internal performance-basedmetric similar to EBITDA, based on our operating plan (“Internal EBITDA”). InternalEBITDA is a financial measure that is used by the Company’s senior managementto establish financial earnings targets in its annual operating plan, anddiffers from the term “EBITDA” as it is commonly used and also differs from “CreditAgreement EBITDA”. See “Item 7—Management’s Discussion and Analysis ofFinancial Condition and Results of Operations—Indebtedness” for a discussion ofCredit Agreement EBITDA. Internal EBITDA is generally calculated asconsolidated net income before consolidated net interest expense, consolidatedincome taxes, consolidated depreciation and amortization, and includesadjustments for certain non-recurring items and the impacts resulting fromchanges in accounting principles. In addition, Internal EBITDA is calculatedusing fixed foreign currency exchange rates, which generally are established asof the beginning of each year. In 2006, Internal EBITDA necessary to achieve100% of the potential payout attributable to this factor was $245 million.

(2)          Various working capitalmetrics, including days sales outstanding in accounts receivable, days sales ininventory and days payables outstanding.

(3)          Variousstrategic/cultural objectives, which include individual performance goals andthe Company’s compliance efforts to address the requirements ofSection 404 of the Sarbanes-Oxley Act prior to the mandatory compliancedate of December 31, 2007.

In 2006, each of these factors accounted for 70%, 15% and15%, respectively, of the total potential MIP award, and the Company wasrequired to achieve a minimum internal EBITDA of $207.7 million in order for apayment to be made with respect to any factor.

Based on the performance of the Company during 2006, ournamed executive officers earned the annual incentive cash compensationreflected in the column “Non-Equity Incentive Plan Compensation” of the SummaryCompensation Table.

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*Special Bonus and Retention BonusPlan*

In December 2006, CDRV Investors used the netproceeds from the sale of $350 million aggregate principal amount of its seniorfloating rate notes to pay a distribution to the holders of its common stock.Under the terms of the Stock Plan, this distribution requires an adjustment tothe exercise price or other terms of outstanding stock options to the extentnecessary or appropriate to reflect the distribution. Accordingly, the exerciseprice of all stock options outstanding under the Stock Plan was reduced, but,in consideration of applicable U.S. federal tax regulations, CDRV Investors wasnot able to reduce the exercise price of certain stock options to reflect thedistribution to the full extent provided under the Stock Plan. As a result, wemade cash payments of approximately $13.5 million to certain holders ofvested and unvested stock options, including certain of the named executiveofficers, to ensure that such holders maintained the same rights and benefitsunder such options after the distribution as they had before the distribution.Individual payments were equal to the difference, if any, between the per shareamount of the distribution and the amount by which the option exercise pricewould otherwise have been reduced. The payments made to the named executiveofficers as a result of the foregoing are reflected in the column “Bonus” ofthe Summary Compensation Table.

In December 2006, wealso adopted a Retention Bonus Plan (the “Retention Bonus Plan”) for certainexecutive officers and other employees who hold restricted stock units. Underthe Retention Bonus Plan, an aggregate payment of approximately $1.3 million isto be paid to holders of restricted stock units as of the date of adoption ofthe Retention Bonus Plan, including Messrs. Ballbach and Wyszomierski, ininstallments over approximately five years (subject to vesting). Amounts earnedby these named executive officers related to the Retention Bonus Plan in 2006are reflected in the column “Non-Equity Incentive Plan Compensation” of theSummary Compensation Table. See “Potential Payments Upon Termination or Changeof Control” for information regarding acceleration of vesting of thesepayments.

*Investment Opportunities and EquityIncentive Compensation*

*InvestmentOpportunities and related Option Grants under Stock Incentive Plan*

Shortly after the completion of the Acquisition in April 2004,CDRV Investors adopted the Stock Plan, pursuant to which CDRV Investors’ Boardof Directors may provide our executive officers or certain other key employees,including the named executive officers, with the opportunity to purchase sharesof CDRV Investors common stock. In March 2006, Mr. Ballbach purchased19,643 shares at a purchase price of $56 per share, and in September 2006,he purchased 4,201 shares at a purchase price of $119 per share. In June 2006,Mr. Van Kula purchased 6,670 shares at a purchase price of $75 per share. Therewere no other purchases of shares by named executive officers in 2006.

For each share of CDRVInvestors common stock purchased by a participant, CDRV Investors generally hasgranted such participant two options (three options in the case of Mr. Ballbach)to purchase additional shares of CDRV Investors common stock. The optionsgranted to the named executive officers in 2006 are shown on the Grants ofPlan-Based Awards Table. The options granted by CDRV Investors vest in equalinstallments over the first five years of the ten-year option term. See “PotentialPayments Upon Termination or Change of Control” for information regardingacceleration of vesting of stock options. Prior to the exercise of an option,the holder has no rights as a stockholder with respect to the shares subject tosuch option, including voting rights and the right to receive dividends ordividend equivalents. Although each executive officer is eligible to beprovided with an investment opportunity pursuant to the Stock Plan, any suchopportunity provided to any individual or the officers as a group is entirelyat the discretion of the CDRV Investors Board of Directors.

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*Restricted StockUnit Grants under Stock Plan*

From time to time, the CDRV Investors Board ofDirectors has granted to certain executive officers and other key employees,including certain of the named executive officers, restricted stock units underthe Stock Plan. No restricted stock units were granted to the named executiveofficers in 2006. The restricted stock units represent a future right toreceive shares of CDRV Investors common stock. The restricted stock unitsgranted by CDRV Investors vest in equal installments over the first fiveyears following the grant date. See “Potential Payments Upon Termination orChange of Control” for information regarding acceleration of vesting ofrestricted stock units. Prior to the issuance of shares represented by therestricted stock units, the holder has no rights as a stockholder with respectto such shares, including voting rights and the right to receive dividends ordividend equivalents. Although each executive officer is eligible to receiverestricted stock units, the granting of restricted stock units to anyindividual or the officers as a group is entirely at the discretion of the CDRVInvestors Board of Directors.

Although the investment opportunities and grants ofstock options and restricted stock units described above are not made to ourexecutive officers by us and are at the discretion of the CDRV Investors Boardof Directors, we consider these equity transactions and grants to be animportant part of our overall executive officer compensation program. The costsof these transactions are borne by us and are reflected in our financialstatements. Accordingly, we factor these transactions into our evaluation ofeach executive officer’s overall compensation when we are making executiveofficer compensation decisions.

We believe thatthese investment opportunities and grants encourage our executive officers tofocus on our short-term and long-term performance, thereby aligning theirinterests with the interests of the other CDRV Investors stockholders. Theinvestment opportunities provide an opportunity for executive officers andcertain designated key employees to increase their stake in the Company byputting their own financial resources “at risk” based on the performance of theCompany. In addition, by using a mix of long-term stock option and restrictedstock unit grants, the executive officers are encouraged to focus on sustainedincreases in the Company’s share value. Specifically, the granting of stockoptions and restricted stock units assists the Company to:

·       enhancethe link between the creation of stockholder value and long-term executiveincentive compensation;

·       providean opportunity for increased equity ownership by executives; and

·       maintain competitive levelsof total compensation.

*Retirement and Other Benefits*

*Defined BenefitPlan*

We sponsor a definedbenefit pension plan that was frozen on May 31, 2005. The pension plancovered substantially all of our full-time U.S. employees (except employeescovered by collective bargaining agreements who participate in independentlyoperated plans). Because the pension plan complies with ERISA and InternalRevenue Code maximum compensation and defined benefit limitations, certain ofthe annual retirement benefits will be paid pursuant to our SupplementalPension Plan. None of the named executive officers are entitled to benefitsunder these defined benefit plans. 

*Savings Plan*

We sponsor the VWRInternational, Inc. Retirement Savings 401(k) Plan (the “Savings Plan”),which is a tax-qualified retirement savings plan pursuant to which all U.S.based associates, including the named executive officers, are able tocontribute the lesser of up to 25% of their earnings or the limit prescribed bythe Internal Revenue Service to the Savings Plan on a before-tax basis. TheCompany will match 100% of 

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thefirst 4% of pay that is contributed to the Savings Plan, subject to earningslimitations under applicable federal income tax rules. In addition, we make asupplemental contribution of up to 2% of pay to all eligible participants,including named executive officers, if the Company meets certain internalperformance measures. This supplemental contribution also is subject toearnings limitations under applicable federal income tax rules. Allcontributions to the Savings Plan are fully-vested upon contribution. All ofour named executive officers were eligible for benefits under the Savings Plan.

*Perquisites and Other PersonalBenefits*

The Committee periodically reviews the levels ofperquisites and other personal benefits provided to executive officers. Currently,the perquisites and other benefits provided to executive officers primarilyinclude annual automobile allowances, financial planning assistance, relocationbenefits under our relocation policy and, in the case of Mr. Pulkownik, ahousing allowance and commuting reimbursements. In connection with Mr. Ballbach’srelocation, in December 2006, we agreed to an amendment to the terms ofhis employment agreement to require us to cause our provider of employeerelocation services to purchase his former house at its current fair marketvalue of $970,000. We agreed with the provider that the house would be resoldand any difference in the resale price would be our responsibility. Inrecognition of the decrease in the fair market value of the house since hiscommencement of employment in November 2005, we also agreed to pay Mr. Ballbacha special one-time bonus of $92,500.

Attributed costs of thepersonal benefits described above for the named executive officers for 2006,are included in the column “All Other Compensation” of the SummaryCompensation Table.

**Tax and AccountingConsiderations**

*Deductibility of ExecutiveCompensation*

We generally structure ourcompensation programs so that they are deductible for federal income taxpurposes.

*Accounting for Stock-BasedCompensation*

The expenses associated with the options andrestricted stock units issued by CDRV Investors to our executive officers andother key employees are reflected in our financial statements. Beginning on January 1,2006, the Company began accounting for these stock-based programs in accordancewith the requirements of SFAS 123R, which requires companies to recognize inthe income statement the grant date fair value of equity-based compensationissued to employees. We previously accounted for these awards using theintrinsic value method of APB 25. Under APB 25, we generally did not recognizecompensation expense for the options granted because the options had anexercise price equal to their fair value on the date of grant.

Executive compensation disclosed in the SummaryCompensation Table includes the full amount of the special bonus to the namedexecutive officers in connection with the CDRV Investors distribution in December 2006,which is more fully described under “Special Bonus and Retention Bonus Plan” andNote 15 under “Item 8—Financial Statements and Supplementary Data.” The fullamount of the distribution to Company employees, including the named executiveofficers, was $13.5 million of which $1.4 million was recorded as acompensation charge and $12.1 million was charged to additionalpaid-in-capital.

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*CompensationCommittee Report*

TheCommittee has reviewed and discussed the Compensation Discussion and Analysisrequired by Item 402(b) of Regulation S-K with management and, basedon such review and discussions, the Committee recommended to the full Board ofDirectors that the Compensation Discussion and Analysis be included in this Form 10-K.

|   | THE COMPENSATION COMMITTEE   |
|--------|------------------------------|
|   | B. Charles Ames              |
|   | Charles A. Banks             |
|   | Robert L. Barchi             |
|   | Joseph F.  Eckroth, Jr. |
|   | Brian P. Kelley              |
|   | Robert J. Zollars            |

 

*CompensationCommittee Interlocks and Insider Participation*

The Committee currentlyconsists of B. Charles Ames, Charles A. Banks, Robert L. Barchi, Joseph F.Eckroth, Jr., Brian P. Kelley and Robert J. Zollars. Messrs. Ames andBanks are affiliated with CD&R (and various of its affiliates) and are notindependent within the meaning of the Securities and Exchange Act of 1934. See “Item13—Certain Relationships and Related Transactions—Other Relationships” forcertain relationships involving Messrs. Barchi and Kelley.

*SummaryCompensation Table*

Thetable below summarizes the total compensation paid or earned by each of thenamed executive officers for 2006.

| ** **                                                                                             | ** ** | ** ** | ** ** | ** ** | ** ** | ** **   | ** ** | ** **    | ** ** | ** **     | ** ** | ** **          | ** ** | **Change in** | ** ** | ** **          | ** ** | ** ** | ** ** |
|--------------------------------------------------------------------------------------------------------|------------|------------|------------|------------|------------|--------------|------------|---------------|------------|----------------|------------|---------------------|------------|--------------------|------------|---------------------|------------|------------|------------|
| ** **                                                                                             | ** ** | ** ** | ** ** | ** ** | ** ** | ** **   | ** ** | ** **    | ** ** | ** **     | ** ** | ** **          | ** ** | **Pension**        | ** ** | ** **          | ** ** | ** ** | ** ** |
| ** **                                                                                             | ** ** | ** ** | ** ** | ** ** | ** ** | ** **   | ** ** | ** **    | ** ** | ** **     | ** ** | ** **          | ** ** | **Value**          | ** ** | ** **          | ** ** | ** ** | ** ** |
| ** **                                                                                             | ** ** | ** ** | ** ** | ** ** | ** ** | ** **   | ** ** | ** **    | ** ** | ** **     | ** ** | ** **          | ** ** | **and**            | ** ** | ** **          | ** ** | ** ** | ** ** |
| ** **                                                                                             | ** ** | ** ** | ** ** | ** ** | ** ** | ** **   | ** ** | ** **    | ** ** | ** **     | ** ** | **Non-Equity**      | ** ** | **Nonqualified**   | ** ** | ** **          | ** ** | ** ** | ** ** |
| ** **                                                                                             | ** ** | ** ** | ** ** | ** ** | ** ** | ** **   | ** ** | ** **    | ** ** | ** **     | ** ** | **Incentive**       | ** ** | **Deferred**       | ** ** | ** **          | ** ** | ** ** | ** ** |
| ** **                                                                                             | ** ** | ** ** | ** ** | ** ** | ** ** | ** **   | ** ** | **Stock**     | ** ** | **Option**     | ** ** | **Plan**            | ** ** | **Compensation**   | ** ** | **All Other**  | ** ** | ** ** | ** ** |
| ** **                                                                                             | ** ** | ** ** | ** ** | **Salary** | ** ** | **Bonus(2)** | ** ** | **Awards(3)** | ** ** | **Awards (4)** | ** ** | **Compensation(5)** | ** ** | **Earnings**       | ** ** | **Compensation(6)** | ** ** | **Total**  | ** ** |
| **Name**                                                                                               | ** ** | ** ** | ** ** | **Year**   | ** ** | **($)**      | ** ** | **($)**       | ** ** | **($)**        | ** ** | **($)**             | ** ** | **($)**            | ** ** | **($)**             | ** ** | **($)**    | ** ** | **($)** | ** ** |
| John M. Ballbach  Director, President and Chief Executive Officer                                      |       | 2006       |       | $          | 650,004    |         | $          | 1,651,191     |       | $              | 100,000    |                |       | $                  | 360,224    |                |       |       | $          | 548,096 |   |   |   | $ | — |   |   |   | $ | 173,476 |   |   | $ | 3,482,991 |   |
| Jack L. Wyszomierski  Executive Vice President and Chief Financial Officer                             |       | 2006       |       | 379,180    |       | 670,000      |       | 49,180        |       |           | 61,084     |                |       |               | 272,202    |                |       |       | —     |   |   |   | 25,032 |   |   | 1,456,678 |   |
| George Van Kula(1)  Senior Vice President, General Counsel and Secretary                               |       | 2006       |       | 210,594    |       | 586,960      |       | —        |       |           | 253,766    |                |       |               | 114,665    |                |       |       | —     |   |   |   | 162,986 |   |   | 1,328,971 |   |
| Theodore C.  Pulkownik Senior Vice President of Strategey, Corporate Development and  Emerging Markets |       | 2006       |       | 275,010    |       | 670,000      |       | —        |       |           | 61,084     |                |       |               | 148,886    |                |       |       | —     |   |   |   | 89,664 |   |   | 1,244,644 |   |
| Charles F.  Canfield Senior Vice President, Human Resources                                            |       | 2006       |       | 275,010    |       | 435,500      |       | —        |       |           | 39,704     |                |       |               | 148,886    |                |       |       | —     |   |   |   | 38,903 |   |   | 938,003 |   |
|                                                                                                        |            |            |            |            |            |              |            |               |            |                |            |                     |            |                    |            |                     |            |            |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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(1)             Mr. Van Kula joined the Company in his currentposition in May 2006.

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(2)          This column representsthe payments made in connection with the one-time payments made to holders ofstock options described in the Compensation Discussion and Analysis under “SpecialBonus and Retention Bonus Plan” and, in the cases of Messrs. Ballbach and VanKula, one-time bonus payments relating to option grants, as described below.

In connection with Mr. Ballbach’s purchase ofshares in March 2006, he was granted 58,929 options with an exercise priceof $75 per share, which exceeded the exercise price of $56 per share includedin Mr. Ballbach’s October 2005 employment agreement. Accordingly, theCompany paid Mr. Ballbach a one-time bonus of $1,119,651, reflecting thisincreased exercise price.

Pursuant to his March 2006employment agreement, Mr. Van Kula was granted the right to purchase 6,670shares and the right to acquire two options at an exercise price of $75 pershare for each share that he purchased. He purchased 6,670 shares in June 2006.The related options were not granted until September 2006, and they weregranted at an exercise price of $119 per share, which was the per share fairvalue at the time of this grant. Accordingly, the Company paid Mr. VanKula a one-time bonus of $586,960, reflecting this increased exercise price.

(3)          This column representsthe compensation cost recognized for financial statement reporting purposes in2006 for restricted stock units that vested during 2006. The value of each unitwas determined as of the grant date.

(4)          This column representsthe compensation cost recognized for financial statement reporting purposes in2006 for the fair value of stock options granted to each of the named executiveofficers, in accordance with SFAS 123R. Pursuant to SEC rules, the amountsshown exclude the impact of estimated forfeitures related to service-basedvesting conditions. These amounts reflect the Company’s accounting expense forthese awards and do not necessarily correspond to the actual value that may berecognized.

For accountingpurposes, Mr. Van Kula’s right to purchase 6,670 shares described in note (2) abovewas treated as an option. Accordingly, the Company recognized compensation costof $217,242 related to this option in accordance with SFAS 123R, and thiscompensation cost is included in the total for Mr. Van Kula.

(5)          This column representsamounts earned under the MIP and, in the cases of Messrs. Ballbach andWyszomierski, amounts earned under the Retention Bonus Plan of $79,151 and$39,569, respectively.

(6)          Thiscolumn represents the attributed costs to the Company of the perquisites andother personal benefits listed in the table below. The partial tax gross upreflected in the table below relates to the Company’s payment ofMr. Ballbach’s portion of the FICA tax associated with his purchase ofshares in March 2006 (and described in the Option Exercises and StockVested Table).

| ** ** | ** ** | **Relocation Benefits** | ** ** | ** **        | ** ** | ** **    | ** ** | **Company**   | ** ** | ** **         | ** ** | ** **     | ** ** |
|------------|------------|------------------------------|------------|-------------------|------------|---------------|------------|---------------|------------|--------------------|------------|----------------|------------|
| ** ** | ** ** | ** **                   | ** ** | ** **        | ** ** | ** **    | ** ** | ** **    | ** ** | **Financial**      | ** ** | **Annual**     | ** ** | **Contributions** | ** ** | **Partial** | ** ** | ** ** | ** ** |
| ** ** | ** ** | **Relocation**               | ** ** | **Reimbusement-** | ** ** | **Housing**   | ** ** | **Commuting** | ** ** | **Planning**       | ** ** | **Automobile** | ** ** | **to Savings** | ** ** | **Tax** | ** ** | ** ** | ** ** |
| **Name**   | ** ** | ** **                   | ** ** | **Expenses**      | ** ** | **Residence** | ** ** | **Allowance** | ** ** | **Reimbursements** | ** ** | **Assistance** | ** ** | **Allowance** | ** ** | **Plan** | ** ** | **Gross Up** | ** ** | **Total** | ** ** |
|            |            |                              |            |                   |            |               |            |               |            |                    |            |                |            |  |  |  |  |  |  |  |  |

| John M. Ballbach      |   |   | $       | 36,752 |   |   |   | $      | 92,500 |   |   |   | $      | — |   |   |   | $      | — |   |   |   | $      | 13,355 |   |   |   | $      | 14,032 |   |   |   | $      | 11,000  |   |   |   | $ | 5,837 |   |   | $ | 173,476 |   |
|-----------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|---|-------|--------|--------|---|---------|--------|
| Jack L. Wyszomierski  |   |   | —  |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 14,032 |   |   |   | 11,000 |   |   |   | — |   |   | 25,032  |   |
| George Van Kula       |   |   | 118,442 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 24,470 |   |   |   | 9,074  |   |   |   | 11,000 |   |   |   | — |   |   | 162,986 |   |
| Theodore C. Pulkownik |   |   | —  |   |   |   | — |   |   |   | 36,000 |   |   |   | 6,886  |   |   |   | 21,889 |   |   |   | 13,889 |   |   |   | 11,000 |   |   |   | — |   |   | 89,664  |   |
| Charles F.  Canfield  |   |   | —  |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 13,871 |   |   |   | 14,032 |   |   |   | 11,000 |   |   |   | — |   |   | 38,903  |   |

 

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*Grants ofPlan-Based Awards*

Thefollowing table provides information about equity and non-equity awards grantedto the named executive officers in 2006.

|            | ** ** | ** ** | ** ** | ** **                      | ** ** | ** **                       | ** ** | ** **         | ** ** | ** **         | ** ** | ** **        | ** ** | ** **         | ** ** | **All Other** | ** ** | **All Other** | ** ** | ** **   | ** ** | ** **         | ** ** |
|------------|------------|------------|------------|---------------------------------|------------|----------------------------------|------------|--------------------|------------|--------------------|------------|-------------------|------------|--------------------|------------|--------------------|------------|--------------------|------------|--------------|------------|--------------------|------------|
| ** ** | ** ** | ** ** | ** ** | ** **                      | ** ** | ** **                       | ** ** | ** **         | ** ** | ** **         | ** ** | ** **        | ** ** | ** **         | ** ** | **Stock**          | ** ** | **Option**         | ** ** | ** **   | ** ** | **Grant**          | ** ** |
| ** ** | ** ** | ** ** | ** ** | ** **                      | ** ** | ** **                       | ** ** | ** **         | ** ** | ** **         | ** ** | ** **        | ** ** | ** **         | ** ** | **Awards:**        | ** ** | **Awards:**        | ** ** | **Exercise** | ** ** | **Date Fair** | ** ** |
| ** ** | ** ** | ** ** | ** ** | **Estimated Future Payouts**    | ** ** | **Estimated Future Payouts**     | ** ** | **Number of** | ** ** | **Number of** | ** ** | **or Base**  | ** ** | **Value of**  | ** ** |
| ** ** | ** ** | ** ** | ** ** | **Under Non-Equity  Incentive** | ** ** | **Under Equity Incentive  Plan** | ** ** | **Shares of** | ** ** | **Securities**     | ** ** | **Price of** | ** ** | **Stock and** | ** ** |
| ** ** | ** ** | ** ** | ** ** | **Plan Awards(1)**              | ** ** | **Awards**                       | ** ** | **Stock or**  | ** ** | **Underlying**     | ** ** | **Option**        | ** ** | **Option**         | ** ** |
| ** ** | ** ** | **Grant**  | ** ** | **Threshold**                   | ** ** | **Target**                       | ** ** | **Maximum**        | ** ** | **Threshold**      | ** ** | **Target**        | ** ** | **Maximum**        | ** ** | **Units**          | ** ** | **Options**        | ** ** | **Awards**   | ** ** | **Awards**         | ** ** |
| **Name**   | ** ** | ** ** | ** ** | **Date**                        | ** ** | **($)**                          | ** ** | **($)**            | ** ** | **($)**            | ** ** | **(#)**           | ** ** | **(#)**            | ** ** | **(#)**            | ** ** | **(#)**            | ** ** | **(#)**      | ** ** | **($/sh)**         | ** ** | **($)** | ** ** |
|            |            |            |            |                                 |            |                                  |            |                    |            |                    |            |                   |            |                    |            |                    |            |                    |            |              |            |                    |            |  |  |

| John M. Ballbach      |   | 2/15/2006 |   |   | $       | — |   |    | $      | 650,004 |    |   | $      | 650,004 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | $      | —    |   |   |   | $ | — |   |   |
|-----------------------|--------|-----------|--------|--------|---------|--------|--------|---------|--------|---------|---------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|---|--------|--------|--------|
|                       |   | 12/7/2006 |   |   | 395,753 |   |   | 395,753 |   |    | 395,753 |   |   |    | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | —    |   |   |
|                       |   | 3/10/2006 |   |   | —  |   |   | —  |   |    | —  |   |   |    | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 58,929 |   |   |   | 75.00  |   |   |   | 1,980,604 |   |   |
|                       |   | 9/6/2006  |   |   | —  |   |   | —  |   |    | —  |   |   |    | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 12,603 |   |   |   | 119.00 |   |   |   | 661,027   |   |   |
| Jack L. Wyszomierski  |   | 2/15/2006 |   |   | —  |   |   | 322,303 |   |    | 322,303 |   |   |    | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | —    |   |   |
|                  |   | 12/7/2006 |   |   | 197,847 |   |   | 197,847 |   |    | 197,847 |   |   |    | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | —    |   |   |
| George Van Kula(2)    |   | 5/8/2006  |   |   | —  |   |   | 157,946 |   |    | 157,946 |   |   |    | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 6,670  |   |   |   | 75.00  |   |   |   | 217,242   |   |   |
|                       |   | 9/29/2006 |   |   | —  |   |   | —  |   |    | —  |   |   |    | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 13,340 |   |   |   | 119.00 |   |   |   | 693,947   |   |   |
| Theodore C. Pulkownik |   | 2/15/2006 |   |   | —  |   |   | 206,258 |   |    | 206,258 |   |   |    | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | —    |   |   |
| Charles F. Canfield   |   | 2/15/2006 |   |   | —  |   |   | 206,258 |   |    | 206,258 |   |   |    | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | —    |   |   |

----

(1)          These columns represent (i) thepotential payment under the MIP for 2006 performance, as set by the Committeeon February 15, 2006, and (ii) in the cases of Messrs. Ballbachand Wyszomierski, the total potential bonus relating to the grants made to themon December 7, 2006 under the Retention Bonus Plan. The potential paymentsunder the MIP are performance-driven and are completely at risk. The criteriaand factors and the MIP percentages of base salary are described in theCompensation Discussion and Analysis under “Performance-Based Cash IncentiveCompensation.”  Mr. Van Kula’s MIPamounts were pro-rated due to his May 8, 2006 employment commencementdate.

(2)          Pursuantto Mr. Van Kula’s employment agreement, he was granted the right to purchase6,670 shares at $75 per share, which for accounting purposes was treated as anoption, and is reflected in the table as an option. The fair value per share atthe time of this grant was $107.

*Outstanding EquityAwards at Fiscal Year-end*

The following table provides information on thecurrent holdings of stock options and restricted stock units by the namedexecutive officers. This table includes unexercised vested and unvested stockoptions and unvested restricted stock units. Each equity grant is shownseparately for each named executive officer. Each equity grant vests and, inthe case of stock options, becomes exercisable, ratably in five equal annualinstallments, beginning one year after the grant date. The market value of therestricted stock units is based on the fair value of CDRV Investors commonstock as of December 31, 2006 (as determined by the CDRV Investors Boardof Directors), which was $98.64. Additional information about the stock optionand restricted stock unit grants is provided in the Compensation Discussion andAnalysis under “Investment Opportunities and Equity Incentive Compensation.”

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| ** **                 | ** ** | ** ** | ** ** | **Option Awards**                                                                  | ** ** | **Stock Awards**                                                                     | ** ** |
|----------------------------|------------|------------|------------|------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------|------------|
| Name                       | ** ** | ** ** | ** ** | **Number of  Securities  Underlying  Unexercised  Options  (#)  Exercisable** | ** ** | **Number of  Securities  Underlying  Unexercised  Options  (#)  Unexercisable** | ** ** | **Equity  Incentive  Plan  Awards:  Number of  Securities  Underlying  Unexercised  Unearned  Options  (#)** | ** ** | **Option  Exercise  Price(1)  ($)** | ** ** | **Option  Expiration  Date** | ** ** | **Number  of Shares  or Units  of Stock  That Have  Not  Vested  (#)** | ** ** | **Market  Value of  Shares or  Units of  Stock That  Have Not  Vested  ($)** | ** ** | **Equity  Incentive  Plan  Awards:  Number of  Unearned  Shares,  Units or  Other  Rights That  Have Not  Vested  (#)** | ** ** | **Equity  Incentive  Plan  Awards:  Market or  Payout  Value of  Unearned  Shares,  Units or  Other  Rights That  Have Not  Vested  ($)** | ** ** |
| John M. Ballbach           |       |       | —     |                                                                               |       |                                                                                 | 58,929     |   |   |   | — |   |   |   | $ | 24.66 |   |   | 3/10/2016 |   |   | 5,334 |   |   |   | $ | 526,146 |   |   |   | — |   |   |   | $ | — |   |   |
|                            |       |       | —     |                                                                               |       |                                                                                 | 12,603     |   |   |   | — |   |   |   | 59.64 |   |   | 9/6/2016 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Jack L. Wyszomierski  |       |       | 8.000      |                                                                               |       |                                                                                 | 12,000     |   |   |   | — |   |   |   | 24.66 |   |   | 9/30/2014 |   |   | 2,667 |   |   |   | 263,073 |   |   |   | — |   |   |   | — |   |   |
| George Van Kula            |       |       | —     |                                                                               |       |                                                                                 | 13,340     |   |   |   | — |   |   |   | 59.64 |   |   | 6/27/2016 |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Theodore C. Pulkownik |       |       | 8,000      |                                                                               |       |                                                                                 | 12,000     |   |   |   | — |   |   |   | 24.66 |   |   | 9/30/2014 |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Charles F. Canfield   |       |       | 5,200      |                                                                               |       |                                                                                 | 7,800      |   |   |   | — |   |   |   | 24.66 |   |   | 9/30/2014 |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |

----

(1)             These exercise prices reflect thereductions to the exercise prices of outstanding stock options as a result ofthe December 2006 distribution to CDRV Investors common stock holdersdescribed in the Compensation Discussion and Analysis under “Special Bonus andRetention Bonus Plan.”

*Option Exercises and Stock Vested*

| ** **                  | ** ** | ** ** | ** ** | **Option Awards**                                           | ** ** | **Stock Awards**                         | ** ** |
|-----------------------------|------------|------------|------------|-------------------------------------------------------------|------------|------------------------------------------|------------|
| Name                        | ** ** | ** ** | ** ** | **Number of  Shares  Acquired on  Exercise  (#)** | ** ** | **Value  Realized  Upon  Exercise  ($)** | ** ** | **Number of  Shares  Acquired On  Vesting   (#)** | ** ** | **Value  Realized On  Vesting   ($)** | ** ** |
| John M. Ballbach(1)    |       |       | 19,643     |                                                        |       | $                                        | 373,217    |   |   | — |   |   |   | $ | — |   |   |
|                             |       |       | 4,201      |                                                        |       | —                                   |       |   | — |   |   |   | — |   |   |
| Jack L.  Wyszomierski  |       |       | —     |                                                        |       | —                                   |       |   | — |   |   |   | — |   |   |
| George Van Kula(2)          |       |       | 6,670      |                                                        |       | 213,440                                  |       |   | — |   |   |   | — |   |   |
| Theodore C.  Pulkownik |       |       | —     |                                                        |       | —                                   |       |   | — |   |   |   | — |   |   |
| Charles F. Canfield    |       |       | —     |                                                        |       | —                                   |       |   | — |   |   |   | — |   |   |
|                             |            |            |            |                                                             |            |                                          |            |  |  |  |  |  |  |  |  |  |  |  |  |

----

(1)          Pursuant to hisemployment agreement, Mr. Ballbach was granted the right to purchaseshares at $56 per share. Prior to his purchase of shares pursuant to thisright, Mr. Ballbach’s employment agreement was amended to require anypurchases after March 15, 2006 to be made at a per share purchase priceequal to fair value on the purchase date. On March 10, 2006, he purchased19,643 shares when the fair value per share was $75. In September 2006, Mr. Ballbachpurchased 4,201 shares at a purchase price equal to the fair value per share. Foraccounting purposes, his right to purchase these shares is considered anoption, and his purchases are reflected as exercises in the table.

(2)          Pursuantto his employment agreement, Mr. Van Kula was granted the right topurchase 6,670 shares at $75 per share. In June 2006, he purchased 6,670shares when the fair value per share was $107. For accounting purposes, hisright to purchase these shares is considered an option, and his purchase isreflected as an exercise in the table.

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*Potential PaymentsUpon Termination or Change of Control*

The following tables showpotential payments to each of the named executive officers under existingcontracts, agreements, plans or arrangements, whether written or unwritten, forvarious scenarios involving a change in control of CDRV Investors or atermination of employment of such officer, assuming a December 31, 2006 effectivedate of such change of control or termination.

**JOHNBALLBACH**

| **Executive  Payments upon  Termination**       | ** ** | **Voluntary  Termination** | ** ** | **Early  Retirement** | ** ** | **Normal  Retirement** | ** ** | **Involuntary  not for Cause  Termination** | ** ** | **Involuntary  for Cause  Termination** | ** ** | **Change  in  Control** | ** ** | **Death** | ** ** | **Disability** | ** ** |
|------------------------------------------------------|------------|----------------------------|------------|-----------------------|------------|------------------------|------------|-------------------------------------------------------|------------|----------------------------------------------|------------|-------------------------|------------|-----------|------------|----------------|------------|
| Severance Payments(1)                                |       |                       | $          | —                |       |                   |       | $                                                     | —     |                                         |       |                    | $          | —    |       |           |       | $ | 975,000 |   |   |   | $ | — |   |   | $ | — |   | $ | — |   | $ | — |   |
| Stock Options (unvested and accelerated)(2)          |       |                       | —     |                  |       |                   | —     |                                                  |       |                                         | —     |                    |       |      | —     |           |       |   | — |   |   | 4,851,084 |   | 4,851,084 |   | 4,851,084 |   |
| Restricted Stock Units (unvested and accelerated)(3) |       |                       | —     |                  |       |                   | —     |                                                  |       |                                         | —     |                    |       |      | —     |           |       |   | — |   |   | 526,146 |   | 526,146 |   | 526,146 |   |
| Retention Bonus Plan Compensation(4)                 |       |                       | —     |                  |       |                   | —     |                                                  |       |                                         | —     |                    |       |      | —     |           |       |   | — |   |   | 316,602 |   | 316,602 |   | 316,602 |   |
|                                                      |            |                            |            |                       |            |                        |            |                                                       |            |                                              |            |                         |            |           |            |                |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

**JACK WYSZOMIERSKI**

| **Executive  Payments upon  Termination**       | ** ** | **Voluntary  Termination** | ** ** | **Early  Retirement** | ** ** | **Normal  Retirement** | ** ** | **Involuntary  not for Cause  Termination** | ** ** | **Involuntary  for Cause  Termination** | ** ** | **Change  in  Control** | ** ** | **Death** | ** ** | **Disability** | ** ** |
|------------------------------------------------------|------------|----------------------------|------------|-----------------------|------------|------------------------|------------|-------------------------------------------------------|------------|----------------------------------------------|------------|-------------------------|------------|-----------|------------|----------------|------------|
| Severance Payments(1)                                |       |                       | $          | —                |       |                   |       | $                                                     | —     |                                         |       |                    | $          | —    |       |           |       | $ | — |   |   |   | $ | — |   |   | $ | — |   | $ | — |   |   | $ | — |   |   |
| Stock Options (unvested and accelerated)(2)          |       |                       | —     |                  |       |                   | —     |                                                  |       |                                         | —     |                    |       |      | —     |           |       |   | — |   |   | 887,760 |   | 887,760 |   |   | 887,760 |   |   |
| Restricted Stock Units (unvested and accelerated)(3) |       |                       | —     |                  |       |                   | —     |                                                  |       |                                         | —     |                    |       |      | —     |           |       |   | — |   |   | 263,073 |   | 263,073 |   |   | 263,073 |   |   |
| Retention Bonus Plan Compensation(4)                 |       |                       | —     |                  |       |                   | —     |                                                  |       |                                         | —     |                    |       |      | —     |           |       |   | — |   |   | 158,278 |   | 158,278 |   |   | 158,278 |   |   |
|                                                      |            |                            |            |                       |            |                        |            |                                                       |            |                                              |            |                         |            |           |            |                |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

**GEORGEVAN KULA**

| **Executive  Payments upon  Termination**       | ** ** | **Voluntary  Termination** | ** ** | **Early  Retirement** | ** ** | **Normal  Retirement** | ** ** | **Involuntary  not for Cause  Termination** | ** ** | **Involuntary  for Cause  Termination** | ** ** | **Change  in  Control** | ** ** | **Death** | ** ** | **Disability** | ** ** |
|------------------------------------------------------|------------|----------------------------|------------|-----------------------|------------|------------------------|------------|-------------------------------------------------------|------------|----------------------------------------------|------------|-------------------------|------------|-----------|------------|----------------|------------|
| Severance Payments(1)                                |       |                       | $          | —                |       |                   |       | $                                                     | —     |                                         |       |                    | $          | —    |       |           |       | $ | 325,000 |   |   |   | $ | — |   |   | $ | — |   | $ | — |   |   | $ | — |   |   |
| Stock Options (unvested and accelerated)(2)          |       |                       | —     |                  |       |                   | —     |                                                  |       |                                         | —     |                    |       |      | —     |           |       |   | — |   |   | 520,260 |   | 520,260 |   |   | 520,260 |   |   |
| Restricted Stock Units (unvested and accelerated)(3) |       |                       | —     |                  |       |                   | —     |                                                  |       |                                         | —     |                    |       |      | —     |           |       |   | — |   |   | — |   | — |   |   | — |   |   |
| Retention Bonus Plan Compensation(4)                 |       |                       | —     |                  |       |                   | —     |                                                  |       |                                         | —     |                    |       |      | —     |           |       |   | — |   |   | — |   | — |   |   | — |   |   |
|                                                      |            |                            |            |                       |            |                        |            |                                                       |            |                                              |            |                         |            |           |            |                |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

**THEODOREPULKOWNIK**

| **Executive  Payments upon  Termination**       | ** ** | **Voluntary  Termination** | ** ** | **Early  Retirement** | ** ** | **Normal  Retirement** | ** ** | **Involuntary  not for Cause  Termination** | ** ** | **Involuntary  for Cause  Termination** | ** ** | **Change  in  Control** | ** ** | **Death** | ** ** | **Disability** | ** ** |
|------------------------------------------------------|------------|----------------------------|------------|-----------------------|------------|------------------------|------------|-------------------------------------------------------|------------|----------------------------------------------|------------|-------------------------|------------|-----------|------------|----------------|------------|
| Severance Payments(1)                                |       |                       | $          | —                |       |                   |       | $                                                     | —     |                                         |       |                    | $          | —    |       |           |       | $ | — |   |   |   | $ | — |   |   | $ | — |   | $ | — |   |   | $ | — |   |   |
| Stock Options (unvested and accelerated)(2)          |       |                       | —     |                  |       |                   | —     |                                                  |       |                                         | —     |                    |       |      | —     |           |       |   | — |   |   | 887,760 |   | 887,760 |   |   | 887,760 |   |   |
| Restricted Stock Units (unvested and accelerated)(3) |       |                       | —     |                  |       |                   | —     |                                                  |       |                                         | —     |                    |       |      | —     |           |       |   | — |   |   | — |   | — |   |   | — |   |   |
| Retention Bonus Plan Compensation(4)                 |       |                       | —     |                  |       |                   | —     |                                                  |       |                                         | —     |                    |       |      | —     |           |       |   | — |   |   | — |   | — |   |   | — |   |   |
|                                                      |            |                            |            |                       |            |                        |            |                                                       |            |                                              |            |                         |            |           |            |                |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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**CHARLESCANFIELD**

| **Executive  Payments upon  Termination**       | ** ** | **Voluntary  Termination** | ** ** | **Early  Retirement** | ** ** | **Normal  Retirement** | ** ** | **Involuntary  not for Cause  Termination** | ** ** | **Involuntary  for Cause  Termination** | ** ** | **Change  in  Control** | ** ** | **Death** | ** ** | **Disability** | ** ** |
|------------------------------------------------------|------------|----------------------------|------------|-----------------------|------------|------------------------|------------|-------------------------------------------------------|------------|----------------------------------------------|------------|-------------------------|------------|-----------|------------|----------------|------------|
| Severance Payments(1)                                |       |                       | $          | —                |       |                   |       | $                                                     | —     |                                         |       |                    | $          | —    |       |           |       | $ | — |   |   |   | $ | — |   |   | $ | — |   | $ | — |   | $ | — |   |
| Stock Options (unvested and accelerated)(2)          |       |                       | —     |                  |       |                   | —     |                                                  |       |                                         | —     |                    |       |      | —     |           |       |   | — |   |   | 577,044 |   | 577,044 |   | 577,044 |   |
| Restricted Stock Units (unvested and accelerated)(3) |       |                       | —     |                  |       |                   | —     |                                                  |       |                                         | —     |                    |       |      | —     |           |       |   | — |   |   | — |   | — |   | — |   |
| Retention Bonus Plan Compensation(4)                 |       |                       | —     |                  |       |                   | —     |                                                  |       |                                         | —     |                    |       |      | —     |           |       |   | — |   |   | — |   | — |   | — |   |
|                                                      |            |                            |            |                       |            |                        |            |                                                       |            |                                              |            |                         |            |           |            |                |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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(1)   Thepotential severance payments to Messrs. Ballbach and Van Kula are based onthe terms of the applicable named executive officer’s employment agreement,each of which provides that if such officer’s employment is terminated by theCompany without cause, he will be entitled to continued payments by the Companyof his base salary until the earlier of (i) eighteen months (for Mr. Ballbach)and one year (for Mr. Van Kula) after termination, or (ii) until heobtains new employment. Such continued payments are subject to the officer’sexecution of a general release and standard provisions regardingconfidentiality, non-competition and non-solicitation of employees andcustomers.

(2)   Thestock option agreements provide that the vesting of options to purchase sharesof CDRV Investors common stock granted pursuant thereto will be accelerated ifCDRV Investors experiences a change in control (as defined in the Stock Plan),unless the CDRV Investors Board of Directors reasonably determines in goodfaith that options with substantially equivalent or better terms aresubstituted for the existing options. The amounts reflected in the table assumethe acceleration of vesting upon a change in control. In addition, the stockoption agreements provide that, upon the officer’s termination of employment byreason of death or disability, all unvested options will vest and remainexercisable until the earlier of (i) six months after such termination,and (ii) the expiration of the option term. The CDRV Investors Board ofDirectors also has the discretion to accelerate the vesting of options at anytime and from time to time. The “payments” relating to stock options representthe value of unvested and accelerated stock options as of December 31,2006, calculated by multiplying the number of accelerated options by thedifference between the exercise price and the fair value of CDRV Investorscommon stock (as determined by its Board of Directors) as of December 31,2006, which was $98.64.

(3)   Therestricted stock unit agreements provide that, upon the officer’s terminationof employment by reason of death or disability or upon the effective date of achange in control (as defined in the Stock Plan), all unvested restricted stockunits will vest. The “payments” relating to restricted stock units representthe value of unvested and accelerated restricted stock units, calculated bymultiplying the number of accelerated units by the fair value of CDRV Investorscommon stock (as determined by its Board of Directors) as of December 31,2006.

(4)   The Company’s Retention Bonus Plan provides that,within 30 days of the officer’s termination of employment by reason of death ordisability or the effective date of a change in control (as defined in theStock Plan), the officer will be entitled to any remaining payments under theRetention Bonus Plan.

*DirectorCompensation*

Our directors who are not also our employees oremployees or principals of CD&R (“Outside Directors”) are compensated pursuantto our Directors Compensation Policy. Under this policy, such directors receivean annualized fee of $70,000, at least 50% of which is payable in shares (orrights to 

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acquire shares) of CDRVInvestors common stock granted under Stock Plan. Directors may elect to receiveup to 100% of their annual fee in shares or rights to acquire shares grantedunder the Stock Plan.

Any Outside Director serving as the chair of any ofthe committees of our Board of Directors will receive an additional $10,000annual cash fee, $15,000 in the case of the chair of the audit committee of ourBoard of Directors.

We do not pay any remuneration to any of our directorswho are also our employees or who are employees or principals of CD&R,however all such directors are reimbursed for reasonable travel and lodgingexpenses incurred to attend meetings of our Board of Directors or a committeethereof.

Thetable below summarizes the compensation earned by Outside Directors for 2006.

| **Name**                    | ** ** | ** ** | ** ** | **Fees  Earned  or Paid in  Cash  ($)** | ** ** | **Stock  Awards  ($)** | ** ** | **Option  Awards  ($)** | ** ** | **Non-Equity  Incentive  Plan  Compensation** | ** ** | **Change in  Pension Value  and  Nonqualified  Deferred  Compensation  Earnings  ($)** | ** ** | **All Other  Compensation  ($)** | ** ** | **Total  ($)** | ** ** |
|-----------------------------|------------|------------|------------|---------------------------------------------------|------------|------------------------|------------|-------------------------|------------|-----------------------------------------------|------------|--------------------------------------------------------------------------------------------------|------------|---------------------------------------|------------|----------------|------------|
| Robert L. Barchi(1)         |       |       | $          | 26,250                                            |       |                   | $          | 26,250                  |       |                                          | $          | —                                                                                           |       |                                  |       | $              | —     |   |   |   | $ | — |   |   |   | $ | — |   |   | $ | 52,500 |   |
| Alan W. Dunton(1)      |       |       | 26,250     |                                              |       | 26,250                 |       |                    | —     |                                          |       |                                                                                             | —     |                                  |       |           | —     |   |   |   | — |   |   | 52,500 |   |
| Joseph F. Eckroth, Jr. |       |       | 35,000     |                                              |       | 35,000                 |       |                    | —     |                                          |       |                                                                                             | —     |                                  |       |           | —     |   |   |   | — |   |   | 70,000 |   |
| Lewis S. Edelheit           |       |       | 35,000     |                                              |       | 35,000                 |       |                    | —     |                                          |       |                                                                                             | —     |                                  |       |           | —     |   |   |   | — |   |   | 70,000 |   |
| Brian P. Kelley             |       |       | —     |                                              |       | 70,000                 |       |                    | —     |                                          |       |                                                                                             | —     |                                  |       |           | —     |   |   |   | — |   |   | 70,000 |   |
| Axel Ruckert(1)             |       |       | —     |                                              |       | 52,500                 |       |                    | —     |                                          |       |                                                                                             | —     |                                  |       |           | —     |   |   |   | — |   |   | 52,500 |   |
| Carl T. Stocker             |       |       | 50,000     |                                              |       | 35,000                 |       |                    | —     |                                          |       |                                                                                             | —     |                                  |       |           | —     |   |   |   | — |   |   | 85,000 |   |
| Robert J.  Zollars     |       |       | —     |                                              |       | 70,000                 |       |                    | —     |                                          |       |                                                                                             | —     |                                  |       |           | —     |   |   |   | — |   |   | 70,000 |   |
|                             |            |            |            |                                                   |            |                        |            |                         |            |                                               |            |                                                                                                  |            |                                       |            |                |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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(1)             Messrs. Barchi and Dunton became directors in May 2006and Mr. Ruckert resigned in September 2006.

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**ITEM 12.**         SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERS

CDRV Investors owns, through CDRV Holdings, Inc.,all of the outstanding capital stock of VWR International, Inc. Thefollowing table lists all shares of common stock of CDRV Investors beneficiallyowned by the following holders as of March 16, 2007:

| **Name and Address of Beneficial Owner(1)** | ** ** | ** ** | ** ** | **Number** | ** ** | **Percent** | ** ** |
|----------------------------------------------------------------------|------------|------------|------------|------------|------------|-------------|------------|
| CD&R Fund  VI(2)                                                 |       | 4,200,000  |       |       | 70.31      |        |       |
| Banc of America  Capital Investors, L.P.(3)                          |       | 350,000    |       |       | 5.86       |        |       |
| John M.  Ballbach(4)                                                 |       | 36,962     |       |       | *          |        |       |
| Jack L.  Wyszomierski(5)                                             |       | 18,666     |       |       | *          |        |       |
| George Van  Kula(6)                                                  |       | 6,670      |       |       | *          |        |       |
| Theodore C.  Pulkownik(7)                                            |       | 18,000     |       |       | *          |        |       |
| Charles F.  Canfield(8)                                              |       | 11,700     |       |       | *          |        |       |
| B.Charles Ames(9)                                                    |       | —     |       |       | *          |        |       |
| Charles A.  Banks(9)                                                 |       | —     |       |       | *          |        |       |
| Robert L. Barchi                                                     |       | 325        |       |       | *          |        |       |
| Alan W. Dunton                                                       |       | 325        |       |       | *          |        |       |
| Joseph F.  Eckroth, Jr.(10)                                     |       | 2,733      |       |       | *          |        |       |
| Lewis S. Edelheit                                                    |       | 3,784      |       |       | *          |        |       |
| George K.  Jaquette                                                  |       | —     |       |       | *          |        |       |
| Brian P. Kelley                                                      |       | 3,566      |       |       | *          |        |       |
| Richard J.  Schnall(9)                                               |       | —     |       |       | *          |        |       |
| Carl T. Stocker                                                      |       | 4,284      |       |       | *          |        |       |
| Robert J.  Zollars(11)                                               |       | 6,066      |       |       | *          |        |       |
| All directors and  executive officers as a group (21 persons)        |       | 138,797    |       |       | 2.32       |        |       |

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*                    Less than 1%

(1)          In accordance with Rule 13d-3under the Exchange Act, as amended, a person is deemed a “beneficial owner” ofa security if he or she has or shares the power to vote or direct the voting ofsuch security or the power to dispose or direct the disposition of suchsecurity. A person is also deemed to be a beneficial owner of any securitieswhich that person has the right to acquire beneficial ownership of within 60days. More than one person may be deemed to be a beneficial owner of the samesecurities. Each of such stockholders has sole voting and investment power asto the shares unless otherwise noted.

(2)          CD&R Associates VILimited Partnership, a Cayman Islands exempted limited partnership, is thegeneral partner of CD&R Fund VI and has the power to direct CD&R FundVI as to the voting and disposition of shares held by CD&R Fund VI.CD&R Investment Associates VI, Inc., a Cayman Island exempted company,is the general partner of CD&R Associates VI Limited Partnership and hasthe power to direct CD&R Associates VI Limited Partnership as to itsdirection of CD&R Fund VI’s voting and disposition of the shares heldby CD&R Fund VI. No person controls the voting and disposition of CD&RInvestment Associates VI, Inc., with respect to the shares owned byCD&R Fund VI. Each of CD&R Associates VI Limited Partnership andCD&R Investment Associates VI, Inc. expressly disclaims beneficialownership of the shares owned by CD&R Fund VI. The business address foreach of CD&R Fund VI, CD&R Associates VI Limited Partnership andCD&R Investment Associates VI, Inc., is 1403 Foulk Road, Suite 106,Wilmington, Delaware 19803.

(3)          Banc of America CapitalInvestors, L.P. is a Delaware limited partnership. Banc of America CapitalManagement, L.P., a Delaware limited partnership, is the general partner ofBanc of America Capital Investors, L.P. and has the power to direct Banc ofAmerica Capital Investors, L.P. as to the voting 

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and disposition of sharesheld by Banc of America Capital Investors, L.P. BACM I GP, LLC, a Delawarelimited liability company, is the general partner of Banc of America CapitalManagement L.P. and has the power to direct Banc of America Capital ManagementL.P. as to the voting and disposition of shares held by Banc of America CapitalManagement L.P. The business address for Banc of America Capital Investors,L.P., Banc of America Capital Management, L.P. and BACM I GP, LLC, is Bank ofAmerica Corporate Center, 100 North Tryon Street, 25th Floor, Charlotte,NC 28255.

(4)          Mr. Ballbach owns23,844 shares, has 11,785 options that are currently vested and exercisable,and has 1,333 vested restricted stock units. All shares and awards were issuedpursuant to the Stock Plan.

(5)          Mr. Wyszomierskiowns 10,000 shares, has 8,000 options that are currently vested andexercisable, and has 666 vested restricted stock units. All shares and awardswere issued pursuant to the Stock Plan.

(6)          Mr. Van Kula owns6,670 shares issued pursuant to the Stock Plan.

(7)          Mr. Pulkownik owns10,000 shares and has 8,000 options that are currently vested and exercisable.All shares and awards were issued pursuant to the Stock Plan.

(8)          Mr. Canfield owns6,500 shares and has 5,200 options that are currently vested and exercisable.All shares and awards were issued pursuant to the Stock Plan.

(9)          Does not include4,200,000 shares owned by CD&R Fund VI. Messrs. Ames, Banks andSchnall may be deemed to share beneficial ownership of the shares owned ofrecord by  CD&R Fund VI by virtue oftheir status as stockholders of CD&R Investment Associates VI, Inc.,the general partner of CD&R Associates VI Limited Partnership. However,each of Messrs. Banks, Ames and Schnall expressly disclaim beneficialownership of the shares owned by CD&R Fund VI.

(10) Includes 1,090 shares that were purchased by Mr. Eckroth underthe Stock Plan that were immediately transferred to a trust created for thebenefit of Mr. Eckroth’s family.

(11) Includes 2,500 shares that were purchased by Mr. Zollarsunder the Stock Plan and immediately transferred to a limited partnershipcontrolled by Mr. Zollars.

**ITEM 13.**         CERTAINRELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

*Certain Relationshipsand Related Transactions*

**Investment FundManaged by CD&R**

***Overview.***   Asof March 16, 2007, CD&R Fund VI beneficially owns approximately 70.3%of the outstanding common stock of our ultimate parent company, CDRV Investors.CD&R Fund VI is a private investment fund managed by CD&R.

The general partner of CD&R Fund VI is CD&RAssociates VI Limited Partnership, a Cayman Islands exempted limitedpartnership. CD&R Associates VI Limited Partnership’s general partner isCD&R Investment Associates VI, Inc., a Cayman Islands exemptedcompany.

Four of our directors, B. Charles Ames (operatingprincipal), Charles A. Banks (operating principal), George K. Jaquette(professional employee) and Richard J. Schnall (financial principal), areprincipals or employees of CD&R (Messrs. Banks, Ames and Schnall areprincipals and Mr. Jaquette is a professional employee).Messrs. Ames, Banks and Schnall are limited partners (including a familytrust of Mr. Ames) of CD&R Associates VI Limited Partnership andstockholders and directors of CD&R Investment Associates VI, Inc.

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CD&R is a private investment firm organized as aDelaware corporation. CD&R is the manager of a series of investment funds,including CD&R Fund VI. CD&R generally assists in structuring,arranging financing for and negotiating the acquisition of the companies inwhich the funds it manages invest. After the consummation of such transactions,CD&R generally provides management and financial consulting services to thecompanies. Such services include helping companies to establish effective banking,legal and other business relationships and assisting management in developingand implementing strategies for improving their operational, marketing andfinancial performance.

***ConsultingAgreement.***   CDRV Investors,CDRV Holdings, Inc., VWR International, Inc., CDRV InvestmentHoldings Corporation and CD&R are parties to an amended ConsultingAgreement, pursuant to which CD&R provides us with financial advisory andmanagement consulting services. We pay CD&R a management fee of $1.5million annually, which will be reviewed on an annual basis. We paid CD&R afee of $18.0 million as compensation for performing financial, investmentbanking, management advisory and other services in connection with the Acquisition,and reimbursed certain CD&R expenses. Effective as of May 15, 2005,the parties entered into a loanout agreement under the Consulting Agreementwhereby CD&R agreed to make the services of James W. Rogers, the formerChairman of our Board and a CD&R employee, available to us. The managementfee payable to CD&R was increased by $0.5 million annually for the period Mr. Rogerswas our Chief Executive Officer, and $0.3 million was paid to CD&R in theyear ended December 31, 2005 in connection therewith. The loanoutagreement terminated pursuant to its terms upon the approval of Mr. Ballbach’semployment as our Chief Executive Officer in late 2005.

***IndemnificationAgreement.***   CDRV Investors, CDRV Holdings, Inc.,VWR International, Inc. and CDRV Investment Holdings Corporation areparties to an amended Indemnification Agreement with CD&R and CD&R FundVI, pursuant to which we indemnify CD&R, CD&R Fund VI, any otherinvestment vehicle managed by CD&R, their respective directors, officers,partners, employees, agents and controlling persons, against certainliabilities arising under federal securities laws, liabilities arising out ofthe performance of the consulting agreement and certain other claims andliabilities.

***Stock SubscriptionAgreement.***   As of March 16, 2007,CD&R Fund VI beneficially owns approximately 70.3% of the outstandingshares of common stock of CDRV Investors. It subscribed for 4,800,000 shares ofCDRV Investors common stock for an aggregate purchase price of $480.0 millionpursuant to a Stock Subscription Agreement, dated as of April 7, 2004.Pursuant to that agreement, CD&R Fund VI may designate all of the membersof the Board of Directors of CDRV Investors and certain of its direct andindirect subsidiaries. CD&R is also entitled to consult with CDRV Investorswith respect to our operations at any time, to have observers attend meetingsof its Board of Directors and those of its subsidiaries, including us, and toreceive all of its quarterly and annual financial reports and budgets, as wellas other documents.

On June 22, 2004,CD&R Fund VI transferred an aggregate of 500,000 shares of the common stockof CDRV Investors to five of its limited partners, and on December 6,2004, CD&R Fund VI transferred another 100,000 shares of CDRV Investorscommon stock to another of its limited partners, pursuant to transferagreements among the Company, CD&R Fund VI and each such transferee.Pursuant to the transfer agreements, transferees are entitled to the rights andobligations of a minority stockholder under the Registration and ParticipationAgreement, dated as of April 7, 2004, including the transferrestrictions, registration rights, tag-along rights and drag-along rightsthat are described below under the heading “—Agreement with Management andOther Investors—Registration and Participation Agreement.”

**Agreements withManagement and Other Investors**

***Management EquityOfferings.***   Shortly after the Acquisition,CDRV Investors adopted the Stock Plan. Under the Stock Plan, CDRV Investors’Board of Directors may grant to our directors who are not also 

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our employees orassociated with CD&R, any of our executive officers and certain otheremployees rights to purchase shares of CDRV Investors common stock, options topurchase shares of CDRV Investors common stock, restricted stock units andother share-based awards.

See Note 15 to theFinancial Statements and “Item 11—Executive Compensation” for more informationregarding 2006 transactions pursuant to the Stock Plan.

***Registration and Participation Agreement.***

CDRV Investors, CD&R Fund VI and certain otherstockholders of CDRV Investors entered into a Registration and ParticipationAgreement, dated as of April 7, 2004, pursuant to which, among otherthings:

***TransferRestrictions.***   Until the earlier of theinitial public offering of the common stock of CDRV Investors and the fifthanniversary of the agreement, holders of common stock of CDRV Investors otherthan CD&R Fund VI are subject to certain restrictions on transfer.

***Registration Rights.***   Holdersof shares of common stock of CDRV Investors, including certain executiveofficers, are entitled to registration rights for such shares of common stockheld by them:

·       holdersconstituting, at any time prior to the initial public offering of the commonstock of CDRV Investors, at least 50% and thereafter, at least 25%, of thetotal registrable securities may request that CDRV Investors use its best effortsto register such securities for public resale,

·       followingthe initial public offering of the common stock of CDRV Investors, underspecified circumstances (and if CDRV Investors has qualified for registrationon Form S-3), certain holders other than CD&R Fund VI mayrequest that CDRV Investors use its best efforts to register their shares ofcommon stock of CDRV Investors for public resale on Form S-3, and

·       ifCDRV Investors registers any common stock at any time, either for its accountor for the account of any stockholder, the holders of registrable securitiesare entitled to request that it use its best efforts to include the number oftheir shares of common stock that, in the opinion of the underwriters, can besold.

CDRV Investors will bear all registration expenses(other than underwriting discounts) for the first four registrations, includingthe fees and expenses of counsel to the selling stockholders. Because onlyCD&R Fund VI holds more than 50% of its outstanding common stock, it is theonly stockholder able to initiate the initial registration by itself. CDRVInvestors also will bear the registration expenses (other than underwritingdiscounts) for two registrations on Form S-3 requested by certainco-investors of CD&R Fund VI, including the fees and expenses of counsel tothe selling stockholders.

If CDRV Investors files a registration statement underthe Securities Act with respect to a public offering of its common stock, noholders of its common stock will be permitted to effect any public sale ordistribution of any shares of such stock during the 20 days before and the 180days (or, in the case of a shelf registration, 90 days) after the effectivedate of the registration statement (other than as part of the public offering).

***ParticipationRights.***   Prior to the initial public offeringof CDRV Investors, certain holders of the common stock of CDRV Investors havethe right to purchase, on a pro rata basis, additional shares of its commonstock if CD&R Fund VI or any other investment vehicle managed by CD&Rsubscribes for additional shares of common stock, excluding any issuances byway of dividends or distributions on in kind, or stock splits,reclassifications, recapitalizations or consolidations.

***Tag-Along Rights.***   Priorto such time as a public market has been established for 20% or more of thecommon stock of CDRV Investors, certain holders of common stock of CDRVInvestors other than 

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CD&R Fund VI have theright to participate, on a pro rata basis and subject to the same terms andconditions, in any sale by CD&R Fund VI of more than 10% of its shares ofcommon stock to a third party purchaser or to CDRV Investors.

***Drag-AlongRight.***   Priorto such time as a public market has been established for 20% or more of thecommon stock of CDRV Investors, if CD&R Fund VI intends to sell more than50% of its shares of common stock of CDRV Investors to a third party purchaser,CD&R Fund VI will have the right to require certain other holders of commonstock to participate in such sale, on a pro rata basis and subject to the sameterms and conditions.

**Other Relationships**

***SIRVA.***   Wereceive product transportation and relocation services from SIRVA, Inc. (“SIRVA”).As of December 31, 2006, two private equity funds managed by CD&R,including CD&R Fund VI, beneficially owned approximately 33% of the equityinterests in SIRVA. Three members of our Board of Directors, Messrs. Kelley,Schnall and Stocker, are also members of SIRVA’s Board of Directors, and Mr. Kelleyis the President and Chief Executive Officer of SIRVA. In 2006, we incurredtotal expenses of approximately $1.7 million with SIRVA.

***Debevoise &Plimpton LLP.*****  **Wereceive certain legal services from the law firm of Debevoise &Plimpton LLP. A member of Debevoise & Plimpton LLP is the spouse ofJoseph L. Rice III, a former director of the Company and CDRV Investors.Mr. Rice is a principal of CD&R. Total fees for services rendered byDebevoise & Plimpton LLP during 2006 were approximately $0.6 million.

***Hertz Corporation.*****  **When business travel requires therental of an automobile, our officers and employees rent from The HertzCorporation (“Hertz”). As of February 12, 2007, certain investment fundsassociated with or designated by CD&R beneficially owned approximately 24%of the common stock of Hertz Global Holdings, Inc., Hertz’s ultimateparent company. In 2006, we reimbursed officer and employee expenses incurred fromHertz rentals in the aggregate amount of approximately $0.5 million.

***Thomas Jefferson University.******  ***We sellcertain products to Thomas Jefferson University. One of our directors, RobertL. Barchi, is the President of Thomas Jefferson University. In 2006, we hadless than $200,000 of net sales to Thomas Jefferson University.

*Review and Approvalof Transactions with Related Persons*

The Company’s Board ofDirectors has not formally adopted a written policy and procedure for approvalof transactions involving the Company and “related persons” (directors andexecutive officers or their immediate family members, or shareholders owningfive percent or greater of the Company’s outstanding stock). However, the Boardbelieves that any such transactions have in the past been, and will continue tobe, appropriately reviewed, approved and monitored. The Board intends to adopta written policy covering any related person transaction that meets the minimumthreshold for disclosure under the relevant SEC rules (generally,transactions involving amounts exceeding $120,000 in which a related person hasa direct or indirect material interest).

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*DirectorIndependence*

OurBoard of Directors has adopted Corporate Governance Guidelines, which, amongother things, require a majority of the Board members to satisfy theindependence requirements of the New York Stock Exchange and for the Board tomake an annual assessment regarding the members’ qualification as independent. TheBoard has determined that each of the following non-employee Directors isindependent and has no material relationship with the Company:

| (1) Robert L. Barchi             |   | (5) Brian P. Kelley   |
|---------------------------------------|--------|----------------------------|
| (2) Alan W.  Dunton              |   | (6) Carl T. Stocker   |
| (3) Joseph  F. Eckroth, Jr. |   | (7) Robert J. Zollars |
| (4) Lewis S.  Edelheit           |   |                       |

 

The Board has four standing committees to facilitateand assist the Board in the execution of its responsibilities. The committeescurrently are the Audit Committee, the Compensation Committee, the ExecutiveCommittee and a Nominating & Corporate Governance Committee. The tablebelow shows current membership for each of the standing Board committees.Messrs. Ames, Ballbach, Banks, Jaquette and Schnall are not independent.

| **Audit  Committee**                                                                       | ** ** | **Compensation  Committee**                                                                                          | ** ** | **Executive  Committee**                                                | ** ** | **Nominating &  Corporate Governance  Committee**               |
|--------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------|------------|--------------------------------------------------------------------------|
| Alan W. Dunton  Lewis S. Edelheit  George K. Jaquette  Richard J. Schnall  Carl T. Stocker |       | B. Charles Ames  Charles A. Banks  Robert L. Barchi  Joseph F. Eckroth, Jr.  Brian P. Kelley  Robert J. Zollars |       | B. Charles Ames  John M. Ballbach  Charles A. Banks  Richard J. Schnall |       | B. Charles Ames  Charles A. Banks  Lewis S. Edelheit  George K. Jaquette |

 

Axel Ruckert resigned fromour Board of Directors, effective September 22, 2006. Prior to hisresignation, Mr. Ruckert had been serving on the Audit Committee, and hewas independent. Joseph L. Rice, III and James W. Rogers resigned from ourBoard of Directors, effective December 7, 2006. Prior to theirresignations, Mr. Rice had been serving on the Audit Committee, and Mr. Rogershad been serving on the Executive and Compensation Committees, and neither Mr. Ricenor Mr. Rogers was independent.

**ITEM 14.**         PRINCIPALACCOUNTANT FEES AND SERVICES

KPMGserved as the Company’s independent auditor for the fiscal years ended December 31,2006 and 2005. Fees and expenses for services rendered by KPMG in 2006 and 2005were approved by our Audit Committee. KPMG’s fees and expenses for servicesrendered to the Company for the past two fiscal years are set forth in thetable below. We have determined that the provision of these services iscompatible with maintaining the independence of our independent auditors.

| **Type of Fees** | ** ** | ** **                           | ** ** | **    2006    ** | ** ** | **    2005    ** | ** ** |
|----------------------------|------------|--------------------------------------|------------|----------------------------------------------------------|------------|----------------------------------------------------------|------------|
| ** **                 | ** ** | **(dollars in thousands)** | ** ** |
| Audit Fees(1)              |       |                                 | $          | 4,159                                                    |       |                                                     |       | $ | 2,088 |   |   |
| Tax Fees(2)                |       |                                 | 38         |                                                     |       |                                                     | 52         |   |   |
|                       |       |                                 | $          | 4,197                                                    |       |                                                     |       | $ | 2,140 |   |   |

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(1)          2006 and 2005 audit feesrelate to the audit of VWR International, Inc.’s global operationsincluding statutory audits. 2006 also includes fees related to the audit ofinternal control over financial reporting. Also included herein are feesrelated to various employee benefit plan audits.

(2)          Fees for both yearsrelate to tax compliance services.

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**Pre-Approval Policyfor Auditor Services**

The Audit Committee has adopted a policy that requiresit to pre-approve the audit and non-audit services performed by VWR’s auditorin order to assure that providing such services will not impair the auditor’sindependence.

The Audit Committee has the sole and directresponsibility and authority for the appointment, termination and compensationto be paid to the independent accountants. The Committee has the responsibilityto approve, in advance of the provision thereof, all audit services andpermissible non-audit services to be performed by the independent accountantsas well as compensation to be paid with respect to such services.

Our Audit Committee Charter authorizes the Committeeto delegate authority to pre-approve audit and permissible non-audit servicesto a member of the Committee. Any decisions made by such member under delegatedauthority, must be presented to the full Committee at its next scheduledmeeting.

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**PART IV**

**ITEM 15.**         EXHIBITSAND FINANCIAL STATEMENT SCHEDULES

a.                 Financialstatements, financial statement schedule and exhibits filed as part of thisreport

1.                 The followingfinancial statements, together with the Report of Independent Registered PublicAccountants and Notes to Consolidated Financial Statements, are filed as partof this report:

| ** **                                                                                                                                                                                                   | ** ** | **Page** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|------------|
| **VWR INTERNATIONAL, INC.  (Predecessor and Successor)**                                                                                                                                                     |       |     |       |   |   |
| Report of  Independent Registered Public Accounting Firm                                                                                                                                                     |       |     | 43         |   |   |
| Consolidated  Balance Sheets as of December 31, 2006 and 2005                                                                                                                                           |       |     | 44         |   |   |
| Consolidated  Statements of Operations for the years ended December 31, 2006 and 2005  and the periods included in the year ended December 31, 2004                                                |       |     | 45         |   |   |
| Consolidated  Statements of Stockholders’ Equity and other Comprehensive Income for the  years ended December 31, 2006 and 2005 and the periods included in the  year ended December 31, 2004 |       |     | 46         |   |   |
| Consolidated  Statements of Cash Flows for the years ended December 31, 2006 and 2005  and the periods included in the year ended December 31, 2004                                                |       |     | 48         |   |   |
| Notes to  Consolidated Financial Statements                                                                                                                                                                  |       |     | 49         |   |   |
| Schedule II—Valuation  and Qualifying Accounts for the years ended December 31, 2006 and 2005  and the periods included in the year ended December 31, 2004.                                  |       |     | 131        |   |   |

 

| Exhibit    Number | ** ** | **Description of Documents** | ** ** | **Method of Filing**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|------------------------|------------|------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                   | 3.1        |                         |       | Certificate of Incorporation of VWR  International, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Previously filed as Exhibit 3.1 to Annual  Report on Form 10-K, filed on April 6, 2005. |
|                   | 3.2        |                         |       | Amended and Restated  Bylaws of VWR International, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | Previously filed as  Exhibit 3.2 to Annual Report on Form 10-K, filed on  April 6, 2005. |
|                   | 4.1        | (a)                          |       | Credit Agreement, dated  as of April 7, 2004, among CDRV Acquisition Corporation (the rights and  obligations of which thereunder were assumed by VWR  International, Inc.), the Foreign Subsidiary Borrowers from time to time  parties thereto, the several Lenders from time to time parties thereto,  Deutsche Bank AG, New York Branch, as Administrative Agent, Citicorp North  America, Inc., as Syndication Agent, and Bank of America, N.A., BNP  Paribas and Barclays Bank PLC, as Documentation Agents |   | Previously filed as  Exhibit 4.1 to Form S-4, filed on August 30, 2004. |
|                   |  4.1  | (b)                          |       | Assumption Agreement,  dated as of April 7, 2004, between CDRV Acquisition Corporation and VWR  International, Inc.                                                                                                                                                                                                                                                                                                                                                                                                    |   | Previously filed as  Exhibit 4.2 to Form S-4, filed on August 30, 2004. |

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|        |  4.1 | (c) |   | Guarantee and Collateral  Agreement, dated as of April 7, 2004, made by CDRV Holdings, Inc.,  CDRV Acquisition Corporation (the rights and obligations of which were  assumed by VWR International, Inc.) and certain of its Subsidiaries in  favor of Deutsche Bank AG, New York Branch, as Administrative Agent.                                                                                             |   | Previously filed as  Exhibit 4.3 to Form S-4, filed on August 30, 2004.  |
|--------|-----------|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|
|   |  4.1 | (d) |   | First Amendment, dated  as of February 11, 2005, to said Credit Agreement and  said Guarantee and Collateral Agreement                                                                                                                                                                                                                                                                                         |   | Previously filed as  Exhibit 4.1 to Form 8-K, filed on January 30, 2007. |
|   |  4.1 | (e) |   | Second Amendment, dated  as of August 18, 2006, to said Credit Agreement                                                                                                                                                                                                                                                                                                                                                 |   | Previously filed as  Exhibit 4.2 to Form 8-K, filed on January 30, 2007. |
|   | 4.1       | (f) |   | Third Amendment, dated  as of January 29, 2007, to said Credit Agreement                                                                                                                                                                                                                                                                                                                                                 |   | Previously filed as  Exhibit 4.3 to Form 8-K, filed on January 30, 2007. |
|   | 4.2       | (a) |   | 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, Inc.), the Subsidiary Guarantors from time to time  parties thereto, as Subsidiary Guarantors and Wells Fargo Bank, National  Association, as Trustee, relating to the 67¤8%  Senior Notes due 2012 of CDRV Acquisition Corporation      |   | Previously filed as  Exhibit 4.4 to Form S-4, filed on August 30, 2004.  |
|   | 4.2       | (b) |   | 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, 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 |   | Previously filed as  Exhibit 4.5 to Form S-4, filed on August 30, 2004.  |
|   |  4.2 | (c) |   | Supplemental Indenture,  dated as of April 7, 2004, relating to the 67¤8%  Senior Notes                                                                                                                                                                                                                                                                                                                             |   | Previously filed as  Exhibit 4.6 to Form S-4, filed on August 30, 2004.  |
|   | 4.2       | (d) |   | Supplemental Indenture,  dated as of April 7, 2004, relating to the 8% Senior Subordinated Notes                                                                                                                                                                                                                                                                                                                         |   | Previously filed as  Exhibit 4.7 to Form S-4, filed on August 30, 2004.  |
|   |  4.2 | (e) |   | Form of 67¤8%  Senior Notes                                                                                                                                                                                                                                                                                                                                                                                         |   | Previously filed as  Exhibit 4.10 to Form S-4, filed on August 30, 2004. |
|   |  4.2 | (f) |   | Form of 8% Senior  Subordinated Notes                                                                                                                                                                                                                                                                                                                                                                                    |   | Previously filed as  Exhibit 4.11 to Form S-4, filed on August 30, 2004. |

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|        |  4.2 | (g)    |   | Supplemental Indenture,  dated as of April 7, 2004, relating to the 67¤8%  Senior Notes                                                                                                                                                                                                   |   | Previously filed as  Exhibit 4.12 to Amendment No. 2 to Form S-4, filed on  November 19, 2004. |
|--------|-----------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------|
|   |  4.2 | (h)    |   | Supplemental Indenture,  dated as of April 7, 2004, relating to the 8% Senior Subordinated Notes                                                                                                                                                                                               |   | Previously filed as  Exhibit 4.13 to Amendment No. 2 to Form S-4, filed on  November 19, 2004. |
|   | 10.1      | (a)    |   | Consulting Agreement,  dated as of April 7, 2004, by and among CDRV Investors, Inc., CDRV  Holdings, Inc., CDRV Acquisition Corporation, CDRV Delaware, Inc.  and Clayton, Dubilier & Rice, Inc.                                                                  |   | Previously filed as  Exhibit 10.1 to Form S-4, filed on August 30, 2004.                            |
|   | 10.1      | (b)    |   | First Amendment, dated  December 6, 2006, to said Consulting Agreement                                                                                                                                                                                                                         |   | Previously filed as  Exhibit 10.1 to Form 8-K, filed on December 12, 2006.                          |
|   | 10.2      |   |   | Loanout Agreement, dated  as of May 15, 2005, by and among CDRV Investors, Inc., CDRV  Holdings, Inc., VWR International, Inc. and Clayton,  Dubilier & Rice, Inc.                                                                                                |   | Previously filed as  Exhibit 99.1 to Form 8-K, filed on May 15, 2005.                               |
|   | 10.3      | (a)    |   | Indemnification  Agreement, dated as of April 7, 2004, among CDRV Investors, Inc.,  CDRV Holdings, Inc., CDRV Acquisition Corporation, CDRV  Delaware, Inc., Clayton, Dubilier & Rice, Inc. and  Clayton, Dubilier & Rice Fund VI Limited Partnership    |   | Previously filed as  Exhibit 10.2 to Form S-4, filed on August 30, 2004.                            |
|   | 10.3      | (b)    |   | First Amendment, dated  December 6, 2006, to said Indemnification Agreement                                                                                                                                                                                                                    |   | Previously filed as  Exhibit 10.2 to Form 8-K, filed on December 12, 2006.                          |
|   | 10.4      |   |   | Registration and  Participation Agreement, dated as of April 7, 2004, among CDRV  Investors, Inc., Clayton, Dubilier & Rice Fund VI Limited  Partnership, Banc of America Capital Investors, L.P., SSB Capital Partners  (Master Fund) I, L.P., and CGI Private Equity L.P., LLC |   | Previously filed as  Exhibit 10.3 to Form S-4, filed on August 30, 2004.                            |
|   | 10.5      |   |   | Stock Subscription  Agreement, dated April 7, 2004, between CDRV Investors, Inc. and  Clayton, Dubilier & Rice Fund VI Limited Partnership                                                                                                                                       |   | Previously filed as Exhibit 10.4  to Form S-4, filed on August 30, 2004.                            |
|   | 10.6      |   |   | VWR  International, Inc. Directors Compensation Policy*                                                                                                                                                                                                                                        |   | Previously filed as  Exhibit 10.5 to Form S-4, filed on August 30, 2004.                            |
|   | 10.7      | (a)    |   | CDRV  Investors, Inc. Amended and Restated Stock Incentive Plan*                                                                                                                                                                                                                               |   | Previously filed as  Exhibit 10.1 to Form 10-Q, for the quarter ended  September 30, 2006.          |

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|        | 10.7        | (b)    |   | Form of Employee  Stock Subscription Agreement under said Stock Incentive Plan*        |   | Previously filed as  Exhibit 10.7 to Form S-4, filed on August 30, 2004.               |
|--------|-------------|--------|--------|---------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------|
|   | 10.7        | (c)    |   | Form Restricted  Stock Unit Agreement under said Stock Incentive Plan*                 |   | Previously filed as  Exhibit 10.1 to Form 10-Q, for the quarter ended  March 31, 2006. |
|   | 10.7        | (d)    |   | Form of Stock  Option Agreement under said Stock Incentive Plan*                       |   | Previously filed as  Exhibit 10.8 to Form S-4, filed on August 30, 2004.               |
|   | 10.8        | (a)    |   | VWR  International, Inc. Amended and Restated Retirement Plan*                         |   | Filed herewith.                                                                                       |
|   | 10.8        | (b)    |   | Amendment No. 1 to  VWR International, Inc. Amended and Restated Retirement Plan* |   | Filed herewith.                                                                                       |
|   | 10.8        | (c)    |   | Amendment No. 2 to  VWR International, Inc. Amended and Restated Retirement Plan* |   | Filed herewith.                                                                                       |
|   |  10.9  |   |   | VWR Corporation  Supplemental Benefits Plan*                                                |   | Previously filed as  Exhibit 10.11 to Form S-4, filed on August 30, 2004.              |
|   | 10.10       | (a)    |   | Employment Agreement,  between VWR International Inc and John M. Ballbach*                  |   | Previously filed as  Exhibit 99.2 to Form 8-K, filed on October 19, 2005.              |
|   | 10.10       | (b)    |   | Amendment to said  Employment Agreement*                                                    |   | Previously filed as  Exhibit 99.1 to Form 8-K, filed on February 23, 2006.             |
|   | 10.10       | (c)    |   | Amendment to said  Employment Agreement*                                                    |   | Previously filed as  Exhibit 10.1 to Form 8-K, filed on December 22, 2006.             |
|   |  10.11 |   |   | Employment Agreement,  between VWR International Inc. and Jack L. Wyszomierski*             |   | Previously filed as  Exhibit 10.13 to Form S-4, filed on August 30, 2004.              |
|   | 10.12       |   |   | Employment Agreement,  between VWR International Inc. and George Van Kula*                  |   | Filed herewith.                                                                                       |
|   | 10.13       |   |   | Employment Agreement,  between VWR International Inc. and Theodore C. Pulkownik*            |   | Previously filed as  Exhibit 10.18 to Form S-4, filed on August 30, 2004.              |
|   | 10.14       |   |   | Employment Agreement,  between VWR International Inc. and Charles F. Canfield*              |   | Previously filed as  Exhibit 10.17 to Form S-4, filed on August 30, 2004.              |
|   |  10.15 |   |   | VWR  International, Inc. Retention Bonus Plan*                                         |   | Previously filed as  Exhibit 10.3 to Form 8-K, filed on December 12, 2006.             |
|   | 12.1        |   |   | Computation of Ratio of  Earnings to Fixed Charges                                          |   | Filed herewith.                                                                                       |
|   | 21.1        |   |   | List of subsidiaries                                                                        |   | Filed herewith.                                                                                       |
|   | 24          |   |   | Power of Attorney                                                                           |   | Filed herewith.                                                                                       |

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|        | 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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*                    Denotesmanagement contract or compensatory plan, contract or arrangement.

**SUPPLEMENTALINFORMATION**

The Company is an indirect wholly-owned subsidiary ofCDRV Investors. No annual report to security holders covering the Company’slast fiscal year or proxy statement, form of proxy or other proxy solicitingmaterial has been sent to security holders.

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Pursuantto the requirements of Sections 13 or 15(d) of the Securities Exchange Actof 1934, the registrant has duly caused this report to be signed on its behalfby the undersigned, thereunto duly authorized.

|        | VWR INTERNATIONAL, INC. |
|--------|------------------------------|
|   | By:                          | /s/ GREGORY L. COWAN |
|   |                         | Name: | Gregory L. Cowan |
|   | * *                     | *Title:* | *Vice President and Corporate Controller (Chief  Accounting Officer and Duly Authorized Officer)* |
|   | March 30, 2007          |

 

Pursuantto the requirements of the Securities Exchange Act of 1934, this report hasbeen signed by the following persons on behalf of the registrant and in thecapacities and on the dates indicated.

|                           | **Signature** | ** **                   | ** ** | ** **           | **Title** | ** ** | ** ** | ** ** |
|---------------------------|---------------|------------------------------|------------|----------------------|-----------|------------|------------|------------|
| /s/ JOHN  M. BALLBACH     |          | President, Chief Executive   |       | March 30,  2007 |
| John  M. Ballbach         |          | Officer  and Director        |       |                 |
| /s/ JACK  L. WYSZOMIERSKI |          | Executive Vice President and |       | March 30,  2007 |
| Jack  L. Wyszomierski     |          | Chief  Financial Officer     |       |                 |
| /s/ GREGORY  L. COWAN     |          | Vice President and           |       | March 30,  2007 |
| Gregory L. Cowan          |          | Corporate  Controller        |       |                 |

 

**Directors:**

| B. Charles Ames             | George K. Jaquette |
|-----------------------------|--------------------|
| Charles A. Banks            | Brian P. Kelley    |
| Robert L. Barchi            | Richard J. Schnall |
| Alan W. Dunton              | Carl T. Stocker    |
| Joseph F. Eckroth, Jr. | Robert J. Zollars  |
| Lewis S. Edelheit           |               |

 

ByGeorge Van Kula pursuant to a Power of Attorney executed by the directorslisted above, which Power of Attorney has been filed as an exhibit hereto.

| /s/ GEORGE VAN KULA |   | Attorney-in-fact |   | March 30,  2007 |
|---------------------|--------|------------------|--------|----------------------|
| George Van Kula     |   |             |   |                 |

 

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**Schedule II -Valuation of Qualifying Accounts**

**VWRINTERNATIONAL, INC. Years ended December 31, 2006 and 2005 and for the period April 7 -December 31, 2004 (Dollars in millions)**

| ** **                                                                | ** ** | ** **          | ** ** | ** **         | ** ** | **Foreign**     | ** ** | ** **      | ** ** | ** **          | ** ** |
|---------------------------------------------------------------------------|------------|---------------------|------------|--------------------|------------|-----------------|------------|-----------------|------------|---------------------|------------|
| ** **                                                                | ** ** | **Balance at** | ** ** | ** **         | ** ** | **Currency**    | ** ** | **Deductions**  | ** ** | **Balance at** | ** ** |
| ** **                                                                | ** ** | **Beginning**       | ** ** | **Charged**        | ** ** | **Translation** | ** ** | **From**        | ** ** | **End**             | ** ** |
| ** **                                                                | ** ** | **of Period**  | ** ** | **to Income** | ** ** | **Adjustments** | ** ** | **Reserves(1)** | ** ** | **of Period**  | ** ** |
| Year ended  December 31, 2006  Allowance for doubtful receivables         |       |                | $          | 6.6                |       |            |       | $          | 6.0        |                |       |   | $  | 0.4 |   |   |   | $  | (3.2) |   |   |   | $  | 9.8 |   |   |
| Year ended December 31, 2005  Allowance for doubtful receivables          |       |                | $          | 6.0                |       |            |       | $          | 3.2        |                |       |   | $  | (0.4 | ) |   |   | $  | (2.2) |   |   |   | $  | 6.6 |   |   |
| April 7, 2004–December  31, 2004  Allowance for doubtful receivables |       |                | $          | 7.4                |       |            |       | $          | 2.5        |                |       |   | $  | 0.4 |   |   |   | $  | (4.3) |   |   |   | $  | 6.0 |   |   |

 

**VWR INTERNATIONALCORPORATION For the period January 1 - April 6, 2004 (Dollars in millions)**

| ** **                                                        | ** ** | ** **          | ** ** | ** **         | ** ** | **Foreign**     | ** ** | ** **      | ** ** | ** **          | ** ** |
|-------------------------------------------------------------------|------------|---------------------|------------|--------------------|------------|-----------------|------------|-----------------|------------|---------------------|------------|
| ** **                                                        | ** ** | **Balance at** | ** ** | ** **         | ** ** | **Currency**    | ** ** | **Deductions**  | ** ** | **Balance at** | ** ** |
| ** **                                                        | ** ** | **Beginning**       | ** ** | **Charged**        | ** ** | **Translation** | ** ** | **From**        | ** ** | **End**             | ** ** |
| ** **                                                        | ** ** | **of Period**  | ** ** | **to Income** | ** ** | **Adjustments** | ** ** | **Reserves(1)** | ** ** | **of Period**  | ** ** |
| January 1–April  6, 2004  Allowance for doubtful receivables |       |                | $          | 7.8                |       |            |       | $               | 0.6        |                |       |   | $ | (0.1 | ) |   |   | $ | (0.9 | ) |   |   | $ | 7.4 |   |   |
|                                                                   |            |                     |            |                    |            |                 |            |                 |            |                     |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

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(1)          Bad debts charged off,less recoveries.

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