**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

----

FORM 10-Q

----

(Mark One)

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

**Forthe quarterly period ended March 31, 2005**

**or**

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

**Forthe transition period from                          to                          **

**Commissionfile number:  333-118658**

----

VWR INTERNATIONAL, INC.

(Exact name of registrantas specified in its charter)
| Delaware                                                 | **91-1319190**                       |
|----------------------------------------------------------|--------------------------------------|
| (State of incorporation)                                 | (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**

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 x No o

Indicate by check markwhether the registrant is an accelerated filer (as defined in Rule 12b-2of the Act). Yes o No x

As of March 31, 2005,there was no established public market for the registrant’s common stock, parvalue $0.01 per share. As of May 12, 2005, 100 shares of the registrant’scommon stock were outstanding.

 

----

**VWR INTERNATIONAL,INC.FORM 10-QFOR THE QUARTER ENDED MARCH 31, 2005**

***INDEX***

**PART I.FINANCIAL INFORMATION (Predecessor and Successor):**

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

Theterm “Successor” refers to VWR, International, Inc. following theAcquisition (as defined in Note 1(a)). The term “Predecessor” refers to VWRInternational Corporation prior to the Acquisition on April 7, 2004. Seealso “Background and Basis of Presentation” in Note 1 to the financialstatements.
|                                      | ** **                                                                                                                                  | Page No. |
|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|---------------|
| Item 1.                              | Financial Statements:                                                                                                                       |          |   |   |
|                                 | Consolidated Balance Sheets—March 31, 2005 (Unaudited) and  December 31, 2004                                                |          | 3 |   |
|                                 | Consolidated Statements of  Operations  (Unaudited)—Three Months  Ended  March 31, 2005 and 2004                             |          | 4 |   |
|                                 | Consolidated Statement of Stockholders’ Equity and  Other Comprehensive Income (Unaudited)—Three Months Ended March 31, 2005 |          | 5 |   |
|                                 | Consolidated Statements of Cash  Flows  (Unaudited)—Three Months Ended  March 31, 2005 and 2004                              |          | 6 |   |
|                                 | Notes to  Consolidated Financial Statements (Unaudited)                                                                                     |          | 7 |   |
| Item  2.                             | Management’s Discussion and  Analysis of Financial Condition and Results of Operations                                                 |          | 16 |   |
| Item  3.                             | Quantitative and Qualitative  Disclosures About Market Risk                                                                                 |          | 26 |   |
| Item 4.                              | Controls and Procedures                                                                                                                     |          | 26 |   |
| **PART II. OTHER INFORMATION:** |                                                                                                                                        |          |   |
| Item 6.                              | Exhibits                                                                                                                                    |          | 27 |   |
| Signatures                           |                                                                                                                                        | 28            |   |
|                                      |                                                                                                                                             |               |  |  |  |

 

2

----

**PART 1—FINANCIAL INFORMATION**

**Item 1—*Financial Statements***

**VWR INTERNATIONAL, INC.Consolidated Balance Sheets(Dollars in millions, except share data)**
| ** **                                                                     | ** ** | **March 31,**                                                   | ** ** | **December 31,**                                                | ** ** |
|--------------------------------------------------------------------------------|------------|----------------------------------------------------------------------|------------|----------------------------------------------------------------------|------------|
| ** **                                                                     | ** ** | **     2005     ** | ** ** | **     2004     ** | ** ** |
| ** **                                                                     | ** ** | **(Unaudited)**                                                      | ** ** | ** **                                                           | ** ** |
| **Assets**                                                                     |       |                                                                 |       |                                                                 |       |   |   |   |   |
| Current Assets:                                                                |       |                                                                 |       |                                                                 |       |   |   |   |   |
| Cash and cash equivalents                                                      |       |                                                                 | $          | 146.5                                                                |       |   |   | $ | 116.1 |   |   |
| Trade accounts receivable, less reserves of $6.6 and  $6.0, respectively       |       |                                                                 | 412.1      |                                                                 |       |   | 413.4 |   |   |
| Other receivables                                                              |       |                                                                 | 21.1       |                                                                 |       |   | 19.7 |   |   |
| Inventories                                                                    |       |                                                                 | 236.5      |                                                                 |       |   | 248.9 |   |   |
| Other current assets                                                           |       |                                                                 | 30.9       |                                                                 |       |   | 28.9 |   |   |
| Total current assets                                                           |       |                                                                 | 847.1      |                                                                 |       |   | 827.0 |   |   |
| Property and  equipment, net                                                   |       |                                                                 | 151.1      |                                                                 |       |   | 154.4 |   |   |
| Investments                                                                    |       |                                                                 | 8.5        |                                                                 |       |   | 8.7 |   |   |
| Goodwill                                                                       |       |                                                                 | 910.3      |                                                                 |       |   | 907.0 |   |   |
| Other intangible  assets, net                                                  |       |                                                                 | 561.4      |                                                                 |       |   | 570.8 |   |   |
| Deferred income  taxes                                                         |       |                                                                 | 36.0       |                                                                 |       |   | 34.4 |   |   |
| Other assets                                                                   |       |                                                                 | 43.9       |                                                                 |       |   | 43.7 |   |   |
| Total assets                                                                   |       |                                                                 | $2,558.3   |                                                                 |       |   | $ | 2,546.0 |   |   |
| **Liabilities  and Stockholders’ Equity**                                 |       |                                                                 |       |                                                                 |       |   |   |   |   |
| Current Liabilities:                                                           |       |                                                                 |       |                                                                 |       |   |   |   |   |
| Short-term bank debt and current portion of capital  lease obligations         |       |                                                                 | $          | 8.1                                                                  |       |   |   | $ | 12.9 |   |   |
| Accounts payable                                                               |       |                                                                 | 349.5      |                                                                 |       |   | 333.8 |   |   |
| Accrued expenses                                                               |       |                                                                 | 166.9      |                                                                 |       |   | 150.4 |   |   |
| Total current liabilities                                                      |       |                                                                 | 524.5      |                                                                 |       |   | 497.1 |   |   |
| Long-term debt                                                                 |       |                                                                 | 1,072.7    |                                                                 |       |   | 1,080.2 |   |   |
| Capital lease  obligations                                                     |       |                                                                 | 5.6        |                                                                 |       |   | 6.1 |   |   |
| Other long-term  liabilities                                                   |       |                                                                 | 68.3       |                                                                 |       |   | 81.3 |   |   |
| Deferred income  taxes                                                         |       |                                                                 | 247.6      |                                                                 |       |   | 241.1 |   |   |
| Total liabilities                                                              |       |                                                                 | 1,918.7    |                                                                 |       |   | 1,905.8 |   |   |
| Parent Company  common stock purchase subject to guarantee agreement           |       |                                                                 | 2.8        |                                                                 |       |   | 2.9 |   |   |
| Commitments and  contingences                                                  |       |                                                                 |       |                                                                 |       |   |   |   |   |
| Stockholders’  equity:                                                    |       |                                                                 |       |                                                                 |       |   |   |   |   |
| Common stock, $0.01 par value; 100 shares  authorized, issued and  outstanding |       |                                                                 | —     |                                                                 |       |   | — |   |   |
| Additional paid-in capital                                                     |       |                                                                 | 552.4      |                                                                 |       |   | 552.3 |   |   |
| Retained earnings                                                              |       |                                                                 | 37.0       |                                                                 |       |   | 31.9 |   |   |
| Unamortized value of restricted stock issued                                   |       |                                                                 | (0.3       | )                                                                    |       |   | (0.3 | ) |   |
| Accumulated other comprehensive income                                         |       |                                                                 | 47.7       |                                                                 |       |   | 53.4 |   |   |
| Total stockholders’ equity                                                |       |                                                                 | 636.8      |                                                                 |       |   | 637.3 |   |   |
| Total liabilities and  stockholders’ equity                               |       |                                                                 | $          | 2,558.3                                                              |       |   |   | $ | 2,546.0 |   |   |

 

See accompanying notes to consolidated financial statements.

3

----

**VWR INTERNATIONAL,INC.Consolidated Statements ofOperations(Dollars in millions)(Unaudited)**
| ** **                                    | ** ** | **Successor**         | ** ** | **Predecessor**       | ** ** |
|-----------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                    | ** ** | **Three Months** | ** ** | **Three Months** | ** ** |
| ** **                                    | ** ** | **Ended**             | ** ** | **Ended**             | ** ** |
| ** **                                    | ** ** | **March 31,**    | ** ** | **March 31,**    | ** ** |
| ** **                                    | ** ** | **2005**              | ** ** | **2004**              | ** ** |
| Net sales                                     |       |                  | $          | 754.1                 |       |   |   |   | $ | 733.8 |   |   |
| Cost of goods  sold                           |       |                  | 561.4      |                  |       |   |   | 543.7 |   |   |
| Gross profit                                  |       |                  | 192.7      |                  |       |   |   | 190.1 |   |   |
| Selling, general  and administrative expenses |       |                  | 167.6      |                  |       |   |   | 152.0 |   |   |
| Operating income                              |       |                  | 25.1       |                  |       |   |   | 38.1 |   |   |
| Interest income                               |       |                  | (0.6       | )                     |       |   |   | (0.2 | ) |   |
| Interest expense:                             |       |                  |       |                  |       |   |   |   |   |   |
| Interest on push down debt                    |       |                  | —     |                  |       |   |   | 3.8 |   |   |
| All other interest                            |       |                  | 18.4       |                  |       |   |   | 1.7 |   |   |
| Other income, net                             |       |                  | (1.0       | )                     |       |   |   | (0.3 | ) |   |
| Income before income taxes                    |       |                  | 8.3        |                  |       |   |   | 33.1 |   |   |
| Income tax  provision                         |       |                  | 3.2        |                  |       |   |   | 14.0 |   |   |
| Net income                                    |       |                  | $          | 5.1                   |       |   |   |   | $ | 19.1 |   |   |

 

See accompanying notes to consolidated financial statements.

4

----

**VWR INTERNATIONAL,INC.Consolidated Statement of Stockholders’ Equity andOther Comprehensive IncomeThree Months Ended March 31, 2005(Dollars in millions)(Unaudited)**
| ** **                                 | ** ** | ** ** | ** ** | ** **     | ** ** | ** **   | ** ** | **Unamortized**       | ** ** | **Accumulated**   | ** ** | ** ** | ** ** |
|--------------------------------------------|------------|------------|------------|----------------|------------|--------------|------------|-----------------------|------------|-------------------|------------|------------|------------|
| ** **                                 | ** ** | ** ** | ** ** | **Additional** | ** ** | ** **   | ** ** | **value of**     | ** ** | **other**         | ** ** | ** ** | ** ** |
| ** **                                 | ** ** | **Common** | ** ** | **paid-in**    | ** ** | **Retained** | ** ** | **restricted**        | ** ** | **comprehensive** | ** ** | ** ** | ** ** |
| ** **                                 | ** ** | **stock**  | ** ** | **capital**    | ** ** | **earnings** | ** ** | **stock issued** | ** ** | **income**        | ** ** | **Total**  | ** ** |
| Balance at  January 1, 2005           |       |       | $          | —         |       |         |       | $                     | 552.3      |              |       |       | $          | 31.9 |   |   |   | $ | (0.3 | ) |   |   | $ | 53.4 |   |   | $ | 637.3 |   |
| Capital contribution                       |       |       | —     |           |       |         | 0.1        |                  |       |              | —     |       |       |   | — |   |   |   | — |   |   | 0.1 |   |
| Comprehensive  income (loss):              |       |       |       |           |       |         |       |                  |       |              |       |       |       |   |   |   |   |   |   |   |   |   |   |
| Net income                                 |       |       | —     |           |       |         | —     |                  |       |              | 5.1        |       |       |   | — |   |   |   | — |   |   | 5.1 |   |
| Foreign currency translation adjustment    |       |       | —     |           |       |         | —     |                  |       |              | —     |       |       |   | — |   |   |   | (6.0 | ) |   | (6.0 | ) |
| Unrealized gain on derivatives, net of tax |       |       | —     |           |       |         | —     |                  |       |              | —     |       |       |   | — |   |   |   | 0.3 |   |   | 0.3 |   |
| Total comprehensive income (loss)          |       |       |       |           |       |         |       |                  |       |              |       |       |       |   |   |   |   |   |   |   |   | (0.6 | ) |
| Balance at  March 31, 2005            |       |       | $          | —         |       |         |       | $                     | 552.4      |              |       |       | $          | 37.0 |   |   |   | $ | (0.3 | ) |   |   | $ | 47.7 |   |   | $ | 636.8 |   |

 

See accompanying notes to consolidated financial statements.

5

----

**VWR INTERNATIONAL,INC.Consolidated Statements of Cash Flows(Dollars in millions)(Unaudited)**
| ** **                                                                         | ** ** | **Successor**         | ** ** | **Predecessor**       | ** ** |
|------------------------------------------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                                                         | ** ** | **Three Months** | ** ** | **Three Months** | ** ** |
| ** **                                                                         | ** ** | **Ended**             | ** ** | **Ended**             | ** ** |
| ** **                                                                         | ** ** | **March 31,**    | ** ** | **March 31,**    | ** ** |
| ** **                                                                         | ** ** | **2005**              | ** ** | **2004**              | ** ** |
| Cash flows from  operating activities:                                             |       |                  |       |                  |       |   |   |   |   |   |
| Net income                                                                         |       |                  | $          | 5.1                   |       |   |   |   | $ | 19.1 |   |   |
| Adjustments to  reconcile net income to net cash provided by operating activities: |       |                  |       |                  |       |   |   |   |   |   |
| Depreciation and amortization                                                      |       |                  | 8.4        |                  |       |   |   | 8.4 |   |   |
| Gain on sale of assets                                                             |       |                  | (0.2       | )                     |       |   |   | — |   |   |
| Interest on push down debt, net of tax                                             |       |                  | —     |                  |       |   |   | 2.3 |   |   |
| Amortization of debt issuance costs                                                |       |                  | 1.5        |                  |       |   |   | — |   |   |
| Deferred income tax expense                                                        |       |                  | 2.5        |                  |       |   |   | 1.4 |   |   |
| Provision for doubtful accounts                                                    |       |                  | 0.9        |                  |       |   |   | 0.6 |   |   |
| Changes in  working capital:                                                       |       |                  |       |                  |       |   |   |   |   |   |
| Trade accounts receivable                                                          |       |                  | (7.8       | )                     |       |   |   | (26.8 | ) |   |
| Other receivables                                                                  |       |                  | (1.7       | )                     |       |   |   | 8.7 |   |   |
| Inventories                                                                        |       |                  | 9.3        |                  |       |   |   | 17.5 |   |   |
| Other assets                                                                       |       |                  | (4.4       | )                     |       |   |   | 1.9 |   |   |
| Accounts payable                                                                   |       |                  | 47.9       |                  |       |   |   | 38.9 |   |   |
| Other liabilities                                                                  |       |                  | 5.8        |                  |       |   |   | (0.7 | ) |   |
| Net cash provided by operating activities                                          |       |                  | 67.3       |                  |       |   |   | 71.3 |   |   |
| Cash flows from  investing activities:                                             |       |                  |       |                  |       |   |   |   |   |   |
| Capital expenditures                                                               |       |                  | (4.3       | )                     |       |   |   | (3.3 | ) |   |
| Proceeds from sale of property and equipment                                       |       |                  | 0.2        |                  |       |   |   | 0.4 |   |   |
| Net cash used in investing activities                                              |       |                  | (4.1       | )                     |       |   |   | (2.9 | ) |   |
| Cash flows from  financing activities:                                             |       |                  |       |                  |       |   |   |   |   |   |
| Proceeds from debt                                                                 |       |                  | 0.3        |                  |       |   |   | 13.3 |   |   |
| Repayment of debt                                                                  |       |                  | (4.4       | )                     |       |   |   | (6.8 | ) |   |
| Decrease in notes receivable from Merck KGaA and  affiliates                       |       |                  | —     |                  |       |   |   | 4.1 |   |   |
| Net change in bank checks outstanding                                              |       |                  | (26.8      | )                     |       |   |   | (2.1 | ) |   |
| Net cash (used in) provided by financing activities                                |       |                  | (30.9      | )                     |       |   |   | 8.5 |   |   |
| Effect of  exchange rate changes on cash                                           |       |                  | (1.9       | )                     |       |   |   | (0.6 | ) |   |
| Net increase in cash and cash equivalents                                          |       |                  | 30.4       |                  |       |   |   | 76.3 |   |   |
| Cash and cash  equivalents beginning of period                                     |       |                  | 116.1      |                  |       |   |   | 28.3 |   |   |
| Cash and cash  equivalents end of period                                           |       |                  | $          | 146.5                 |       |   |   |   | $ | 104.6 |   |   |
| Supplemental disclosures  of cash flow information:                                |       |                  |       |                  |       |   |   |   |   |   |
| Cash paid during  the period for:                                                  |       |                  |       |                  |       |   |   |   |   |   |
| Interest                                                                           |       |                  | $          | 6.8                   |       |   |   |   | $ | 1.3 |   |   |
| Income taxes paid, net                                                             |       |                  | $          | 3.1                   |       |   |   |   | $ | 4.2 |   |   |

 

See accompanying notes to consolidated financial statements.

6

----

**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Dollars in millions) (Unaudited)**

**(1)**   Background and Basis of Presentation

***(a)   Background***

VWR International, Inc. and its predecessor, VWRInternational Corporation, (“VWR”, the “Company”, “we” or “our”), distributescientific supplies, chemicals, and equipment, primarily in North America andEurope. Prior to April 7, 2004, Merck KGaA was VWR’s ultimate parentcompany. 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”) (the “Acquisition”).

In connection with the Acquisition, CDRVA issued$200.0 of 67¤8%unsecured senior notes due 2012 and $320.0 of 8% unsecured senior subordinatednotes due 2014 and obtained financing under a new senior secured credit facility (the “SeniorSecured Credit Facility”). Following the completion of the Acquisition, therewere a series of internal reorganizations, pursuant to which, among other things,(i) VWR International 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 InternationalCorporation prior to the change in control on April 7, 2004. CDRVA had nooperations prior to the Acquisition.

The financial statements, for the three months ended March 31,2004, do not include allocations of Merck KGaA general corporate expenses orcharges for financial reporting, tax, and treasury services, as such costs hadnot been charged to VWR. Management does not believe that charges from MerckKGaA for such services would have been material.

The financial statements,for the three months ended March 31, 2004 reflect the push down of thepurchase price previously paid by Merck KGaA for VWR to the VWR financialstatements that resulted in the recognition of push down debt due Merck KGaA ora contribution to stockholders' equity for cash consideration. Interest expensewas recorded on this push down debt based upon Merck KGaA’s intercompanyinterest rates, which are not necessarily indicative of rates VWR would haveobtained if it were not an ultimate subsidiary of Merck KGaA. Interest expense,including tax effects on push down debt, has been included in the statements ofoperations, and presented as a non-cash item in the accompanying statements ofcash flows.

***(b)   Basis ofPresentation***

The accompanying consolidated financial statementsinclude the accounts of VWR and its subsidiaries after elimination of allintercompany balances and transactions. The financial statements includedherein have been prepared by the Company without audit, pursuant to the rules andregulations of the Securities and Exchange Commission (“SEC”). Certaininformation and footnote disclosures normally included in financial statementsprepared in accordance with accounting principles generally accepted in theUnited States of America, have been condensed or omitted pursuant to such rules andregulations. The December 31, 2004 balance sheet is the balance sheetincluded in the audited financial statements as 

7

----

**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions) (Unaudited)**

**(1)**   Background and Basisof Presentation (Continued)

shown in the Company’s2004 Annual Report on Form 10-K for the year ended December 31, 2004.The Company believes that the disclosures included herein are adequate to makethe information presented not misleading when read in conjunction with thefinancial statements, footnotes and related disclosures included in the Company’sAnnual Report on Form 10-K for the year ended December 31, 2004.

The financial information presented herein reflects alladjustments (consisting only of normal-recurring adjustments) that are, in theopinion of management, necessary for a fair presentation of the results for theinterim periods presented. The results for interim periods are not necessarilyindicative of the results to be expected for the full year.

The preparation of financial statements in conformitywith accounting principles generally accepted in the United States of Americarequires management 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. While actual results could differfrom those estimates, management believes that the estimates are reasonable.

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

**(2)**   NewAccounting Standard

During December 2004,the Financial Accounting Standards Board (“FASB”) issued Statement of FinancialAccounting Standard (“SFAS”) No. 123 Revised (“123R”), *Share-Based Payment*. This Statementrequires companies to recognize in the income statement, the grant value ofstock options and other forms of equity-based compensation issued to employees.The provisions of this Statement become effective at the beginning of 2006. DuringAugust 2004, CDRV, our ultimate parent, introduced a share-basedcompensation arrangement as a component of its compensation plans for ouremployees. We estimate that the effect on net income in the periods followingadoption of SFAS No. 123R will be consistent with our pro-forma disclosureunder SFAS No. 123, except that estimated forfeitures will be consideredin the calculation of compensation expense under SFAS No. 123R. However,the actual effect on net income will vary depending upon the number of grantsof equity, if any, compared to prior years. Further, we have not yet determinedthe actual model we will use to calculate fair value. Management is in theprocess of evaluating but has not reached a conclusion on the impact thisStandard will have on its results of operations.

8

----

**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions) (Unaudited)**

**(3)**   Stock-BasedCompensation

The Company measurescompensation expense for its stock-based employee compensation plan using theintrinsic value method of Accounting Principals Board Opinion No. 25, *Accounting for Stock Issued to Employees*. TheCompany has adopted the disclosure-only provisions of SFAS No. 148, *Accounting for Stock-Based Compensation—Transitionand Disclosure, an amendment of FASB Statement No. 123*. Therefore,the Company has not recognized compensation expense for its options grantedbecause such options had an exercise price equal to their fair market value onthe date of grant. Had compensation expense for the Company’s stock optionplans been determined based on the fair value at the grant date for awardsunder the Company’s stock plans, consistent with the methodology prescribedunder SFAS No. 148, the Company’s net income would have approximated thepro-forma amount indicated below:
| ** **                                                                                                          | ** ** | ** **            | ** ** |
|---------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                                                          | ** ** | **Three Months** | ** ** |
| ** **                                                                                                          | ** ** | **Ended**             | ** ** |
| ** **                                                                                                          | ** ** | **March 31,**    | ** ** |
| ** **                                                                                                          | ** ** | **2005**              | ** ** |
| Net income as  reported                                                                                             |       |                  | $          | 5.1 |   |   |
| Deduct:  stock-based compensation expense determined using fair value based  method for all awards, net of tax |       |                  | (0.3       | ) |   |
| Pro-forma net income                                                                                                |       |                  | $          | 4.8 |   |   |

 

Thefair value of the Company’s stock options was estimated using the Black-Scholesoption-pricing model with the following weighted average assumptions:
| Risk free  interest rate  |   | 4.09    | %      |
|---------------------------|--------|---------|--------|
| Expected life of  options |   | 4 years |   |
| Volatility                |   | 20      | %      |
| Expected dividend yield   |   | 0.0     | %      |

 

**(4)**   Restructuring

**(a)   Restructuringas a Result of the Acquisition**

The Acquisition was accounted for under the purchasemethod of accounting in accordance with SFAS No. 141, *BusinessCombinations.*Under purchase accounting, tangible and identifiableintangible assets acquired and liabilities assumed have been recorded at theirrespective fair values based on third party valuations. The purchase accountingadjustments made in the accompanying financial statements have been finalizedin the first quarter of 2005.

During the first quarter of 2005, we implementedvarious restructuring plans that were formulated in 2004 and were in theplanning and evaluation stages. Accordingly, we recorded additionalrestructuring accruals of approximately $24.1 in the first quarter of 2005,which have been recorded as adjustments to acquisition costs (increases togoodwill) pursuant to the provisions of Emerging Issues Task Force Issue No. 95-3,*Recognition of Liabilities in Connectionwith a Purchase Business Combination*(“EITF 95-3”). These chargesprimarily reflect severance and other exit costs including estimates forenvironmental 

9

----

**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions) (Unaudited)**

**(4)**   Restructuring(Continued)

remediation associatedwith cessation of manufacturing operations at a plant in France and severancecosts associated with the consolidation of certain sales and marketingpersonnel in our German and UK operations.

The charge for environmental remediation in France ofapproximately $6.4 is based on estimates obtained from environmentalengineering firms considering requirements set forth under existing rules andregulations in France. There can be no assurance that such estimates willultimately be sufficient to cover actual remediation costs, which may berequired by regulatory authorities.

Thefollowing table sets forth the activity associated with the Company’s liabilityfor restructuring activities during the three months ended March 31, 2005.
| ** **                          | ** ** | **Balance as** | ** ** | **Accruals**        | ** ** | **Cash**      | ** ** | ** **      | ** ** | **Balance as** | ** ** |
|-------------------------------------|------------|---------------------|------------|---------------------|------------|---------------|------------|-----------------|------------|---------------------|------------|
| ** **                          | ** ** | **January 1,** | ** ** | **Charged to** | ** ** | **Payments/** | ** ** | **Translation** | ** ** | **March 31,**  | ** ** |
| ** **                          | ** ** | **2005**            | ** ** | **Goodwill**        | ** ** | **Other**     | ** ** | **Adjustments** | ** ** | **2005**            | ** ** |
| Severance and  termination benefits |       |                | $          | 21.0                |       |          |       | $               | 13.4       |                |       |   | $ | (10.5 | ) |   |   | $ | (0.7 | ) |   |   | $ | 23.2 |   |   |
| Facilities  related                 |       |                | 0.5        |                |       |          | 10.5       |            |       |                | (0.3       | ) |   |   | — |   |   |   | 10.7 |   |   |
| Other                               |       |                | 0.3        |                |       |          | 0.2        |            |       |                | (0.2       | ) |   |   | — |   |   |   | 0.3 |   |   |
| Totals                              |       |                | $          | 21.8                |       |          |       | $               | 24.1       |                |       |   | $ | (11.0 | ) |   |   | $ | (0.7 | ) |   |   | $ | 34.2 |   |   |

 

**(b)   Other restructuring activities**

In addition, we initiateda cost reduction program in the United States in response to relatively staticmarket conditions and implemented a reduction in force during the first quarterof 2005. In connection with this action, we recorded accruals related toseverance and other costs totaling approximately $2.1, which are included inselling, general and administrative expenses in the accompanying statement ofoperations for the threemonths ended March 31, 2005. Through March 31, 2005, amountspaid in connection with this restructuring were not material and substantiallyall actions have been completed.

**(5)**   Goodwilland Other Intangibles

Changesin the carrying amount of goodwill by segment for the three months ended March 31,2005 are as follows:
| ** **                                              | ** ** | **North**             | ** ** | **European** | ** ** | **Science**   | ** ** | ** ** | ** ** |
|---------------------------------------------------------|------------|-----------------------|------------|--------------|------------|---------------|------------|------------|------------|
| ** **                                              | ** ** | **American Lab** | ** ** | **Lab**      | ** ** | **Education** | ** ** | **Total**  | ** ** |
| Balance as of  January 1, 2005                     |       |                  | $          | 645.0        |       |          |       | $          | 192.8      |   |   |   | $ | 69.2 |   |   | $ | 907.0 |   |
| Changes as a result of purchase accounting  adjustment: |       |                  |       |         |       |          |       |       |       |   |   |   |   |   |   |
| Restructuring charges, net of tax                       |       |                  | 0.6        |         |       |          | 19.2       |       |       |   | 0.2 |   |   | 20.0 |   |
| Defined benefit plan curtailment,  net of tax           |       |                  | (8.0       | )            |       |          | —     |       |       |   | — |   |   | (8.0 | ) |
| Currency translation changes                            |       |                  | (0.8       | )            |       |          | (7.9       | )          |       |   | — |   |   | (8.7 | ) |
| Balance as of  March 31, 2005                      |       |                  | $          | 636.8        |       |          |       | $          | 204.1      |   |   |   | $ | 69.4 |   |   | $ | 910.3 |   |

 

10

----

**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions) (Unaudited)**

**(5)**   Goodwill and OtherIntangibles (Continued)

The Company finalized its plans with regard to thecurtailment of the U.S. defined pension plan. In accordance with EITF 95-3, thecurtailment gain of $8.0, net of tax, was recorded as a reduction to goodwill. SeeNote 7 for further information.

The following schedulesets forth the major classes of intangible assets held at March 31, 2005:
| ** **                              | ** ** | **Lives** | ** ** | ** ** | ** ** |
|-----------------------------------------|------------|-----------|------------|------------|------------|
| Amortized  Intangibles:                 |       |      |       |       |       |
| Customer Relationships in North America |       | 33        |       | $          | 241.7      |   |
| Customer Relationships in Europe        |       | 20        |       | 75.0       |       |
| Chemical Supply Agreements              |       | 10        |       | 32.2       |       |
| Other                                   |       | various   |       | 4.4        |       |
| Less: Accumulated Amortization          |       |      |       | (14.5      | )          |
| Amortized Intangibles, net              |       |      |       | 338.8      |       |
| Unamortized  Intangibles:               |       |      |       |       |       |
| Trademarks and Tradenames               |       |      |       | 222.6      |       |
| Total Intangible Assets                 |       |      |       | $          | 561.4      |   |

 

**(6)**   Long-TermBorrowings and Senior Secured Credit Facilities

Followingis a summary of our debtobligations:
| ** **                                       | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|--------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                       | ** ** | **2005**           | ** ** | **2004**              | ** ** |
| Senior Secured  Credit Facility                  |       | $                  | 552.0      |                  |       | $ | 559.5 |   |   |
| 67¤8%  Unsecured Senior Notes due 2012      |       | 200.0              |       |                  | 200.0      |   |   |
| 8% Unsecured  Senior Subordinated Notes due 2014 |       | 320.0              |       |                  | 320.0      |   |   |
| Loan from CDRV  Holdings, Inc.              |       | 0.7                |       |                  | 0.7        |   |   |
| Bank loans                                       |       | 7.1                |       |                  | 11.9       |   |   |
| Capital leases                                   |       | 6.6                |       |                  | 7.1        |   |   |
| Total debt                                       |       | 1,086.4            |       |                  | 1,099.2    |   |   |
| Less short-term  portion                         |       | (8.1               | )          |                  | (12.9      | ) |   |
| Total long-term  portion                         |       | $                  | 1,078.3    |                  |       | $ | 1,086.3 |   |   |

 

11

----

**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions) (Unaudited)**

**(6)**   Long-Term Borrowings and Senior SecuredCredit Facilities (Continued)

**(a) Senior Secured Credit Facility**

The Senior Secured CreditFacility provides for aggregate maximum borrowings of approximately $702.0under (1) a term loan facility providing for a loan denominated in Eurosin an aggregate principal amount currently outstanding of €132.7million (or approximately $172.1 on a U.S. dollar equivalent basis as of March 31, 2005), (2) aterm loan facility providing for a term loan denominated in U.S. dollars in anaggregate principal amount currently outstanding of $379.9, and (3) amulti-currency revolving credit facility, providing for up to $150.0 inmulti-currency revolving loans (including standby and commercial letters ofcredit) outstanding at any time. Un-drawn amounts under the multi-currencyrevolving credit facility will be available on a revolving credit basis forgeneral corporate purposes. As of March 31, 2005, we had $8.0 of un-drawnletters of credit and our remaining borrowing availability under the $150.0multi-currency revolving credit facility was $142.0.

The term loan facilities will mature in 2011 and themulti-currency revolving credit facility will mature in 2009. The principalamount of the term loans will be amortized in annual installments for the firstsix years and quarterly installments during the seventh year.

Subject to certainexceptions, the Senior Secured Credit Facility is expected to be 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 operatingcash flow (as defined) for any fiscal year unless certain leverage ratiotargets are met (beginning in 2006).

***Security; Guarantees***

The obligations under theSenior Secured Credit Facility are guaranteed by our parent, CDRV Holdings, Inc.,and each significant direct and indirect domestic subsidiary of VWR, as thatterm is defined in the credit agreement. As of March 31, 2005, none of thedomestic subsidiaries of VWR met the definition of significant under the creditagreement. In addition, the Senior Secured Credit Facility and the guaranteesthereunder are secured by security interests in and pledges of or liens onsubstantially all of the tangible and intangible assets of VWR and itssubsidiaries.

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

***Interest***

At our election, theinterest rates per annum applicable to the U.S. dollar-denominated term loancan be based on 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 rate perannum applicable to the Euro-denominated term loan are based on a fluctuatingrate of interest measured by reference to an adjusted EURIBOR plus a borrowingmargin. 

12

----

**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions) (Unaudited)**

**(6)**   Long-Term Borrowingsand Senior Secured Credit Facilities (Continued)

As of March 31,2005, the interest rates on the U.S. dollar-denominated and Euro-denominatedterm loans were 5.17% and 4.90%, respectively.

Effective July 21,2004, VWR entered into an interest rate cap to hedge a portion of thevariability of cash flows related to potential changes in interest rates on €35.0million of our Euro-denominated term loan. The instrument has a 5.0% EURIBORcap that terminates on July 21, 2006. The EURIBOR rate was approximately2.1% as of March 31, 2005.

***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, modifyterms of the indentures, engage in mergers or consolidations, change thebusiness conducted by us taken as a whole, make capital expenditures, or engagein certain transactions with affiliates. In addition, under our Senior SecuredCredit facility, we are required to comply with specified financial ratios andtests, including a minimum interest expense coverage ratio, a maximum leverageratio, and maximum capital expenditures test. As of March 31, 2005, theCompany was in compliance with all covenants.

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

The 67¤8%unsecured senior notes mature on April 15, 2012. The 8% unsecured seniorsubordinated notes mature on April 15, 2014. Both the senior and seniorsubordinated 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.

Under the Senior Indentureand the Senior Subordinated Indenture, additional securities may be issued inone or more series from time to time, subject to limitations set forth undercertain covenants.

**(7)**   DefinedBenefit Plans

VWR sponsors various retirement plans for mostfull-time employees. Pension plan benefits for the defined benefit plans arebased primarily on participants’ compensation and years of credited service. Ithas been VWR’s policy to fund the minimum amount required by local regulationsof current and prior year service costs under its funded defined benefit plans.

13

----

**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions) (Unaudited)**

**(7)**   Defined Benefit Plans(Continued)

Net periodic pension costof VWR’s U.S. defined benefit plan and for VWR’s significant Non-U.S. definedbenefit plans in Germany, France and the UK include the following components:
| ** **                      | ** ** | ** **                                   | ** ** | ** **                                           | ** ** | **Net Periodic Pension**                  | ** ** |
|---------------------------------|------------|----------------------------------------------|------------|------------------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                      | ** ** | ** **                                   | ** ** | ** **                                           | ** ** | **Cost for the German, French** | ** ** |
| ** **                      | ** ** | **U.S. Defined Benefit Plan** | ** ** | **and UK Defined Benefit Plans** | ** ** |
| ** **                      | ** ** | **Successor**                                | ** ** | **Predecessor**                                      | ** ** | **Successor**                                       | ** ** | **Predecessor** | ** ** |
| ** **                      | ** ** | **Three Months Ended**             | ** ** | **Three Months Ended**                     | ** ** |
| ** **                      | ** ** | **March 31, 2005**                 | ** ** | **March 31, 2004**                         | ** ** | **March 31, 2005**                        | ** ** | **March 31, 2004** | ** ** |
| Service cost                    |       |                                         | $          | 1.9                                                  |       |                                                |       | $ | 1.7 |   |   |   | $ | 0.9 |   |   |   | $ | 0.1 |   |   |
| Interest cost                   |       |                                         | 2.2        |                                                 |       |                                                | 2.0        |   |   |   | 1.1 |   |   |   | 0.3 |   |   |
| Expected return  on plan assets |       |                                         | (2.1       | )                                                    |       |                                                | (2.3       | ) |   |   | (1.0 | ) |   |   | — |   |   |
| Recognized net  actuarial loss  |       |                                         | —     |                                                 |       |                                                | 0.8        |   |   |   | — |   |   |   | — |   |   |
| Net periodic pension cost       |       |                                         | $          | 2.0                                                  |       |                                                |       | $ | 2.2 |   |   |   | $ | 1.0 |   |   |   | $ | 0.4 |   |   |

 

The Company does not planto make a contribution to the U.S. defined benefit plan during 2005. TheCompany made combined contributions to the Non-U.S. defined benefit plans ofapproximately $0.7 for the three months ended March 31, 2005 and expectsto make additional contributions to the Non-U.S. defined benefit plans ofapproximately $1.8 during the remainder of 2005.

During 2004, we launched acomprehensive study of our U.S. employee benefits programs. The study wasdesigned to both benchmark our benefits from a competitive perspective andassess the balance of the program components in terms of employee needs. TheBoard of Directors approved a number of benefit changes during February 2005,which will be implemented effective June 1, 2005. The most significantchanges involve the curtailment of our U.S. pension plan, improvements in therate of employer matching contributions to our 401(k) defined contributionplan, increased rates of employee contributions to fund ongoing medicalbenefits, and the elimination of carryover vacation days by the end of 2006. Thesechanges are expected to modestly reduce our benefit costs, prospectively.

As a result of thedecision to curtail the pension plan, future benefits will be frozen effective May 31,2005. Most participants will earn no further benefits under the plan after thatdate. As a result of this action, there was a reduction in the plan’s projectedbenefit obligation of $13.1 that was recorded as a reduction to pensionliabilities. Goodwill and deferred tax assets were reduced by $8.0 and $5.1,respectively, as of March 31, 2005.

**(8)**   Segment Financial Information

VWR reports financial results on the basis of thefollowing three business segments: North American laboratory distribution, orNorth American Lab, European laboratory distribution, or European Lab, andScience Education. Both the North American Lab and European Lab segments arecomprised of the distribution of scientific supplies to customers engaged inpharmaceuticals, biotechnology, chemicals, technology, and food processing;governmental agencies; colleges and universities; and environmentalorganizations. Science Education is comprised of the distribution of scientificsupplies and specialized kits to primary and secondary schools as well asdistribution of scientific supplies to universities and research institutes.

14

----

**VWR INTERNATIONAL, INC. Notes to Consolidated Financial Statements (Continued) (Dollars in millions) (Unaudited)**

**(8)**   Segment FinancialInformation (Continued)

Selectedbusiness segment financial information is presented below. Inter-segmentactivity has been eliminated. Therefore, revenues reported for each operatingsegment are substantially all from external customers.
| ** **            | ** ** | **Successor**                    | ** ** | **Predecessor**              | ** ** |
|-----------------------|------------|----------------------------------|------------|------------------------------|------------|
| ** **            | ** ** | **Three Months Ended** | ** ** |
| ** **            | ** ** | **March 31, 2005**     | ** ** | **March 31, 2004** | ** ** |
| **Net Sales**         |       |                             |       |                         |       |   |   |   |   |
| North American Lab    |       |                             | $          | 460.9                        |       |   |   | $ | 450.5 |   |   |
| European Lab          |       |                             | 268.8      |                         |       |   | 261.4 |   |   |
| Science Education     |       |                             | 24.4       |                         |       |   | 21.9 |   |   |
| Total                 |       |                             | $          | 754.1                        |       |   |   | $ | 733.8 |   |   |
| **Operating  Income** |       |                             |       |                         |       |   |   |   |   |
| North American Lab    |       |                             | $          | 14.6                         |       |   |   | $ | 26.3 |   |   |
| European Lab          |       |                             | 11.1       |                         |       |   | 11.9 |   |   |
| Science Education     |       |                             | (0.6       | )                            |       |   | (0.1 | ) |   |
| Total                 |       |                             | $          | 25.1                         |       |   |   | $ | 38.1 |   |   |

 

The following is a reconciliation of reported operatingincome by segment to income before income taxes:
| ** **                     | ** ** | **Successor**                    | ** ** | **Predecessor**              | ** ** |
|--------------------------------|------------|----------------------------------|------------|------------------------------|------------|
| ** **                     | ** ** | **Three Months Ended** | ** ** |
| ** **                     | ** ** | **March 31, 2005**     | ** ** | **March 31, 2004** | ** ** |
| Operating income, as  reported |       |                             |       |                         |       |   |   |   |   |
| North American Lab             |       |                             | $          | 14.6                         |       |   |   | $ | 26.3 |   |   |
| European Lab                   |       |                             | 11.1       |                         |       |   | 11.9 |   |   |
| Science Education              |       |                             | (0.6       | )                            |       |   | (0.1 | ) |   |
| Total                          |       |                             | 25.1       |                         |       |   | 38.1 |   |   |
| Interest income                |       |                             | (0.6       | )                            |       |   | (0.2 | ) |   |
| Interest expense:              |       |                             |       |                         |       |   |   |   |   |
| Interest on push down debt     |       |                             | —     |                         |       |   | 3.8 |   |   |
| All other interest             |       |                             | 18.4       |                         |       |   | 1.7 |   |   |
| Other income, net              |       |                             | (1.0       | )                            |       |   | (0.3 | ) |   |
| Income before  income taxes    |       |                             | $          | 8.3                          |       |   |   | $ | 33.1 |   |   |

 

**(9)**   SubsequentEvent

On April 1, 2005, the Company announced theacquisitions of AGB Scientific Ltd., headquartered in Dublin, Ireland, and ofAdvanced Instruments Sales & Service, Inc., headquartered in San Juan,Puerto Rico. Total consideration, consisting almost entirely of cash, wasapproximately $40.6, and was funded from cash and cash equivalents on hand.

15

----

**Item2—*Management’s Discussion and Analysis of FinancialCondition and Results of Operations***

This Form 10-Qcontains forward-looking statements within the meaning of Section 27A ofthe Securities Act of 1933 and Section 21E of the Securities Exchange Actof 1934. All statements other than statements of historical facts included inthis Form 10-Q may constitute forward-looking statements. We have basedthese forward-looking statements on our current expectations and projectionsabout future events. Although we believe that our assumptions made inconnection with the forward-looking statements are reasonable, there can be noassurances that the assumptions and expectations will prove to be correct. Certainfactors that might cause such a difference include those discussed in thesection entitled “Management’s Discussion and Analysis of Financial Conditionand Results of Operations—Forward-Looking Statements” contained in ourAnnual Report on Form 10-K for the year ended December 31, 2004. Weundertake no obligation to publicly update or revise any forward-lookingstatements, whether as a result of new information, future events or otherwise.In light of these risks, uncertainties and assumptions, the forward-lookingevents discussed in the report might not occur.

**Overview**

Our net sales are derived primarily from the sale ofscientific supplies, including laboratory supplies, research chemicals,apparatus, laboratory furniture and services. Freight costs that are billed toour customers are also included in net sales.

Our cost of sales consists primarily of the cost ofinventory shipped and our cost of labor for services provided on-site at ourcustomer’s locations, such as storeroom management and product delivery. Costof sales also includes freight expenses incurred to deliver products tocustomers as well as credits for rebates earned from suppliers.

Selling, general andadministrative expenses primarily reflect the costs of operations dedicated togenerating new sales, maintaining existing customer relationships, enhancingtechnology capabilities, receiving customer orders and maintaining ourdistribution center facilities. These expenses also include depreciation andamortization.

**Compliance with Sarbanes-Oxley Act**

We have launched acompliance program to address the requirements of Section 404 of theSarbanes-Oxley Act in anticipation of the compliance date of December 31,2006. Compliance with these requirements requires significant incrementalinternal resources and financial investments including, but not limited to, useof outside experts, additional audit fees, and potential changes in systemsdesign, security and structure. For example, we have expanded our finance andaccounting team to include a new position of Vice President of Internal Audit.We also expect to spend in excess of $5 million over the next twelve toeighteen months in conducting our internal assessment of our internal controlsover financial reporting. A component of this study will also focus on thequality, security, and functionality of our information systems. While we havedeveloped sound plans to address our compliance requirements, there can be noassurance that such efforts will not have an impact on, or otherwise distractour senior financial team from, our operations or require additional spendingabove and beyond our initial expectations.

**Basisof Financial Statement Presentation**

Prior to April 7, 2004, Merck KGaA was ourultimate parent company. On April 7, 2004, Merck KGaA sold its investmentin us to CDRVA. As a result of the Acquisition, the financial statements forthe periods included in our December 31, 2004 reporting reflect theresults of operations, cash flows, and statements of stockholders’ equity andother comprehensive income (loss) using predecessor and successor time periods.All intercompany accounts and transactions have been eliminated.

16

----

The purchase price paid by Merck KGaA for thebusinesses was pushed down to VWR International Corporation’s financialstatements from the date of acquisition and has resulted in the allocation ofthe purchase price to the assets and liabilities acquired and the recognitionof either push down debt due Merck KGaA or a contribution to shareholders’equity for cash consideration. Interest expense is recorded on this push downdebt based upon Merck KGaA’s intercompany interest rates, which are notnecessarily indicative of rates we would have obtained if we were not anultimate subsidiary of Merck KGaA. Interest expense, including tax effects, onpush down debt has been included in the statements of operations, and presentedas a non-cash item in the accompanying statements of cash flows and a capitalcontribution in the statement of shareholders’ equity, as this interest is notrequired to be paid to Merck KGaA.

The financial statements,for all periods up to April 6, 2004, do not include allocations of MerckKGaA general corporate expenses or charges for financial reporting, tax, andtreasury services, as such costs were not charged to us. Management does notbelieve that charges for such services would have been material. The historicalfinancial information does not reflect the added costs that we will incur as aseparate company. These additional costs will include costs for new informationtechnology systems to operate as a separate company, costs of periodicreporting to the SEC, as well as the costs related to a global tax and treasurystaff and compliance with the Sarbanes-Oxley Act of 2002. This historicalfinancial information also does not reflect the incremental costs associatedwith changes that occured in our capital structure and operations.

**Effects of the Acquisition**

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 tradenames, 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 depreciation andamortization expense. The new debt outstanding resulted in a significantincrease in interest expense. The cash outflow for interest expense will bepartially offset by tax deductions associated with such interest expense.

**Constant Currency Analysis**

We maintain operations in North America and in fifteenEuropean countries. Approximately 40% of our net sales for the year ended December 31,2004 and the three months ended March 31, 2005 originated in currenciesother than the U.S. dollar, principally the Euro, the British pound sterlingand the Canadian dollar. As a result, changes in our revenues and operatingprofits include the impact of changes in foreign currency exchange rates. Weprovide “constant currency” disclosures in this Report on Form 10-Q toremove the impact of the fluctuation in foreign exchange rates.

We utilize constantcurrency results in our analysis of segment performance. When we use the term “constantcurrency”, it means that we have translated financial data for a period intoU.S. dollars using the same foreign currency exchange rates that we used to translatefinancial data for the previous comparable period. We believe that thiscalculation is a useful measure, indicating the actual growth of ouroperations. Earnings from our subsidiaries are not generally repatriated to theUnited States, and we typically do not incur significant gains or losses onforeign currency transactions with our subsidiaries. Therefore, changes inforeign currency exchange rates primarily impact only reported earnings and notour actual cash flow or economic condition.

17

----

**Business Segments**

We report our financialresults on the basis of the following three business segments: North Americanlaboratory distribution, or North American Lab, European laboratorydistribution, or European Lab, and Science Education. Both the North AmericanLab and European Lab segments are comprised of the distribution of scientificsupplies to customers in pharmaceuticals, biotechnology, chemicals, technology,and food processing; governmental agencies; colleges and universities; andenvironmental organizations. Science Education is comprised of the manufactureand distribution of scientific supplies and specialized kits principally toprimary and secondary schools in North America.

**Results of Operations**

**NetSales**

Thefollowing table presents net sales and changes in net sales by reportablesegment for the three months ended March 31, 2005 and 2004 (dollars inmillions):
| ** **         | ** ** | **Three Months Ended March 31,** | ** ** |
|--------------------|------------|------------------------------------------------------|------------|
| ** **         | ** ** | **2005**                                             | ** ** | **% Change** | ** ** | **2004** | ** ** |
| Net Sales          |       |                                                 |       |   |   |   |   |   |   |
| North American Lab |       | $                                                    | 460.9      |   |   | 2.3 | % |   | $ | 450.5 |   |
| European Lab       |       | 268.8                                                |       |   | 2.8 | % |   | 261.4 |   |
| Science Education  |       | 24.4                                                 |       |   | 11.4 | % |   | 21.9 |   |
| Total              |       | $                                                    | 754.1      |   |   | 2.8 | % |   | $ | 733.8 |   |

 

Net sales in the first quarter of 2005 increased $20.3million or 2.8% from $733.8 million in the first quarter of 2004. Foreigncurrency changes accounted for $16.7 million of the growth in net salesyear-over-year. Excluding the effects of foreign exchange, North American Laband Science Education net sales grew $9.6 million while European Lab salesdeclined by $6.0 million. Sluggish demand and pricing pressures adverselyimpacted growth during the first quarter of 2005.

Net sales in the North American Lab segment for thefirst quarter of 2005 increased to $460.9 million from $450.5 million in thefirst quarter of 2004, an increase of $10.4 million or 2.3%. Favorable currencyexchange rates (primarily between the U.S. dollar and the Canadian dollar)accounted for $3.3 million of the year-over-year increase in net sales. Our netsales in the bio-pharmaceutical and education markets continue to experiencelow single-digit growth while net sales in the industrial market have declinedslightly.

Net sales in the European Lab segment for the firstquarter of 2005 increased to $268.8 million from $261.4 million in the firstquarter of 2004, an increase of $7.4 million, or 2.8%. Currency exchange ratesfavorably impacted net sales by $13.4 million; therefore, net sales declined by2.3% excluding the favorable impact of currency exchange rates. Our EuropeanLab segment operates in fifteen countries and results are heavily influenced bythe larger countries in which we operate such as Germany, UK, and France. Theselarge markets have experienced sluggish economic growth, which has suppresseddemand for our products. We are experiencing strong growth in some of oursmaller operations such as Italy, Netherlands, Spain and the Nordic region. Oursales in the bio-pharmaceutical market were up slightly from the same periodlast year whereas our net sales in the industrial, education and resellersmarkets were down slightly.

Net sales in the ScienceEducation segment for the first quarter of 2005 increased $2.5 million to$24.4 million from $21.9 million in the first quarter of 2004, or 11.4%.The increase was primarily driven by increased sales activity in the publishersmarket and modest sales growth in the smaller commercial market. This segment’sbusiness in the scientific supplies for school laboratories is also improving,as there are fewer budget constraints by various state and local governments onthe funding of such programs.

18

----

***Gross Profit***

Thefollowing table presents gross profit for the three months ended March 31,2005 and 2004 (dollars in millions):
| ** **                              | ** ** | **Three Months Ended March 31,**                                                     | ** ** |
|-----------------------------------------|------------|----------------------------------------------------------------------------------------------------------|------------|
| ** **                              | ** ** | **        2005        ** | ** ** | **        2004        ** | ** ** |
| Gross profit                            |       |                                                                                                     | $          | 192.7 |   |   |   | $ | 190.1 |   |   |
| Percentage of net sales  (gross margin) |       |                                                                                                     | 25.6       | % |   |   | 25.9 | % |   |

 

Gross profit grew $2.6million or 1.4% for the first quarter of 2005 compared to the same period of2004. Gross profit as a percentage of net sales was 25.6% for the first threemonths of 2005 and 25.9% for the comparable period in 2004. Approximately $4.9million of this growth is attributable to the effect of currency translation. Therefore,excluding the effects of foreign exchange, gross profit declined year-over-yearby $2.3 million. Our North American Lab margins improved slightly while boththe European Lab and Science Education margins declined. The European Lab grossmargin percentages decreased as a result of price pressures and sluggisheconomic growth in the larger European countries in this segment, as previouslydiscussed. There was also a negative impact in the Science Education segment asa result of a shift in the mix of business within this operating segment in thefirst quarter of 2005.

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

Thefollowing table presents selling, general, and administrative expenses for thethree months ended March 31, 2005 and 2004 (dollars in millions):
| ** **                                    | ** ** | **Three Months Ended March 31,**                                                     | ** ** |
|-----------------------------------------------|------------|----------------------------------------------------------------------------------------------------------|------------|
| ** **                                    | ** ** | **        2005        ** | ** ** | **        2004        ** | ** ** |
| Selling, general  and administrative expenses |       |                                                                                                     | $          | 167.6 |   |   |   | $ | 152.0 |   |   |
| Percentage of net sales                       |       |                                                                                                     | 22.2       | % |   |   | 20.7 | % |   |

 

Selling, general, andadministrative (“SG&A”) increased $15.6 million or 10.3% during the firstquarter of 2005 compared to the first quarter of 2004. Excluding the effect offoreign exchange totaling $4.0 million, SG&A increased by $11.6 million or7.6% from 2004. Several factors have contributed to the year-over-year increasein SG&A since the Acquisition in the second quarter of 2004. Following theAcquisition, we made significant investments in sales, marketing, and sourcingpersonnel to support our revenue and strategic growth plans and expanded ourfinance and administrative capabilities to support the Company as a stand aloneentity. As a result, SG&A costs have increased in comparison to thecorresponding period of the preceding year. Further, SG&A costs were alsohigher in the first quarter of 2005 than the corresponding period of theprevious year due to the recording of severance and related costs associatedwith a cost reduction program in the U.S. of $2.1 million.

19

----

***Operating Income***

Thefollowing table presents operating income and operating income as a percentageof net sales by reportable segment for the three months ended March 31,2005 and 2004 (dollars in millions):
| ** **         | ** ** | **Three Months Ended March 31,** | ** ** |
|--------------------|------------|------------------------------------------------------|------------|
| ** **         | ** ** | **2005**                                             | ** ** | **2004** | ** ** |
| ** **         | ** ** | ** **                                           | ** ** | **% of** | ** ** | ** ** | ** ** | **% of** | ** ** |
| ** **         | ** ** | **Amount**                                           | ** ** | **Net Sales** | ** ** | **Amount** | ** ** | **Net Sales** | ** ** |
| Operating Income   |       |                                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| North American Lab |       |                                                 | $          | 14.6 |   |   |   | 3.2 | % |   |   | $ | 26.3 |   |   |   | 5.8 | % |   |
| European Lab       |       |                                                 | 11.1       |   |   |   | 4.1 | % |   |   | 11.9 |   |   |   | 4.6 | % |   |
| Science Education  |       |                                                 | (0.6       | ) |   |   | (2.5 | )% |   |   | (0.1 | ) |   |   | (0.5 | )% |   |
| Total              |       |                                                 | $          | 25.1 |   |   |   | 3.3 | % |   |   | $ | 38.1 |   |   |   | 5.2 | % |   |

 

As a result of the factors described previously,operating income for the three months ended March 31, 2005 decreased to$25.1 million or 3.3% of net sales, from $38.1 million or 5.2% of net sales forthe three months ended March 31, 2004, a decrease of $13.0 million, or34.1%. Strengthening foreign currencies increased operating income byapproximately $0.9 million.

Operating income in the North American Lab segment forthe three months ended March 31, 2005 decreased to $14.6 million from$26.3 million for the three months ended March 31, 2004, a decrease of$11.7 million, or 44.5%. The decrease in operating margin to 3.2% in 2005 from5.8% in 2004 was primarily due to the additional SG&A expenses fromincreased investment in the business, increases to corporate costs that areallocated to this segment and the $2.1 million of expenses related to personnelreductions in the first quarter of 2005.

Operating income in the European Lab segment for thethree months ended March 31, 2005 decreased to $11.1 million from $11.9million for the three months ended March 31, 2004, a decrease of $0.8million, or 6.7%. Operating margins decreased to 4.1% for the three monthsended March 31, 2005 compared to 4.6% for the three months ended March 31,2004. Strengthening European currencies increased operating income by $0.5 million.The decline in gross margins was the primary factor adversely affecting thissegment’s operating income as savings from 2004 restructuring efforts mitigatedcost increases.

The operating loss for theScience Education segment for the three months ended March 31, 2005increased to $(0.6) million from $(0.1) million for the three months ended March 31,2004 while operating margins decreased to (2.5)% for the three months ended March 31,2005 compared to (0.5)% for the three months ended March 31, 2004. Thissegment’s decline in gross margin as well as some additional investment in itssales force negatively impacted operating results in the first quarter of 2005.

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

Interest expense, net ofinterest income, was $17.8 million for the three months ended March 31,2005 compared to $5.3 million for the three months ended March 31, 2004. Thisincrease was due to the new capital structure that was established inconnection with the Acquisition that resulted in a higher level of outstandingdebt and an increase in interest rates. The increase in interest rates in thesuccessor period reflects market rates for third party debt as compared to thepredecessor period where substantially all debt was intercompany.

20

----

***Other Income, net***

Other income, net was $1.0million and $0.3 million for the periods ended March 31, 2005 and 2004,respectively. The major components of other income are equity income associatedwith a European equity investment and exchange gains on foreign currencytransactions. The 2005 increase is primarily the result of an increase inexchange gains on foreign currency transactions.

***Income Taxes***

The effective income taxrate was 38.6% in the first quarter of 2005 as compared to 42.3% in the firstquarter of 2004. The prior year effective tax rate was negatively impacted bylosses and related valuation allowances associated with our operations inFrance. We anticipate improved performance from our French operations duringcalendar year 2005, which will result in a lower overall effective tax rate forthe Company, as the unfavorable impact of the valuation allowance isanticipated to be minimal.

***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 and to convert into cash thoseassets that are no longer required to meet existing strategic and financialobjectives. Therefore, liquidity cannot be considered separately from capitalresources that consist of current or potentially available funds for use inachieving long-range objectives and meeting debt service commitments.

Our significant liquidity and capital funding needsare working capital, operating expenses, capital expenditures, contractualobligations, and commercial commitments. Liquidity and capital resource needsare met through cash flows from operations, borrowings under our Senior SecuredCredit Facility, and credit terms from our suppliers, which approximatereceivable terms to our customers.

Working capital, excluding cash and debt, was $184.2million and $226.7 million at March 31, 2005 and December 31, 2004, respectively.Trade receivables, inventories and accounts payable, three important elementsof working capital, are discussed below.

***Trade Accounts Receivable***.   Dayssales outstanding in accounts receivable were 49.2**days and 49.0 days for the quarterly periods ended March 31,2005 and December 31, 2004, respectively. Trade receivables are higher inEurope due to the extended payment practices in several of the countries inwhich we operate. Trade receivables tend to increase in the third quarter as aresult of higher sales of our Science Education segment to primary andsecondary schools.

***Inventories***.   Dayssupply of inventory were 37.9**daysand 39.1 days for the quarterly periods ended March 31, 2005 and December 31,2004, respectively, due primarily to continuous efforts to reduce inventorylevels while maintaining customer service levels. Inventories tend to increaseduring the second quarter to support higher sales in the third quarter due inpart to higher sales to primary and secondary schools in the third quarter.

***Accounts Payable***.   Dayspayables outstanding were 56.0**daysand 52.5 days for the quarterly periods ended March 31, 2005 and December 31,2004, respectively, mainly due to continued efforts to improve working capital.Trade accounts payable are primarily with suppliers whose products wedistribute. Payment terms are negotiated and in cases where economic earlypayment discounts are offered, we make payments to earn the discounts. Dayspayable outstanding are generally higher in Europe due to the extended paymentpractices in certain countries in which we operate. Depending on the timing of paymentsand inventory purchases, trade accounts payable can vary each quarter and fromyear to year.

21

----

***Historical Cash Flows***

Thefollowing table presents cash flow from operations before investing andfinancing activities related to operations and working capital (dollars inmillions):
| ** **                                            | ** ** | **Three Months Ended March 31,**                                                     | ** ** |
|-------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------|------------|
| ** **                                            | ** ** | **        2005        ** | ** ** | **        2004        ** | ** ** |
| Cash flow from  operations, excluding working capital |       |                                                                                                     | $          | 18.2 |   |   |   | $ | 31.8 |   |   |
| Cash flow from  working capital changes, net          |       |                                                                                                     | 49.1       |   |   |   | 39.5 |   |   |
| Cash flow from  operations                            |       |                                                                                                     | $          | 67.3 |   |   |   | $ | 71.3 |   |   |

 

We generated $67.3 million of cash flow fromoperations during the quarter ended March 31, 2005 compared to $71.3million during the same period of 2004. The decrease in cash flow fromoperations was primarily the result of the decline in net income partiallyoffset by improvements in working capital management.

Net cash used in investing activities was $4.1 millionfor the three months ended March 31, 2005 compared to $2.9 million for thecomparable period of 2004. This $1.2 million increase was mainly the result ofa $1.0 million increase of capital expenditures primarily associated with anoffice expansion in Belgium.

Net cash used in financing activities was $30.9million for the three months ended March 31, 2005 compared to cashprovided by financing activities of $8.5 million for the comparable period of2004. The primary reason for the decrease in cash provided by financingactivities is due to the net change in our bank checks outstanding between periodsof $24.7 million.

Prior to the Acquisition on April 7, 2004, cashflow from operating activities and after investing activities was used to paydown debt or to pay dividends to Merck KGaA. Under the credit agreement for ourSenior Secured Credit Facility, beginning with the fiscal year ending December 31,2006, Excess Cash Flow (as defined in the credit agreement) will be required tobe used to prepay credit agreement debt, in addition to scheduled principalpayments. Based upon current levels of operations and expectations as to futuregrowth, we believe that cash generated from operations, together with amountsavailable under our $150.0 million five year multi-currency revolving creditfacility, which is a component of our Senior Secured Credit Facility, will beadequate to permit us to meet our debt service obligations, capital expenditurerequirements, ongoing operating costs and working capital needs until thematurity of our Senior Secured Credit Facility, although no assurance can begiven in this regard. Our future financial and operating performance, abilityto service or refinance our debt and ability to comply with covenants andrestrictions contained in our debt agreements will be subject to futureeconomic conditions and to financial, business and other factors, many of whichare beyond our control and will be substantially dependent on the globaleconomy, demand for our products, and our ability to successfully implement ouroverall business and profitability strategies. As of March 31, 2005, wehad $146.5 million of cash and cash equivalents on hand.

As of March 31, 2005,we had outstanding indebtedness of $1,086.4 million, which consists primarilyof $520.0 million aggregate principal amount of notes, a $379.9 million U.S.dollar-denominated term loan and a $172.1 million Euro-denominated term loan.

**IndebtednessPrior to the Acquisition**

Substantially allindebtedness prior to the Acquisition was intercompany debt with Merck KGaA. Althoughthe contractual maturities of those loans were current, they had beenclassified as long-term as a result of Merck KGaA’s representation to theCompany that it would not require payment on the debt before twelve months.

22

----

**IndebtednessFollowing the Acquisition**

***Senior SecuredCredit Facility***.   On April 7, 2004, we enteredinto the Senior Secured Credit Facility, which consists of (1) a term loanfacility providing for a loan denominated in Euros, in an aggregate principalamount currently outstanding at €132.7 million(approximately $172.1 million on a U.S. dollar equivalent basis as of March 31,2005), (2) a term loan facility providing for a term loan denominated inU.S. dollars in an aggregate principal amount currently outstanding at $379.9million, and (3) a multi-currency revolving credit facility, providing forup to $150.0 million in multi-currency revolving loans (including standby andcommercial letters of credit) outstanding at any time. As of March 31,2005, there was no outstanding balance on the multi-currency revolving creditfacility. Un-drawn amounts under the multi-currency revolving credit facilityare available on a revolving credit basis for general corporate purposes of theborrower and its subsidiaries. As of March 31, 2005, we had $8.0 millionof un-drawn letters of credit and our remaining borrowing availability underthe $150.0 million multi-currency revolving credit facility was $142.0 million.

The credit agreement governing the Senior SecuredCredit Facility contains certain covenants that limit the Company’s ability toincur additional indebtedness, pay cash dividends and make certain otherpayments. The senior secured credit agreement also requires the Company tomaintain certain financial covenants, including a specified debt to CreditAgreement EBITDA leverage ratio and a specified Credit Agreement EBITDA tointerest expense coverage ratio for specified periods. See “Credit AgreementFinancial Covenants; Credit Agreement EBITDA” below. As of March 31, 2005,the Company was in compliance with all covenants.

***Senior and SeniorSubordinated Notes.  ***On April 7, 2004, weissued 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 governing the senior notes and thesenior subordinated notes contain certain covenants that limit the Company’sability to incur additional indebtedness, pay cash dividends and make certainother payments. The indentures also require the Company to maintain certainfinancial covenants, including a specified debt to Consolidated EBITDA leverageratio and a specified Consolidated EBITDA to interest expense coverage ratio.At March 31, 2005, the Company was in compliance with all covenants.

***European Subsidiaries***.   OurEuropean subsidiaries operate without formal agreements with foreign banks.There are no existing financial covenants related to the bank loans to thesesubsidiaries.

**CreditAgreement Financial Covenants; Credit Agreement EBITDA**

Borrowings under our Senior Secured Credit Facilityare a key source of our liquidity. Our ability to borrow under our SeniorSecured Credit Facility is dependent upon, among other things, our compliancewith the financial covenants set forth in the credit agreement for our SeniorSecured Credit Facility. The financial covenants include a specified debt toCredit Agreement EBITDA leverage ratio and a specified Credit Agreement EBITDAto interest expense coverage ratio for specified periods. Failure to complywith these financial ratio covenants would result in a default under the creditagreement for our Senior Secured Credit Facility and, absent a waiver or anamendment from our lenders, would permit the acceleration of all outstandingborrowings under our Senior Secured Credit Facility. We are in compliance withthese financial covenants as of March 31, 2005.

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 

23

----

from the term “EBITDA” asit is commonly used. Credit Agreement EBITDA generally is defined asconsolidated net income before consolidated net interest expense, consolidatedincome taxes, consolidated depreciation and amortization, other non-cashcharges deducted in determining consolidated net income (loss), non-cashprovisions for reserves for discontinued operations, extraordinary, unusual ornon-recurring items, gain or loss associated with the sale or write downof assets not in the ordinary course of business and the cumulative effect ofaccounting changes and earnings of, but including cash dividends ordistributions from, non-controlled affiliates. Credit Agreement EBITDA isreduced by the amount of certain permitted dividends to CDRV Holdings, Inc.

Credit Agreement EBITDA is not used in the indenturesfor the senior and senior subordinated notes. The term “Consolidated EBITDA” isused 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 may include certain costsavings or synergies. “Consolidated EBITDA” is not the same as Credit AgreementEBITDA.

Thecalculation of Credit Agreement EBITDA for the periods indicated is set forthbelow.
| ** **                                              | ** ** | **12 Months Ended**       | ** ** |
|---------------------------------------------------------|------------|-------------------------------------|------------|
| ** **                                              | ** ** | **March 31, 2005**        | ** ** |
| ** **                                              | ** ** | **(Unaudited)**                     | ** ** |
| ** **                                              | ** ** | **(Dollars in millions)** | ** ** |
| Net income                                              |       |                                | $          | 38.6 |   |   |
| Income tax  provision                                   |       |                                | 27.8       |   |   |
| Interest expense,  net                                  |       |                                | 68.8       |   |   |
| Depreciation and  amortization                          |       |                                | 34.7       |   |   |
| Non-cash  charges(1)                                    |       |                                | 7.4        |   |   |
| Other  extraordinary, unusual or non-recurring items(2) |       |                                | 2.5        |   |   |
| Credit Agreement EBITDA                                 |       |                                | $          | 179.8 |   |   |

----

(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; and LIFO adjustments.

(2)          Otherextraordinary, unusual or non-recurring items include one-time severance costs;non-routine inventory reserve adjustments; gains or losses on the sale ofbusinesses or facilities; and other extraordinary, unusual or non-recurringgains, losses, charges or credits.

Thetest periods for compliance with the financial covenants in the creditagreement for our Senior Secured Credit Facility began on July 1, 2004.The financial covenants specify, among other things, the following requirementsfor each four-quarter period ended during the following test periods:
| **Test Period**                                | ** ** | ** ** | ** **   | **Consolidated Debt to  Credit Agreement EBITDA  Leverage Ratio Not More Than** | ** ** | **Credit Agreement EBITDA  to Interest Expense Ratio  Not Less Than** | ** **   |
|-----------------------------------------------------|------------|------------|--------------|-------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------|--------------|
| July 1,  2004—December 30, 2005      |       |       | 7.25 to 1.00 |                                                                                                                    |       |                                                                                                     | 1.80 to 1.00 |   |   |
| December 31,  2005—December 30, 2006 |       |       | 7.00 to 1.00 |                                                                                                                    |       |                                                                                                     | 1.90 to 1.00 |   |   |
| 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 |   |   |

 

24

----

Thetable below sets forth the specified debt to Credit Agreement EBITDA leverageratio and Credit Agreement EBITDA to interest expense ratio for the periodsindicated.
| ** **                                                              | ** ** | **12 Months Ended** | ** ** |
|-------------------------------------------------------------------------|------------|-------------------------------|------------|
| ** **                                                              | ** ** | **March 31, 2005**  | ** ** |
| ** **                                                              | ** ** | **(Unaudited)**               | ** ** |
| Consolidated Debt  to Credit Agreement EBITDA Leverage Ratio            |       |                          | 6.0        |   |   |
| Credit Agreement EBITDA  to Credit Agreement Interest Expense  Ratio(1) |       |                          | 2.8        |   |   |

----

(1)          Forpurposes of calculating the compliance ratio noted above, credit agreementinterest expense was based on actual interest expense, net of interest income,reduced by amortization of deferred financing fees.

**Debt of CDRV Investors, Inc.**

On December 16, 2004, CDRV Investors, Inc.,our indirect parent, issued $481.0 million aggregate principal amount atmaturity ($297.9 million in net proceeds) of 95¤8% seniordiscount notes due 2015 (“CDRV Senior Discount Notes”). The net proceeds of theissuance were used to pay a dividend to the holders of the common stock of CDRVInvestors, Inc. The CDRV Senior Discount Notes are senior unsecuredobligations of CDRV Investors, Inc. and are structurally subordinated toall obligations and other liabilities of CDRV Investors, Inc.’s existingand future subsidiaries, including us. No cash interest will accrue on the CDRVSenior Discount Notes prior to January 1, 2010. Thereafter, cash interestwill accrue and be payable semiannually, only to the extent of funds actuallyavailable for distribution to CDRV Investors, Inc. under specifiedprovisions of the indentures governing our senior notes and senior subordinatednotes and applicable law.

We do not guarantee theobligations under the CDRV Senior Discount Notes. The terms of the SeniorSecured Credit Facility and the indentures governing our senior notes andsenior subordinated notes, significantly restrict us from making distributionsand otherwise transferring assets to CDRV Investors, Inc.

***Critical Accounting Policies***

The discussion andanalysis of our financial condition and results of operations are based on ourfinancial statements, which have been prepared in accordance with accountingprinciples generally accepted in the United States of America. The preparationof these financial statements requires us to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and the disclosureof contingent assets and liabilities at the date of the financial statementsand the reported amounts of revenues and expenses during the reporting period. Onan ongoing basis, management evaluates its estimates and judgments, including,among others, those related to revenue recognition, environmental liabilities,reserves for accounts receivable and inventories, impairment of goodwill andintangible assets, pension plans, rebates from suppliers, agreements withcustomers, and product liability. Those estimates and assumptions are based onour historical experience, our observance of trends in the industry, andvarious other factors that are believed to be reasonable under thecircumstances and form the basis for making judgments about the carrying valuesof assets and liabilities that are not readily apparent from other sources. Actualresults may differ from these estimates under different assumptions orconditions. Refer to “Item 7—Management’s Discussion and Analysis of FinancialCondition and Results of Operations” in the Company’s Annual Report on Form 10-Kfor the year ended December 31, 2004 for the Company’s critical accountingpolicies.

25

----

**Recent Accounting Pronouncements**

For information on recentaccounting pronouncements, refer to “Item 1—Financial Statements—Note 2—NewAccounting Standard,” which is incorporated herein by reference.

**Item3—*Quantitative and Qualitative Disclosure aboutMarket Risk***

Information responsive tothis item as of December 31, 2004 appears in “Item 7A—Quantitative andQualitative Disclosures about Market Risk” included in the Company’s AnnualReport on Form 10-K for the year ended December 31, 2004, whichis incorporated herein by reference. There was no material change in suchinformation as of March 31, 2005.

**Item 4—*Controls and Procedures***

In connection with the preparation of this QuarterlyReport on Form 10-Q, management carried out an evaluation, with theparticipation of the Chief Executive Officer and the Executive Vice Presidentand Chief Financial Officer, of the effectiveness of the disclosure controlsand procedures pursuant to Rule 13a-15 of the Securities andExchange Act of 1934. Based on that evaluation, the Chief Executive Officer andthe Executive Vice President and Chief Financial Officer have concluded thatour disclosure controls and procedures were effective at a reasonable level as ofMarch 31, 2005.

There were no changes in our internal control overfinancial reporting that occurred during the quarter ended March 31, 2005that have materially affected, or are reasonably likely to materially affect,our internal control over financial reporting.

26

----

**Part II.   OTHER INFORMATION**

**ITEM 6.**                EXHIBITS
| Exhibit  Number | ** ** | ** **                                                                                                                    | ** ** | **Description of Documents** | ** ** | **Method of Filing** |
|-----------------|------------|-------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|----------------------|
| 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.          |

 

 

27

----

SIGNATURES

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:                                                            | /STEPHEN KUNST/ |   |
|   | Name: Stephen Kunst                                            |
|   | Title: *Senior Vice President,  General Counsel and Secretary* |
|   | May 16, 2005                                              |

 

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** | ** ** | ** ** | ** ** |
|-----------------------------|---------------|-------------------------------|------------|--------------------|-----------|------------|------------|------------|
|                        |          | Chairman  and Chief Executive |       | May 16,  2005 |
| James W. Rogers             |          | Officer                       |       |               |
|                        |          | Executive  Vice President and |       | May 16,  2005 |
| Jack L. Wyszomierski        |          | Chief Financial  Officer      |       |               |
|                        |          | Director                      |       | May 16,  2005 |
| B. Charles Ames             |          |                          |       |               |
|                        |          | Director                      |       | May 16,  2005 |
| Joseph F. Eckroth, Jr. |          |                          |       |               |
|                        |          | Director                      |       | May 16,  2005 |
| Lewis S. Edelheit           |          |                          |       |               |
|                        |          | Director                      |       | May 16,  2005 |
| Brian P. Kelley             |          |                          |       |               |
|                        |          | Director                      |       | May 16,  2005 |
| Joseph L. Rice, III    |          |                          |       |               |
|                        |          | Director                      |       | May 16,  2005 |
| Axel Ruckert                |          |                          |       |               |
|                        |          | Director                      |       | May 16,  2005 |
| Richard J. Schnall          |          |                          |       |               |
|                        |          | Director                      |       | May 16,  2005 |
| Carl T. Stocker             |          |                          |       |               |
|                        |          | Director                      |       | May 16,  2005 |
| Robert J. Zollars           |          |                          |       |               |

 

 

28

----