##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549




---

Form 10-K

|           |  |                                                                                                                   
|---------- |  | ------------------------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                                   
|          
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934                          
|           |  | For the fiscal year ended December 31,
    2003                                                                   
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR
    15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE
    REQUIRED)
|           |  | For the transition period
    from           to                                                                   

Commission File Number 1-10920.



---

Fisher Scientific International Inc.

(Exact name of registrant as specified in its
charter)


|                                                                                        |  |                                     
|--------------------------------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                                                |  | 02-0451017                          
|(State or other jurisdiction of Incorporation
    or organization)                      |  | (I.R.S. Employer Identification No.)
|One Liberty Lane
    Hampton, New Hampshire(Address of principal executive
    offices) |  | 03842(Zip Code)                     

Registrants telephone number, including
area code:

(603) 926-5911


Securities registered pursuant to
Section 12(b) of the Act:

|                                       |  |                                              
|-------------------------------------- |  | ---------------------------------------------
|Title of each class                    |  | Name of each exchange on which
    registered
|                                       |  |                                              
|Common Stock, par value $.01 per share |  | New York Stock Exchange                      

Securities registered pursuant to
Section 12(g) of the Act:

None




---

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

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

Indicate by checkmark whether the Registrant is
an accelerated filer (as defined in Rule 12b-2 of the Act).
Yes þ
No o

The aggregate market value of the voting common
equity held by non-affiliates of the registrant as of
June 30, 2003 was approximately $1,810,215,676.

The number of shares of Common Stock outstanding
as of March 5, 2004 was 63,791,017.

Documents Incorporated by Reference:The registrants Proxy Statement
for the Annual Meeting of Stockholders to be held May 7,
2004 is incorporated by reference into Part III.



---






---

TABLE OF CONTENTS



|                                         |                                                                                                         |  |  |  |  |  |  | 
|---------------------------------------- | ------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                  
|                                         | Item 1. Business                                                                                       
|                                         | Item 2. Properties                                                                                     
|                                         | Item 3. Legal Proceedings                                                                              
|                                         | Item 4. Submission of Matters to a Vote of Security Holders                                            
|PART II                                 
|                                         | Item 5. Market For Registrants Common Equity and Related Stockholder Matters                          
|                                         | Item 6. Selected Financial Data                                                                        
|                                         | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations          
|                                         | Item 7A. Quantitative and Qualitative Disclosures About Market Risk                                    
|                                         | Item 8. Financial Statements and Supplementary Data                                                    
|                                         | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           
|                                         | Item 9A. Controls and Procedures                                                                       
|PART III                                
|                                         | Item 10. Directors and Executive Officers of the Registrant                                            
|                                         | Item 11. Executive Compensation                                                                        
|                                         | Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|                                         | Item 13. Certain Relationships and Related Transactions                                                
|                                         | Item 14. Principal Accountant Fees and Services                                                        
|PART IV                                 
|                                         | Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                              
|SIGNATURES                              
|Ex-21.01 Worldwide Subsidiary List      
|Ex-23.01 Consent of Deloitte & Touch LLP
|Ex-31.01 Section 302 CEO Certification  
|Ex-31.02 Section 302 CFO Certification  
|Ex-32.01 Section 906 CEO Certification  
|Ex-32.02 Section 906 CFO Certification  



---



##### Table of Contents






PART I




Item 1.     Business

Our Business

Fisher Scientific International Inc.
(Fisher, the Company or we)
is a leading provider of products and services to the global
scientific research and U.S. clinical laboratory markets. Our
customers include pharmaceutical and biotechnology companies;
colleges and universities; medical research institutions;
hospitals and reference labs; and quality control, process
control and research and development laboratories. We offer more
than 600,000 products and services to over 350,000 customers
located in approximately 145 countries. No single customer
represents more than 2.5% of our total sales.

We offer both proprietary products and products
that we source from more than 6,000 vendors. Our proprietary
products consist of Fisher branded products and products for
which we serve as an exclusive distributor. Approximately 45% of
our revenues are generated from the sale of higher margin
proprietary products and this percentage is expected to increase
to approximately 50% of 2004 revenues as a result of our
acquisitions completed in 2003 and 2004. We generate
approximately 80% of our revenues from the sale of consumable
products. We deliver our goods and provide our services to our
customers on a worldwide basis through an integrated, global
logistics network.

Competitive Strengths and Strategy

We believe that our key competitive strengths
include our:



| |   |                                    
| | - | -----------------------------------
| |  | premier global brand;              
|
| |  | broad product and service offering;
|
| |  | industry-leading sales forces;     
|
| |  | extensive global network; and      
|
| |  | integrated electronic systems.     

Our key strategy is to continue to increase our
proprietary products and service offerings, both organically and
through acquisitions, thereby enhancing our operating margins
and increasing our earnings growth.

During 2003, we changed our reportable segments
to reflect the way we currently manage our business and now
report financial results on the basis of the following three
reportable segments: scientific products and services,
healthcare products and services, and laboratory workstations.



| |                                     
| | ------------------------------------
| | Scientific Products and
    Services

Sales in the scientific products and services
segment represent approximately 70% of our total sales. The
scientific products and services segment provides products and
services to entities conducting scientific research, including
quality control and basic research and development, drug
discovery and drug development. This segment manufactures and
distributes a broad range of biochemicals and bioreagents,
custom peptides and peptide libraries, organic and inorganic
chemicals, sera, cell culture media, sterile liquid-handling
systems, scientific instruments and equipment, safety products
and other consumable products and supplies. Additionally, this
segment provides services to pharmaceutical and biotechnology
companies engaged in clinical trials, including specialized
packaging, over-encapsulation, labeling and distribution for
phase III and phase IV clinical trials, as well as combinatorial
chemistry, custom-chemical synthesis, supply-chain management
and a number of other services.

The businesses in this segment primarily serve
pharmaceutical and biotechnology companies, colleges and
universities, medical research institutions, quality control,
process control and research and development laboratories.

1



---



##### Table of Contents



We estimate that the global scientific research
market is currently $20 billion and growing at a rate of
approximately 5% to 8% annually. Scientific research revenues
are driven by spending on research and development, demand for
products and services that drive greater efficiency and lower
costs of drug development, including the demand for outsourced
pharmaceutical services and the pace of development of new
medicines, as well as the demand for safety-related products. In
this segment, approximately 45% of our revenues are generated
from the sale of proprietary products. Proprietary products are
sold under such brand names as Acros Organics, Endogen®,
Pierce, HyClone®, Maybridge and Mimotopes. Fishers
brand names also include Cole-Parmer®, Fisher Clinical
Services®, Masterflex® and Accumet®, among
others. Safety products include personal protection equipment,
respiratory protection systems, environmental monitoring and
sampling equipment, and other safety and clean-room supplies.
Raw materials and supplies for our product and service offerings
are generally available in adequate quantities.

In the scientific products and services segment
we have approximately 2,500 sales and customer service
professionals. Our 1,200 sales representatives and 1,000
customer service representatives provide complete account
management, offering our customers a broad portfolio of
laboratory procurement and supply chain management services,
enhanced with over 300 trained life-science, chemical and
technical specialists that allow us to better meet the needs of
our end-user customers and position us to compete directly with
product companies in the high-growth and more technically
oriented segments of the market. We market and sell our products
and services through the activities of our sales forces, and
various Fisher catalogs, brochures and other marketing
materials. The Fisher Catalog has been published for nearly
100 years and is a recognized scientific reference tool. We
produce more than two million printed copies of our various
catalogs biennially and the catalogs are published in eight
different languages to serve our international customers. Our
e-commerce tools are showcased by our web site
www.fishersci.com, which is a leading e-commerce tool
supporting the scientific community.

We have assembled an integrated global logistics
network through which we service our customers. This network,
along with our order entry and inventory management systems,
allows us to deliver products and provide services on a
worldwide basis. Our domestic logistics network consists of 21
distribution facilities, including a national distribution
center in Somerville, New Jersey; and regional distribution
centers located in Massachusetts, California, Illinois and
Georgia. Our international logistics network consists of 19
facilities in 10 countries and is augmented with network sales
offices in 22 countries and independent dealers in more than 100
countries worldwide. We distribute our products through third
party carriers and our own fleet of delivery vehicles. United
Parcel Service (UPS) handles approximately 65% of
our domestic product deliveries. Our agreement with UPS expires
in January 2005. No other single carrier handles shipments
constituting more than 10% of our revenues.

We compete with other distributors and
manufacturers, including many of our own suppliers that sell
their products directly to end-users. We face a variety of
competitors that distribute a comparable portfolio of products
to regional organizations that focus on specific products or
have well established market niches. Our principal competitors
are, among others, VWR, Invitrogen, Sigma-Aldrich, Qiagen and
Techne. For product and service offerings in the scientific
research market, we compete on a basis of innovative
technologies, product differentiation, availability and
reliability, service and price. In addition, we believe that our
global network of distribution centers and systems capabilities
provide competitive advantages.



| |                                     
| | ------------------------------------
| | Healthcare Products and
    Services

Sales in the healthcare products and services
segment represent approximately 25% of our total sales. The
healthcare products and services segment manufactures and
distributes a wide array of diagnostic kits and reagents,
consumable supplies, equipment, instruments, and medical devices
to hospitals and group-purchasing organizations, clinical
laboratories, reference laboratories and physicians
offices located in the U.S., as well as ear, nose and throat
products outside the U.S. This segment also provides outsourced
manufacturing services for diagnostic reagents, calibrators and
controls to the healthcare and pharmaceutical industries. This
segment primarily serves customers in the United States.
Approximately 45% of our revenues are generated from the sale of
proprietary products. We estimate the domestic clinical
laboratory market is currently $10 billion and growing at a
rate of approximately 4% to 5% annually.

2



---



##### Table of Contents



Sales in the healthcare products and services
segment are driven by the administration and evaluation of
diagnostic tests. We believe that the aging population as well
as the development of new specialty diagnostic tests will result
in increased future growth. Products in the healthcare products
and services segment are sold under such brand names as Fisher
Diagnostics®, Medical Analysis Systems, Biochemical
Sciences and ATOS Medical.

In the healthcare products and services segment,
we have approximately 400 sales and customer service
professionals. Our 250 sales representatives and 100
customer service representatives provide complete account
management, offering our customers a broad portfolio of
laboratory procurement and supply chain management services,
enhanced with over 50 technical specialists that allow us
to better meet the needs of our end-user customers and position
us to compete directly with product companies in the high-growth
and more technically oriented segments of the market. We market
and sell our products and services through the Fisher HealthCare
catalog. We have e-commerce capabilities that are specifically
designed for the clinical laboratory market. We deliver our
products in this segment through the domestic logistics network
shared with our scientific products and services segment. We
distribute our products outside the U.S. through a network of
dealers.

In this segment, we predominantly compete on
product breadth, value and service. Our principal competitors in
this segment include Cardinal Health, Bio-Rad, Roche
Diagnostics, Abbott Laboratories and Bayer.



| |                        
| | -----------------------
| | Laboratory Workstations

Sales in the laboratory workstations segment
represent approximately 5% of total sales. The laboratory
workstations segment primarily manufactures and sells laboratory
workstations and fume hoods for laboratories. This segment
serves pharmaceutical and biotechnology customers, medical
research institutions, colleges, universities and secondary
schools, and hospitals and reference labs. This segment also
provides laboratory design services.

Our product offerings in this segment include
steel, wood and plastic laminate casework systems, adaptable
furniture systems, airflow products and various other laboratory
fixtures and accessories. Sales of laboratory furniture and fume
hoods and laboratory design services are driven primarily by the
construction of new laboratories and the expansion of existing
laboratories by our customers. Products in the laboratory
workstations segment are sold under product names such as
DuraMaxTM, MAX/ Lab®, MAX/ Wall® and MAX/
Mobile®.

Our laboratory workstations segment is
project-based, selling project-specific products and services
through a competitive bidding process. As such, this segment
maintains a backlog of work. Our backlog as of December 31,
2003 was approximately $105 million, compared with
$108 million as of December 31, 2002. A majority of
orders in our backlog are typically filled within one year. We
sell our laboratory workstations primarily through a network of
dealers and our own distribution channel and our customers are
primarily based in the United States, although we also sell to
international customers.

The laboratory workstations market is highly
competitive and is influenced by capital spending cycles. We
compete in this segment primarily on the basis of product
breadth, quality and price. Our principal competitors in this
segment include, among others, Kewaunee Scientific and
CampbellRhea. Our manufacturing facilities for this segment are
located in Wisconsin, Arkansas, New York, and Mexico.

Acquisitions

We continually evaluate strategic acquisitions to
increase the breadth of our proprietary product and service
offering and enhance our operating margins and earnings growth.
Since our initial public offering in 1991, we have completed 36
acquisitions. The following is a brief description of the
material acquisitions we have completed since January 2001.

In February 2004, we signed a definitive
agreement to acquire Dharmacon, Inc. (Dharmacon) for
$80 million in cash, and we expect to close this
acquisition in the first quarter. Dharmacon, based in Lafayette,

3



---



##### Table of Contents



Colorado, had 2003 revenues totaling
$17 million and focuses on RNA technology, including RNA
interference (RNAi) and small interfering RNAi (siRNA). RNA is a
tool for life-science research that increases the efficiency of
the drug discovery process. In March 2004, we acquired Oxoid
Group Holdings Limited (Oxoid) for $330 million
in cash. Oxoid, with revenues of $155 million in 2003, is a
United Kingdom-based manufacturer of microbiological culture
media and other diagnostic products that test primarily for
bacteria contamination. The acquisitions of Oxoid and Dharmacon
are expected to enhance our life-sciences footprint, increase
our portfolio of proprietary products and enhance our growth and
profitability. The results of these acquisitions will be
included in the scientific products and services segment from
their respective dates of acquisition.


During 2003, we acquired more than
99 percent of Perbio Science AB (Perbio), a
Swedish public company, in a public tender offer pursuant to the
rules of the Stockholm Stock Exchange. The remaining equity of
Perbio was acquired during the first quarter of 2004. Perbio
manufactures and sells consumable tools for protein-related
research and protein-based biopharma drug production, primarily
to customers within the United States. The purchase price was
approximately $689 million in cash plus assumed net debt of
approximately $44 million. The acquisition of Perbio
enhanced our footprint in the life sciences market and increased
our proprietary product offerings. From the date of acquisition,
the BioResearch and Cell Culture divisions of Perbio, which
accounted for approximately 90% of total Perbio revenues, have
been included in the scientific products and services segment,
and its medical device division, which accounted for the
remaining 10% of total Perbio revenues, has been included in the
healthcare products and services segment.

In November 2001, we acquired Cole-Parmer
Instrument Company (Cole-Parmer) for approximately
$208.5 million in cash. Cole-Parmer is a leading
manufacturer and distributor of specialty technical instruments,
appliances, equipment and supplies. The acquisition of
Cole-Parmer expanded the breadth of our product offering and
strengthened our proprietary product portfolio. The results of
Cole-Parmer have been included in our scientific products and
services segment from the date of acquisition.

In February 2001, we acquired the clinical
services business of Covance, which we renamed Fisher Clinical
Services Inc. (FCS), for approximately
$133 million in cash. FCS enables pharmaceutical and
biotechnology customers to outsource the packaging, labeling and
distribution of new medicines undergoing phase III and
phase IV clinical trials. The acquisition of FCS expanded
our line of services available to major pharmaceutical and
biotechnology companies. The results of FCS have been included
in our scientific products and services segment from the date of
acquisition.

Intellectual Property

We own or license numerous patents, trademarks,
trade names and service marks in the United States and abroad.
Except for the Fisher Scientific trade name and trademark, we do
not consider any one patent or other proprietary right to be
material.

Environmental Matters

A number of our operations involve the handling,
manufacturing, use or sale of substances that are or could be
classified as toxic or hazardous substances within the meaning
of applicable environmental laws. Consequently, some risk of
environmental damage is inherent in our particular operations
and products, as it is with other companies engaged in similar
businesses. Our expenses for environmental remediation matters
relate to the costs of permit requirements and installing,
operating and maintaining groundwater treatment systems and
other remedial activities related to historical environmental
contamination. These expenses were approximately
$1.0 million in 2003, $1.0 million in 2002 and
$1.2 million 2001. We estimate that our expenses for these
environmental remediation matters will continue to be
approximately $1.0 million per year.

Our Fair Lawn and Somerville, New Jersey,
facilities are the subject of administrative consent orders
issued by the New Jersey Department of Environmental Protection.
These orders require us to maintain groundwater remediation
activities at these sites. In addition, as the owner of the Fair
Lawn facility, we are listed as a potentially responsible party
for remediation of contamination located within an area called
the Fair Lawn Wellfields Superfund Site. This site was listed in
1983 on the National Priority List under the Federal

4



---



##### Table of Contents



Comprehensive Environmental Response Compensation
and Liability Act of 1980. This statute, referred to as
CERCLA, is also known as the Superfund
Act. We have also been notified that we are among the
potentially responsible parties under CERCLA or similar state
laws for the costs of investigating or remediating contamination
at various other Superfund sites. Other liabilities for
environmental matters relate to domestic and international
remedial measures and environmental regulatory compliance
requirements such as the Clean Air Act, the Clean Water Act and
other applicable governmental requirements.


We cannot predict the potential costs related to
environmental matters and the possible impact on future
operations given the uncertainties regarding the extent of any
required cleanups, the complexity and interpretation of
applicable laws and regulations, the varying costs of
alternative cleanup methods and the extent of our
responsibility. However, these costs could be material. We
record accruals for environmental liabilities based on current
interpretations of environmental laws and regulations when it is
probable that a liability has been incurred and the amount of
such liability can be reasonably estimated. We calculate
estimates based upon several factors, including reports prepared
by environmental specialists and managements knowledge and
experience with these environmental matters. We include in these
estimates potential costs for investigation, remediation and
operation and maintenance of cleanup sites. Accrued liabilities
for environmental matters were $32.5 million and
$31.0 million at December 31, 2003 and 2002,
respectively.

Although these environmental liabilities do not
include third-party recoveries, we may be entitled to
indemnification from third parties for liabilities relating to
certain sites. We believe that our accrual is adequate for the
environmental liabilities we currently expect to incur. As a
result, we believe that our ultimate liability with respect to
environmental matters will not have a material adverse effect on
our financial position or results of operations or cash flows.
However, we may be subject to additional remedial or compliance
costs due to future events, such as changes in existing laws and
regulations, changes in agency direction or enforcement
policies, developments in remediation technologies or changes in
the conduct of our operations, which could have a material
adverse effect on our financial position, results of operations
or cash flows.

Regulatory Affairs

From time to time, various governmental agencies,
such as the U.S. Drug Enforcement Administration, the Department
of Transportation, the Food and Drug Administration, and the
Bureau of Alcohol, Tobacco and Firearms examine certain aspects
of our operations. To date, none has had a material impact on
our operations. For information regarding legal proceedings,
refer to Item 3  Legal Proceedings,
which is incorporated herein by reference.

Foreign and Domestic Operations, Segment Data
and Export Sales

For information regarding foreign and domestic
operations and export sales, refer to
Item 8  Financial Statements and
Supplementary Data  Note 19  Segment
and Geographic Financial Information, which is
incorporated herein by reference.

Employees

As of December 31, 2003 and 2002, we had
approximately 10,200 and 9,100 full-time employees,
respectively. Of these employees, approximately 7,600 and 6,600,
respectively, were located in the United States in 2003 and
2002. We consider relations with our employees to be good.

We are a party to several collective-bargaining
agreements that include certain of our laboratory workstation
segment manufacturing employees, certain of our chemical
manufacturing employees located in the United States and certain
manufacturing employees located in Mexico.

5



---



##### Table of Contents



Management

Our executive officers and directors, and their
ages and positions as of December 31, 2003 are as follows:

|                                 |  |     |    |          |  |                                                  
|-------------------------------- |  | --- | -- | -------- |  | -------------------------------------------------
|Executive Officers and Directors |  | Age |    | Position
|                                 |  |     |    |         
|Paul M. Montrone                 |  |     | 62 |          |  | Chairman of the Board and Chief Executive Officer
|Paul M. Meister                  |  |     | 51 |          |  | Vice Chairman of the Board                       
|David T. Della Penta             |  |     | 56 |          |  | President and Chief Operating Officer            
|Kevin P. Clark                   |  |     | 41 |          |  | Vice President and Chief Financial Officer       
|Todd M. DuChene                  |  |     | 40 |          |  | Vice President, General Counsel and Secretary    
|Michael D. Dingman(2)(3)         |  |     | 72 |          |  | Director                                         
|Anthony J. DiNovi(1)             |  |     | 41 |          |  | Director                                         
|Scott M. Sperling(2)(3)          |  |     | 46 |          |  | Director                                         
|W. Clayton Stephens(1)(2)        |  |     | 61 |          |  | Director                                         
|Charles A. Sanders, M.D.(1)(3)   |  |     | 72 |          |  | Director                                         



---



|    |                                                                 
|--- | ----------------------------------------------------------------
|(1) | Member of the Audit Committee.                                  
|   
|(2) | Member of the Compensation Committee.                           
|   
|(3) | Member of the Nominating and Corporate Governance
    Committee.

Paul M. Montronehas
served Fisher as an executive officer and director since 1991.
Mr. Montrone has been Chairman of the Board of Fisher since
March 1998 and the Chief Executive Officer of Fisher since 1991.
Mr. Montrone served as President and a director from 1991
to 1998. Mr. Montrone is Chairman of the Board of General
Chemical Industrial Products Inc. (formerly the General Chemical
Group Inc.) (General Chemical).

Paul M. Meisterhas
served Fisher as an executive officer since 1991 and a director
since 1998. Mr. Meister has been Vice Chairman of the Board
since March 2001. Mr. Meister served as Vice Chairman of
the Board, Executive Vice President and Chief Financial Officer
of Fisher from March 1998 to February 2001 and was Senior Vice
President and Chief Financial Officer of Fisher from 1991 to
March 1998. Mr. Meister is Vice Chairman of the Board of
General Chemical and is a director of LKQ Corporation,
M & F Worldwide Corp., Minerals Technologies
Inc., and National Waterworks, Inc.

David T. Della Pentahas served Fisher as an executive
officer since 1998. Mr. Della Penta has been President and
Chief Operating Officer since April 1998. From prior to 1996
until April 1998, Mr. Della Penta served as President of
Nalge Nunc International, a subsidiary of Sybron International
Corporation (now known as Apogent Technologies, Inc.), a
manufacturer of laboratory products.

Kevin P. Clarkhas
served Fisher as an executive officer since 1996. Mr. Clark
has been Vice President and Chief Financial Officer since March
2001. He served as Vice President and Controller from May 1998
to February 2001. Mr. Clark served as our Vice President
and Treasurer from September 1997 to May 1998, and as our
Assistant Treasurer from 1995 to 1997.

Todd M. DuChenehas
served Fisher since 1996. Mr. DuChene has been Vice
President, General Counsel and Secretary since November 1996.
Mr. DuChene was Senior Vice President, General Counsel and
Secretary of OfficeMax, Inc. from March 1995 to November 1996,
and was Vice President, General Counsel and Assistant Secretary
from January 1994 to March 1995.

Michael D. Dingmanhas been a director at Fisher since
1991. Mr. Dingman has been President of Shipston Group Ltd.
(international investments) since prior to 1999.
Mr. Dingman was Chairman of the Board of Fisher from 1991
to 1998.

Anthony J. DiNovihas been a director at Fisher since
1998. Mr. DiNovi has been employed by Thomas H. Lee
Partners, L.P., and its predecessor Thomas H. Lee Company, since
prior to 1999. Mr. DiNovi

6



---



##### Table of Contents



currently serves as a Managing Director of Thomas
H. Lee Partners, L.P. Mr. DiNovi is a director of American
Media Operations, Inc.; Endurance Specialty Holdings Ltd.; Eye
Care Centers of America, Inc.; Fairpoint Communications, Inc.;
Michael Foods Inc., National Waterworks, Inc.; US LEC
Corp.; and Vertis, Inc. (Vertis).


Scott M. Sperlinghas been a director at Fisher since
1998. Mr. Sperling has been employed by Thomas H. Lee
Partners, L.P., and its predecessor Thomas H. Lee Company, since
prior to 1999. Mr. Sperling currently serves as a Managing
Director of Thomas H. Lee Partners, L.P. Mr. Sperling is a
director of Houghton Mifflin Co., Live Wire Systems, LLC, Vertis
and Wyndham International.

W. Clayton Stephenshas been a director at Fisher since
November 2002. Mr. Stephens founded Warren Capital
Corporation in 1984 and has served as a Director and President
of the firm since that time. Mr. Stephens is a member of
the Advisory Board of Sonoma National Bank.

Charles A. Sanders, M.D.has been a director at Fisher since
May 2003. Mr. Sanders has served as Chairman of the
Foundation for National Institutes of Health since its founding
in 1996. Dr. Sanders served as Chief Executive Officer of
Glaxo Inc. from 1989 to 1994 and was Chairman of the Board from
1992 to 1995. Dr. Sanders is a director of BioPure Corp.,
Cephalon Inc., Genentech Inc., Trimeris Inc. and Vertex
Pharmaceuticals.

Available Information

The Company files annual, quarterly and special
reports, proxy statements and other information with the
U.S. Securities and Exchange Commission (the
SEC). You may read and copy any documents the
Company files at the SECs public reference room at 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC
at 1-800-SEC-0330 for further information on the public
reference room. The Companys SEC filings are also
available to the public free of charge at the SECs website
at www.sec.gov. In addition, all of the Companys
filings with the SEC are available free of charge through the
Companys website at www.fisherscientific.comimmediately upon filing.

Our common stock is listed on the New York Stock
Exchange, Inc. (the NYSE) under the symbol
FSH. You can also inspect reports and other
information concerning us at the office of the NYSE,
20 Broad Street, New York, New York 10005.

Corporate Information

We were founded in 1902 by Chester G. Fisher in
Pittsburgh, Pennsylvania and became a Delaware corporation in
1991. Our principal executive offices are located at One Liberty
Lane, Hampton, New Hampshire 03842, and our telephone number is
(603) 926-5911. Our website is located at
www.fisherscientific.com.

7



---



##### Table of Contents



Risk Factors

Our business is subject to a number of important
risks and uncertainties. You should carefully consider all the
information we have included in this Form 10-K. In
addition, you should carefully consider the risk factors
described below.

Our significant leverage could adversely
affect our cash flow and prevent us from fulfilling our
financial obligations.

As of December 31, 2003, we had total debt
of $1,398.1 million. In addition, as of December 31,
2003, we had the ability to incur an additional aggregate amount
of $386.8 million under our existing accounts receivable
securitization facility and revolving credit facility; further
borrowing under those facilities or incurring any other
additional indebtedness would likely increase our leverage and
the risks therefrom. Our debt agreements permit us to incur or
guarantee additional indebtedness, subject to limitations set
forth in those agreements.

Our substantial indebtedness could negatively
affect our operations in a number of ways, including:



| |                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) we may be unable to obtain additional
    financing necessary to support our operations or for
    acquisitions or business expansions desirable for our business
    or necessary to facilitate future growth;
|
| | (b) we must dedicate a significant portion
    of our cash flow from operations to debt repayment and interest,
    thereby reducing funds available for other corporate purposes;
    and                         
|
| | (c) the level of our debt and the resources
    necessary to service our debt could adversely affect our
    liquidity during downturns in our business.                                                           

In addition, we will be required to repay the
indebtedness under our various debt agreements as that
indebtedness matures. We may not have sufficient funds or we may
be unable to arrange for additional financing to pay these
amounts when they become due. See Item 7 
Managements Discussion and Analysis of Financial Condition
and Results of Operations  Description of
Indebtedness.

Restrictions and covenants in our debt
agreements may require action that may not be in the best
interests of our stockholders or may limit our ability to take
corporate actions otherwise desirable under the
circumstances.

Our debt agreements contain a number of covenants
that significantly limit or restrict our ability to take certain
actions such as issuing additional debt or paying dividends.
Under our credit facility we are also required to comply with
specific financial ratios and tests, including, among others,
maximum leverage ratios and minimum EBITDA to cash interest
expense ratios. We may not be able to comply in the future with
these covenants or restrictions as a result of events beyond our
control, such as prevailing economic, financial and industry
conditions. If we default in the performance of the covenants in
our debt agreements, our lenders could declare all the principal
and interest amounts outstanding due and payable and terminate
their commitments to extend credit to us in the future. If we
are unable to secure credit in the future, we may be unable to
pursue business opportunities or strategic investments (e.g.,
acquisitions or joint ventures) that we need to undertake.

In addition, if we or certain of our subsidiaries
are not in compliance with certain of the financial covenants in
the indenture governing our 8% senior subordinated notes due
2013, the indenture governing our 8 1/8% senior
subordinated notes due 2012 or the indenture governing our
7 1/8% senior notes due 2005, our ability to consummate our
acquisition and investment strategy will be impaired and will
require prior approval or waiver by the holders of those notes.

See Item 7 
Managements Discussion and Analysis of Financial Condition
and Results of Operations  Description of
Indebtedness.

8



---



##### Table of Contents



Our results of operations depend on our
customers research and development efforts; these efforts
and the spending on them are beyond our control, and our results
of operations may be harmed if our customers do not expend
sufficient resources on these activities.

A significant number of our customers include
entities active in scientific or technological research in the
life science and clinical laboratory markets in the United
States and internationally. Research and development budgets and
activities have a large effect on the demand for our products
and services. Our customers determine their research and
development budgets based on several factors, including the need
to develop new products, competition and the general
availability of resources. In addition, as we continue to expand
our international operations, the research and development
spending levels in other global markets will become increasingly
important to us. We expect continued increases in scientific and
technology-related research and development spending in the
United States and worldwide, although we cannot give any
assurances, and such spending may decrease or become subject to
cyclical swings.

Our growth strategy to acquire new
businesses may not be successful and the integration of future
acquisitions may be difficult and disruptive to our ongoing
business.

Acquisitions are an important part of our growth
strategy. Since 1991, we have acquired 36 businesses, and we
routinely review additional potential acquisition opportunities.
Despite our successful record in integrating the companies we
have acquired, certain risks exist, including:



| |                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) our management must focus on integrating
    the operations of the acquired businesses, which could dilute
    focus on existing business to the detriment of those businesses;
|
| | (b) we may have difficulties in integrating
    the operations and systems of the acquired businesses and in
    realizing operating synergies; and                                
|
| | (c) we may have difficulty in assimilating
    and retaining personnel and customers of the acquired companies.                                                                    

None of these difficulties have historically been
material, but if they were to be in the future, it is unlikely
we could successfully implement our growth strategy. In
addition, we compete with other companies to acquire suitable
targets, and in the past have not been able to acquire certain
targets that we sought. Also, certain of the businesses we
acquired have not generated the cash flow and earnings, or
yielded other benefits, that we anticipated at the time of their
acquisition. Furthermore, we have at times encountered
substantial unanticipated costs or other problems associated
with the acquired businesses. If we are unable to successfully
complete and integrate strategic acquisitions in a timely
manner, the acquisition may adversely affect our profitability.

Recently, we acquired Oxoid and signed an
agreement to acquire Dharmacon. We believe that we will be able
to realize important strategic and commercial benefits by
combining each of these businesses with our existing business;
however, the risks discussed above could impede our ability to
realize these benefits.

Because we rely heavily on third party
package delivery services, any unanticipated disruptions in
these services or significant increases in prices may disrupt
our ability to ship products and increase our costs and lower
our profitability.

We ship a significant portion of our products to
our customers through independent package delivery companies,
such as UPS. We also maintain a small fleet of transportation
vehicles dedicated to the delivery of our products. In 2003, we
shipped approximately 65% of our products in the United States
via UPS. Our agreement with UPS expires in January 2005. We also
ship our products through other carriers, including

9



---



##### Table of Contents



national and regional trucking firms, overnight
carrier services and the U.S. Postal Service. If UPS or
another third party package delivery provider experiences a
major work stoppage, as UPS did in 1997, such that either our
products would not be delivered in a timely fashion or we would
incur additional shipping costs which we could not pass on to
our customers, our costs may increase and our relationships with
certain of our customers may be strained. In addition, if UPS or
our other third party package delivery providers increase
prices, and we are not able to find comparable alternatives or
make adjustments to our delivery network, our profitability
would be harmed.


We may incur unexpected costs associated
with compliance with environmental regulations.

A number of our domestic and international
operations involve and have involved the handling,
transportation, manufacture, use or sale of substances that are
or could be classified as toxic or hazardous substances. Some
risk of environmental damage is inherent in our operations and
the products we manufacture, sell or distribute. We have been
named as a potentially responsible party for environmental
contamination associated with various sites. We are currently
implementing remedial measures at some of our facilities,
including two of our facilities in New Jersey. We have
established reserves in the amount of $32.5 million as of
December 31, 2003 for the potential costs of this
remediation based on several factors, including
managements knowledge and experience and reports from
environmental specialists. However, our actual costs may exceed
those reflected in our reserves. In addition, future
environmental damage resulting from our operations may occur,
the costs of which may harm our business. We may also be liable
for third party infringement claims in addition to primary
liability. Future events, including changes in existing laws and
regulations or changes in the manner or method of enforcement of
such laws, identification of unknown conditions and the
development of new remediation techniques and the circumstances
of third parties who may be jointly or severally liable for
damage may also give rise to additional costs which could harm
our business.

If we lose our key personnel, our business
may be harmed.

We depend heavily on the services of our senior
management, including Paul M. Montrone, our Chairman of the
Board and Chief Executive Officer, and Paul M. Meister, our Vice
Chairman of the Board, both of whom are important to the
implementation of our acquisition and earnings growth strategy.
We believe that our future success will depend upon the
continued services of our senior management. Our business may be
harmed by the loss of any member of our senior management,
including Mr. Montrone or Mr. Meister. We do not
maintain key-man life insurance with respect to
Mr. Montrone or Mr. Meister.

Our failure to maintain satisfactory
compliance with the Food and Drug Administrations
regulations and those of other governmental agencies may force
us to recall products and cease their manufacture and
distribution.

Some of our operations are subject to regulation
by the U.S. Food and Drug Administration and similar
international agencies. These regulations govern a wide variety
of product activities, from design and development to labeling,
manufacturing, promotion, sales and distribution. If we fail to
comply with the Food and Drug Administrations regulations
or those of similar international agencies, we may have to
recall products and cease their manufacture and distribution,
which would increase our costs and reduce our revenues.

10



---



##### Table of Contents



We may be unable to adjust to the rapid
changes the healthcare industry is undergoing.

In recent years, the healthcare industry has
undergone significant changes in an effort to reduce costs.
These changes include:



| |                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------
| |  the development of large and
    sophisticated purchasing groups of pharmaceuticals and medical
    and surgical supplies;
|
| |  wider implementation of managed care;                                                                                     
|
| |  legislative healthcare reform and
    other government actions;                                                           
|
| |  consolidation of pharmaceutical and
    medical and surgical supply distributors; and                                     
|
| |  cuts in Medicare spending.                                                                                                

We expect the healthcare industry to continue to
change significantly in the future. Some of these potential
changes, such as a reduction in governmental support of
healthcare services or adverse changes in legislation or
regulations governing the delivery or pricing of healthcare
services or mandated benefits, may cause healthcare industry
participants to purchase fewer of our products and services or
to reduce the price that they are willing to pay for our
products or services.






|        |           
|------- | ----------
|Item 2. | Properties

Our principal executive offices are located in
Hampton, New Hampshire. We believe that our property and
equipment are generally well maintained, in good operating
condition and adequate for our present needs. The inability to
renew any short-term real property lease would not have a
material adverse effect on our operations.

The following table identifies our principal
facilities, which are owned unless otherwise indicated:

|                                 |  |                                     
|-------------------------------- |  | ------------------------------------
|Scientific Products and Services |  |                                     
|Allentown, Pennsylvania(b)       |  | Offices, Logistics and Manufacturing
|Barrington, Illinois(b)          |  | Manufacturing                       
|Basel, Switzerland(b)            |  | Offices, Logistics and Manufacturing
|Cramlington, United Kingdom      |  | Offices, Logistics and Manufacturing
|Elancourt, France                |  | Offices and Logistics               
|Geel, Belgium                    |  | Offices, Logistics and Manufacturing
|Horsham, United Kingdom(b)       |  | Offices, Logistics and Manufacturing
|Indiana, Pennsylvania            |  | Manufacturing                       
|Landsmeer, Netherlands(a)        |  | Offices and Logistics               
|Logan, Utah                      |  | Offices and Manufacturing           
|Loughborough, United Kingdom     |  | Offices, Logistics and Manufacturing
|Melbourne, Australia(b)          |  | Manufacturing                       
|Milwaukee, Wisconsin             |  | Offices and Manufacturing           
|Rockford, Illinois               |  | Offices and Manufacturing           
|Shah Alam, Malaysia              |  | Offices and Logistics               
|Schwerte, Germany(b)             |  | Offices and Logistics               
|Strasbourg, France               |  | Offices and Logistics               
|Tintagel, United Kingdom         |  | Offices and Manufacturing           
|Whitby, Ontario, Canada          |  | Logistics                           
|Healthcare Products and Services |  |                                     
|Camarillo, California(a)         |  | Offices and Manufacturing           

11



---



##### Table of Contents



|                             |  |                          
|---------------------------- |  | -------------------------
|Horby, Sweden                |  | Offices and Manufacturing
|Houston, Texas               |  | Offices                  
|Middletown, Virginia         |  | Manufacturing            
|Shared Properties(c)         |  |                          
|Agawam, Massachusetts        |  | Logistics                
|Chino, California            |  | Logistics                
|Delmar (Newark), Delaware    |  | Logistics                
|Denver, Colorado(a)          |  | Logistics                
|Fair Lawn, New Jersey        |  | Manufacturing            
|Florence, Kentucky           |  | Logistics                
|Hanover Park, Illinois       |  | Logistics                
|Houston, Texas               |  | Offices and Logistics    
|Morris Plains, New Jersey(a) |  | Offices and Logistics    
|Pittsburgh, Pennsylvania(a)  |  | Offices and Data Center  
|Santa Clara, California(a)   |  | Logistics                
|Somerville, New Jersey       |  | Logistics                
|Suwanee, Georgia(a)          |  | Offices and Logistics    
|Lab Workstations             |  |                          
|Conklin, New York(b)         |  | Offices and Manufacturing
|Mountain Home, Arkansas      |  | Offices and Manufacturing
|Two Rivers, Wisconsin        |  | Offices and Manufacturing
|Other Properties             |  |                          
|Hampton, New Hampshire       |  | Corporate Offices        



---



|    |                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------
|(a) | Leased                                                                                                                        
|   
|(b) | One property owned, one leased                                                                                                
|   
|(c) | Represents properties shared by the scientific
    products and services and the healthcare products and services
    segments






|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

We are a party to various lawsuits and other
legal proceedings including consolidated multi-party product
liability actions for products we may have distributed or
manufactured. We believe that some of the costs incurred in
defending and ultimately disposing of most of these claims for
personal injury and other matters may be covered in part by
insurance policies previously maintained by several insurance
carriers or subject to indemnification by our suppliers or
purchasers and that the ultimate liability with respect to these
matters, if any, will not have a material adverse effect on our
results of operations, financial position or cash flows. Actual
costs incurred will depend on the solvency of our insurance
carriers and former carriers, the degree of coverage with
respect to any partial claim, our success in litigating these
claims and the third parties who may be jointly and severally
liable.

See Item 1 
Business  Environmental Matters for legal
proceedings involving environmental and health and safety
matters.

We are subject to the jurisdiction of various
regulatory agencies including, among others, the United States
Food and Drug Administration and the Agency for International
Development. Various governmental agencies conduct
investigations from time to time to examine matters relating to
our operations. Some operations involve and have involved the
handling, manufacture, use or sale of substances that are
classified as

12



---



##### Table of Contents



toxic or hazardous substances within the meaning
of applicable environmental laws. Consequently, some risk of
environmental and other damage is inherent in particular
operations and products as it is with other companies engaged in
similar businesses, and we cannot assure that material damage
will not occur or be discovered or be determined to be material
in the future. We are currently involved in various stages of
investigation and remediation relative to environmental
protection matters. We believe that such investigations and
remediation expenditures in connection therewith, individually
and in the aggregate, will not have a material adverse effect
upon our results of operations, financial position, or cash
flows.







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

No matters were submitted to a vote of security
holders in the fourth quarter of 2003.




PART II






|        |                                                                          
|------- | -------------------------------------------------------------------------
|Item 5. | Market For Registrants Common Equity
    and Related Stockholder Matters

Market Information

Our common stock is listed on the NYSE under the
trading symbol FSH. For information regarding the
high and low closing sale prices of our common stock, see
Item 8  Financial Statements and
Supplementary Data  Note 23 
Unaudited Quarterly Financial Information, which is
incorporated herein by reference.

The last reported sale price of our common stock
on the NYSE on March 5, 2004 was $53.80 per share. As of
March 5, 2004 we had approximately 112 holders of
record of our common stock.

Dividends

We have not paid a cash dividend on our common
stock during the last three fiscal years. Our credit facility
and other debt agreements restrict our ability to pay cash
dividends. See Item 7  Managements
Discussion and Analysis of Financial Condition and Results of
Operations  Description of Indebtedness.
Accordingly, we do not anticipate paying cash dividends on
common stock at any time in the foreseeable future.

Equity Compensation Plans

The following is a summary of our equity
compensation plan information as of December 31, 2003:

|                                                               |  |                         |            |                     |  |                       |       |  |  |  |           | 
|-------------------------------------------------------------- |  | ----------------------- | ---------- | ------------------- |  | --------------------- | ----- |  |  |  | --------- | 
|                                                               |  |                         |            |                     |  | Number of Securities 
|                                                               |  |                         |            |                     |  | Remaining for Future 
|                                                               |  |                         |            |                     |  | Issuance Under Equity
|                                                               |  |                         |            |                     |  | Compensation Plans   
|                                                               |  | Number of Securities to |            | Weighted-Average    |  | (Excluding Securities
|                                                               |  | be Issued Upon Exercise |            | Exercise Price of   |  | Reflected in         
|Plan Category                                                  |  | of Outstanding Options  |            | Outstanding Options |  | Column (a))          
|                                                               |  |                         |            |                     |  |                      
|                                                               |  | (a)                     |            | (b)                 |  | (c)(1)               
|Equity compensation plans approved by security
    holders     |  |                         | 11,038,559 |                     |  | $                     | 25.77 |  |  |  | 2,434,003 | 
|Equity compensation plans not approved by
    security holders |  |                         |           |                     |  |                       |      |  |  |  |          | 
|                                                               |  |                         |            |                     |  |                       |       |  |  |  |           | 
|Total at December 31, 2003                                     |  |                         | 11,038,559 |                     |  | $                     | 25.77 |  |  |  | 2,434,003 | 
|                                                               |  |                         |            |                     |  |                       |       |  |  |  |           | 



---



|    |                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | 2,029,503 of the shares listed in column (c)
    may be issued in the form of other stock-based awards, which
    include restricted or unrestricted stock, restricted or
    unrestricted stock units or dividend equivalents, pursuant to
    the 2001 and 2003 Equity and Incentive Plans.

13



---



##### Table of Contents








|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

This summary of selected financial data for the
five years in the period ended December 31, 2003 should be
read in conjunction with Managements Discussion and
Analysis of Financial Condition and Results of Operations and
the Financial Statements presented elsewhere herein. See
Item 8  Financial Statements and
Supplementary Data  Note 1  Nature of
Operations and Note 2  Summary of Significant
Accounting Policies for a further discussion of the basis
of presentation, principles of consolidation and defined terms.

|                                                         |                                                                                   |                                         |         |      |  |      |         |       |   |      |         |      |  |   |         |      |  |   |         |      | 
|-------------------------------------------------------- | --------------------------------------------------------------------------------- | --------------------------------------- | ------- | ---- |  | ---- | ------- | ----- | - | ---- | ------- | ---- |  | - | ------- | ---- |  | - | ------- | ---- | 
|                                                         |                                                                                   |                                        
|                                                         |                                                                                   | Year Ended December 31,                
|                                                         |                                                                                   |                                        
|                                                         |                                                                                   | 2003                                    |         | 2002 |  | 2001 |         | 2000  |   | 1999
|                                                         |                                                                                   |                                         |         |      |  |      |         |       |   |     
|                                                         |                                                                                   |                                        
|                                                         |                                                                                   | (In millions, except per share amounts)
|Statement of Operations Data:                            |                                                                                   |                                         |         |      |  |      |         |       |   |      |         |      |  |   |         |      |  |   |         |     
|Sales                                                    |                                                                                   | $                                       | 3,564.4 |      |  | $    | 3,238.4 |       |   | $    | 2,880.0 |      |  | $ | 2,622.3 |      |  | $ | 2,514.5 |     
|Income from operations(a)                                |                                                                                   |                                         | 258.6   |      |  |      | 245.1   |       |   |      | 131.1   |      |  |   | 156.3   |      |  |   | 146.8   |     
|Income before cumulative effect of accounting
    change |                                                                                   |                                         | 78.4    |      |  |      | 96.7    |       |   |      | 16.4    |      |  |   | 22.7    |      |  |   | 23.4    |     
|Net income(b)                                            |                                                                                   |                                         | 78.4    |      |  |      | 50.6    |       |   |      | 16.4    |      |  |   | 22.7    |      |  |   | 23.4    |     
|Share Data:                                              |                                                                                   |                                         |         |      |  |      |         |       |   |      |         |      |  |   |         |      |  |   |         |     
|Net income per common share:                             |                                                                                   |                                         |         |      |  |      |         |       |   |      |         |      |  |   |         |      |  |   |         |     
|                                                         | Basic income per common share before cumulative
    effect of accounting change   |                                         | $       | 1.38 |  |      | $       | 1.77  |   |      | $       | 0.33 |  |   | $       | 0.57 |  |   | $       | 0.59 | 
|                                                         | Cumulative effect of accounting change, net of tax                                |                                         |         |     |  |      |         | (0.84 | ) |      |         |     |  |   |         |     |  |   |         |     | 
|                                                         |                                                                                   |                                         |         |      |  |      |         |       |   |      |         |      |  |   |         |      |  |   |         |     
|                                                         | Basic net income per common share                                                 |                                         | $       | 1.38 |  |      | $       | 0.93  |   |      | $       | 0.33 |  |   | $       | 0.57 |  |   | $       | 0.59 | 
|                                                         |                                                                                   |                                         |         |      |  |      |         |       |   |      |         |      |  |   |         |      |  |   |         |     
|                                                         | Diluted income per common share before cumulative
    effect of accounting change |                                         | $       | 1.29 |  |      | $       | 1.67  |   |      | $       | 0.31 |  |   | $       | 0.51 |  |   | $       | 0.55 | 
|                                                         | Cumulative effect of accounting change, net of tax                                |                                         |         |     |  |      |         | (0.80 | ) |      |         |     |  |   |         |     |  |   |         |     | 
|                                                         |                                                                                   |                                         |         |      |  |      |         |       |   |      |         |      |  |   |         |      |  |   |         |     
|                                                         | Diluted net income per common share                                               |                                         | $       | 1.29 |  |      | $       | 0.87  |   |      | $       | 0.31 |  |   | $       | 0.51 |  |   | $       | 0.55 | 
|                                                         |                                                                                   |                                         |         |      |  |      |         |       |   |      |         |      |  |   |         |      |  |   |         |     
|Weighted average common shares outstanding:              |                                                                                   |                                         |         |      |  |      |         |       |   |      |         |      |  |   |         |      |  |   |         |     
|                                                         | Basic                                                                             |                                         |         | 56.9 |  |      |         | 54.5  |   |      |         | 49.4 |  |   |         | 40.1 |  |   |         | 40.0 | 
|                                                         | Diluted                                                                           |                                         |         | 60.6 |  |      |         | 57.9  |   |      |         | 53.0 |  |   |         | 44.4 |  |   |         | 42.8 | 
|Balance Sheet Data (at end of year):                     |                                                                                   |                                         |         |      |  |      |         |       |   |      |         |      |  |   |         |      |  |   |         |     
|Working capital                                          |                                                                                   | $                                       | 362.3   |      |  | $    | 186.1   |       |   | $    | 120.1   |      |  | $ | 142.8   |      |  | $ | 115.3   |     
|Total assets                                             |                                                                                   |                                         | 2,859.4 |      |  |      | 1,871.4 |       |   |      | 1,839.2 |      |  |   | 1,385.7 |      |  |   | 1,402.6 |     
|Long-term debt                                           |                                                                                   |                                         | 1,386.1 |      |  |      | 921.8   |       |   |      | 956.1   |      |  |   | 991.1   |      |  |   | 1,011.1 |     



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Includes charges of $18.1 million
    ($11.4 million, net of tax) to step-up the fair value of
    inventory from the Perbio acquisition in 2003, $2.2 million
    ($1.4 million, net of tax) of restructuring credits
    relating to a reduction in estimated severance costs in 2002,
    $61.2 million ($38.5 million, net of tax) of
    restructuring and other charges in 2001, $8.4 million
    ($5.2 million, net of tax) of restructuring credits and
    other charges in 2000, and $11.2 million
    ($8.6 million, net of tax) of restructuring and other
    charges in 1999. Refer to Item 7 
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations.                                                                                                  
|   
|(b) | Net income includes the charges described in
    (a) above and, in 2003, includes charges of
    $43.8 million ($27.6 million, net of tax) for call
    premiums, $22.1 million ($13.9 million, net of tax)
    for the write-off of deferred financing fees and
    $15.7 million ($9.9 million, net of tax) for the
    purchase of options to hedge foreign currency exposure and
    $2.8 million ($1.8 million, net of tax) for bridge
    financing fees, each related to the Perbio acquisition. Net
    income in 2002 includes the amounts described in (a) above
    and includes a charge of $11.2 million ($7.1 million,
    net of tax) consisting of $7.1 million of fixed-swap unwind
    costs and $4.1 million of deferred financing and other
    costs associated with the refinancing of our

14



---



##### Table of Contents



| |                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | term debt. Net income in 2000 includes the
    amounts in (a) above and a $23.6 million
    ($14.9 million, net of tax) write down of investments in
    certain internet-related ventures.






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis
    of Financial Condition and Results of Operations

Overview

We generate our revenues through the sale of more
than 600,000 products and services to the global scientific
research and U.S. clinical laboratory markets. We generated
approximately 80% of our revenues from the sale of consumable
products. We offer both proprietary products and products that
we source from more than 6,000 vendors. Our proprietary
products consist of Fisher-branded products and products for
which we serve as an exclusive distributor.

We offer and sell our products and services to
over 350,000 customers located in approximately
145 countries. Our customers include pharmaceutical and
biotechnology companies, colleges and universities, medical
research institutions, hospitals and reference labs, and quality
control, process control and research and development
laboratories. Our largest customer accounted for less than 2.5%
of our 2003 sales.

Our key strategy is to continue to increase our
proprietary products and service offerings, both organically and
through acquisitions, thereby enhancing our operating margins
and increasing our earnings growth. As part of executing our
strategy:



| |   |                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we have steadily increased the portion of sales
    generated from our higher-margin proprietary products, from 40%
    in 2000 to approximately 45% in 2003. We plan to continue to
    focus on increasing the breadth of our portfolio of proprietary
    products and services;                                        
|
| |  | we have enhanced our international capabilities,
    such that our sales outside the United States have increased
    from 19% of our sales in 2001 to 20% in 2003. In addition, our
    earnings have improved reflecting continued margin improvement
    on international sales. We expect these trends to continue; and
|
| |  | we have enhanced our focus in the higher-growth
    life sciences sector of the scientific research market. It is
    our intention to continue to focus on the high-growth life
    sciences sector in the future.                                                                                                        

We have implemented this strategy through
continued investments in internal resources and strategic
acquisitions. In September 2003, we acquired Perbio, a
manufacturer of consumable tools for protein-related research
and protein-based biopharma drug production, primarily to
customers within the United States. In November 2001, we
acquired Cole-Parmer, a manufacturer and distributor of
specialty technical instruments, appliances, equipment and
supplies. We acquired Fisher Clinical Services (FCS)
in February 2001, a company that enables pharmaceutical and
biotechnology customers to outsource the packaging, labeling and
distribution of new medicines undergoing phase III and phase IV
clinical trials.

More recently, we acquired Oxoid and signed a
definitive agreement to acquire Dhamacon. Oxoid manufactures
microbiological culture media and other diagnostic products that
test for bacterial contamination. Dharmacon is a manufacturer of
RNA tools used in life-science research that increase the
efficiency of the drug-discovery process. These acquisitions
will expand our life-sciences footprint and position us to offer
our customers products and services across the life-sciences
spectrum.

Acquired companies accounted for approximately 3%
of the increase in our sales in 2003 and 7% in 2002. A portion
of the increase in 2004 sales will be generated by a full year
of Perbio results and approximately three quarters of results
for Oxoid and Dharmacon.

We undertook a number of financing transactions
in 2002 and 2003 to extend the maturity of our long-term debt,
take advantage of favorable interest rates to reduce our
borrowing costs and finance our acquisitions discussed above.
Additionally, a year-ago, Thomas H. Lee Company and certain
affiliates (the Equity Investors) owned, on a
diluted basis, 19.5% of our issued and outstanding common stock.
During the year, the Equity Investors made distributions of
their holdings eliminating any remaining ownership of our
outstanding common stock.

15



---



##### Table of Contents



During 2003, we changed our reportable segments
to reflect the way we currently manage our business and now
report financial results on the basis of the following three
reportable segments:



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | Scientific products and services
    segment, which provides products and
    services used for scientific-research, drug-discovery and
    drug-development applications on a global basis. This segment
    manufactures and distributes a broad range of consumable
    supplies, scientific instruments and apparatus and safety
    products. In addition, this segment provides pharmaceutical
    services for clinical trials, customer chemical synthesis,
    contract manufacturing and a number of other value-added
    services.
|
| | 2. | Healthcare products and services
    segment, which manufactures and
    distributes a wide array of diagnostic kits and reagents,
    consumable supplies and medical devices to hospitals, clinical
    laboratories and physicians offices located in the U.S.
    Additionally, this segment provides outsourced manufacturing
    services for diagnostic reagents, calibrators and controls to
    the healthcare and pharmaceutical industries.                                                                                       
|
| | 3. | Laboratory workstations
    segment, which manufactures and sells
    laboratory furniture and fume hoods and provides lab-design
    services for pharmaceutical and biotechnology customers,
    colleges, universities and secondary schools, hospitals and
    reference labs.                                                                                                                                                                                                                                                            

Results of Operations



| |      
| | -----
| | Sales

The following table presents sales and sales
growth by reportable segment for the years ended
December 31, 2003, 2002 and 2001 (dollars in millions):

|                                 |       |       |         |         |  |       |       |        |  |       |         |         |  |  |       |       |  |   |         |         | 
|-------------------------------- | ----- | ----- | ------- | ------- |  | ----- | ----- | ------ |  | ----- | ------- | ------- |  |  | ----- | ----- |  | - | ------- | ------- | 
|                                 |       |       |         |         |  |      
|                                 |       | 2003  |         | 2002    |  | 2001 
|                                 |       |       |         |         |  |      
|                                 |       |       |         | Sales   |  |       |       | Sales  |  |      
|                                 |       | Sales |         | Growth  |  | Sales |       | Growth |  | Sales
|                                 |       |       |         |         |  |       |       |        |  |      
|Scientific products and services |       | $     | 2,501.0 |         |  |       | 10.8% |        |  | $     | 2,258.0 |         |  |  | 14.4% |       |  | $ | 1,973.8 |        
|Healthcare products and services |       |       | 877.2   |         |  |       | 8.7%  |        |  |       | 806.7   |         |  |  | 8.0%  |       |  |   | 746.6   |        
|Laboratory workstations          |       |       | 206.1   |         |  |       | 6.3%  |        |  |       | 193.9   |         |  |  | 8.6%  |       |  |   | 178.6   |        
|Eliminations                     |       |       | (19.9   | )       |  |       |       |        |  |       | (20.2   | )       |  |  |       |       |  |   | (19.0   | )      
|                                 |       |       |         |         |  |       |       |        |  |       |         |         |  |  |       |       |  |   |         |        
|                                 | Total |       | $       | 3,564.4 |  |       |       | 10.1%  |  |       | $       | 3,238.4 |  |  |       | 12.4% |  |   | $       | 2,880.0 | 
|                                 |       |       |         |         |  |       |       |        |  |       |         |         |  |  |       |       |  |   |         |        

The 2003 and 2002 sales growth rates are
favorably impacted by foreign exchange translation of
$76.6 million and $17.1 million, respectively.
Acquisitions accounted for approximately 3% and 7%,
respectively, of the 2003 and 2002 sales growth rates. Our
organic growth rate for 2003 and 2002 remained constant at
approximately 5%. In 2003, our organic growth rate was impacted
by an increase in demand for certain clinical laboratory
products, as well as safety-related products, offset by mixed
results among our pharmaceutical customers and a decline in
sales to U.S. biotechnology customers and in certain
international markets, primarily France and Germany. In 2002,
the organic sales growth rate increased approximately 1% and was
primarily driven by normal market conditions.

Scientific Products and
Services.The 2003 and 2002 sales
growth rates are favorably impacted by foreign exchange
translation of $75.9 million and $17.1 million,
respectively. Acquisitions accounted for approximately 4% and
9%, respectively, of 2003 and 2002 sales growth rates. The 2003
effect of acquisitions is primarily attributable to
Perbios cell culture and bioresearch divisions. The 2002
effect of acquisitions is primarily attributable to our
acquisition of Cole-Parmer. Our 2003 organic growth rate
decreased approximately 1% from approximately 4.5% in 2002. Our
2003 organic growth rate was impacted by an increase in demand
for safety-related products, offset by a decline in sales to our
U.S. biotechnology customers, mixed results among pharmaceutical
customers and a slowdown in international sale due to weakness
in the European economy and reductions in research funding from
governments. The change in our organic growth rate in 2002 was
primarily attributable to normal market conditions in the U.S.,
offset by a decline in international sales, primarily due to our
strategy to focus on the sale of higher margin products.

16



---



##### Table of Contents



Healthcare Products and
Services.Sales growth in 2003 was
primarily due to an increase in demand for clinical laboratory
products and the acquisition of the Perbio medical devices
business. Sales growth was spread evenly between hospitals and
reference labs. In 2002, sales growth was attributable to growth
in the U.S. clinical laboratory market and the acquisition
of Medical Analysis Systems, Inc. (MAS). The effect
of foreign exchange is not significant to our healthcare
products and services segment as sales are primarily to
customers within the U.S.

Laboratory
Workstations.Sales in 2003 and 2002
were $206.1 million and $193.9 million, respectively.
This represents an increase of 6.3% and 8.6%, respectively,
versus the prior years sales. The decrease in the sales
growth rate for 2003 was primarily attributable to a
$12.3 million Transportation Safety Authority
(TSA) project awarded and substantially completed in
2002, that was not anticipated to repeat in 2003. The increase
in the 2002 sales growth rate was attributable to the TSA
project. Laboratory workstations is a project-based business
which operates from a backlog, a majority of which may be
shipped in less than one year. Delivery and installation of
projects, which are driven by the timing of construction
projects, results in a corresponding reduction in backlog.
Backlog at December 31, 2003 was $105 million versus
$108 million at December 31, 2002.



| |                       
| | ----------------------
| | Income from Operations

The following table presents income from
operations and income from operations as a percentage of sales
by reportable segment for the years ended December 31,
2003, 2002 and 2001 (dollars in millions):

|                                               |           |                        |       |                     |  |      |       |             |  |      |       |       |  |  |      |      |  |  |      |      |  |  |      |      | 
|---------------------------------------------- | --------- | ---------------------- | ----- | ------------------- |  | ---- | ----- | ----------- |  | ---- | ----- | ----- |  |  | ---- | ---- |  |  | ---- | ---- |  |  | ---- | ---- | 
|                                               |           |                        |       |                     |  |      |       |            
|                                               |           |                        |       |                     |  |      |       | Income from
|                                               |           |                        |       | Operations as a    
|                                               |           | Income from Operations |       | Percentage of Sales
|                                               |           |                        |       |                    
|                                               |           | 2003                   |       | 2002                |  | 2001 |       | 2003        |  | 2002 |       | 2001 
|                                               |           |                        |       |                     |  |      |       |             |  |      |       |      
|Scientific products and services               |           | $                      | 230.0 |                     |  | $    | 206.2 |             |  | $    | 175.8 |       |  |  | 9.2% |      |  |  | 9.1% |      |  |  | 8.9% |     
|Healthcare products and services               |           |                        | 35.7  |                     |  |      | 25.2  |             |  |      | 24.2  |       |  |  | 4.1% |      |  |  | 3.1% |      |  |  | 3.2% |     
|Laboratory workstations                        |           |                        | 11.1  |                     |  |      | 11.7  |             |  |      | 8.7   |       |  |  | 5.4% |      |  |  | 6.0% |      |  |  | 4.9% |     
|Eliminations                                   |           |                        | (0.1  | )                   |  |      | (0.2  | )           |  |      | 0.3   |       |  |  |      |      |  |  |      |      |  |  |      |     
|                                               |           |                        |       |                     |  |      |       |             |  |      |       |       |  |  |      |      |  |  |      |      |  |  |      |     
|                                               | Sub-total |                        |       | 276.7               |  |      |       | 242.9       |  |      |       | 209.0 |  |  |      | 7.8% |  |  |      | 7.5% |  |  |      | 7.3% | 
|                                               |           |                        |       |                     |  |      |       |             |  |      |       |       |  |  |      |      |  |  |      |      |  |  |      |     
|Inventory step-up                              |           |                        | 18.1  |                     |  |      |      |             |  |      |      |       |  |  |      |      |  |  |      |      |  |  |      |     
|Restructuring and other charges (credits), net |           |                        |      |                     |  |      | (2.2  | )           |  |      | 59.7  |       |  |  |      |      |  |  |      |      |  |  |      |     
|Nonrecurring operating charges                 |           |                        |      |                     |  |      |      |             |  |      | 1.5   |       |  |  |      |      |  |  |      |      |  |  |      |     
|Goodwill amortization                          |           |                        |      |                     |  |      |      |             |  |      | 16.7  |       |  |  |      |      |  |  |      |      |  |  |      |     
|                                               |           |                        |       |                     |  |      |       |             |  |      |       |       |  |  |      |      |  |  |      |      |  |  |      |     
|                                               | Total     |                        | $     | 258.6               |  |      | $     | 245.1       |  |      | $     | 131.1 |  |  |      | 7.3% |  |  |      | 7.6% |  |  |      | 4.6% | 
|                                               |           |                        |       |                     |  |      |       |             |  |      |       |       |  |  |      |      |  |  |      |      |  |  |      |     

Included in the 2003 income from operations is a
charge of $18.1 million related to the step-up of
Perbios inventory to its acquired fair value. Excluding
this charge, income from operations was 7.8% of sales. Included
in the 2002 income from operations is a restructuring credit of
$2.2 million for the reversal of certain costs accrued for in a
restructuring plan entered into in 2001. The restructuring
credit is primarily related to a reduction in estimated
severance costs due to the election of certain employees to
voluntarily separate from the Company. Excluding the
restructuring credit, income from operations was 7.5% of sales.
The increase in income from operations as a percentage of sales
is attributable to our acquisition of Perbio, as well as our
clinical laboratory product portfolio that was partially offset
by investments in life-science and chemical sales specialists,
targeted marketing programs and continued investments in
business processes and systems.

Included in the 2001 income from operations are
the following items:



| |   |                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a restructuring charge of $27.0 million,
    reflecting $18.3 million related to estimated employee
    separation costs and $8.7 million of exit costs;                                               
|
| |  | a restructuring credit of $0.8 million for
    the reversal of certain costs accrued for restructuring plans
    recorded prior to 2001, due to actual costs being lower than
    originally estimated;

17



---



##### Table of Contents





| |   |                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a non-cash compensation charge of
    $33.5 million for the accelerated vesting of certain stock
    options in connection with our May 2001 stock offering;
|
| |  | a $1.5 million charge for the write-off of
    inventory for discontinued product lines; and                                                                
|
| |  | $16.7 million for the amortization of
    goodwill.                                                                                                         

The resulting income from operations excluding
these items was 7.3% of sales. The increase in income from
operations as a percentage of sales in 2002 was primarily
attributable to our acquisition of Cole-Parmer. The remaining
improvement was organic. Our organic growth was primarily driven
by an increase in international operating margins due to our
strategy to focus on the sale of higher margin products,
partially offset by strategic investments in sales and marketing
initiatives and business processes and systems.

Scientific Products and
Services.The increase in income from
operations as a percentage of sales in 2003 was attributable to
the impact of the Perbio acquisition, continued improvements in
international operating margins, partially offset by a decrease
in volume to U.S. biotechnology companies and increased
investments in sales and marketing initiatives. The increase in
2002 operating margins was primarily attributable to our
acquisition of Cole-Parmer and an increase in international
operating margins. We expect a trend of continued operating
margin improvement for 2004, reflecting the contribution of
Perbios cell culture and bioresearch businesses, as well
as organic fixed cost leverage and margin improvement from
initiatives both domestic and international.

Healthcare Products and
Services.The increase in income from
operations as a percentage of sales in 2003 was reflective of a
broad-based increase in volume for clinical laboratory products.
The decrease in operating margins for 2002 was primarily the
result of strategic investments in business processes and
systems. We expect operating margin improvement for 2004,
reflecting the impact of the higher-margin medical device
business of Perbio.

Laboratory
Workstations.The decrease in income
from operations as a percentage of sales in 2003 was the result
of the higher-margin TSA project completed in 2002 that did not
repeat in 2003. Conversely, the TSA project was primarily
attributable for the increase in operating margins in 2002. We
anticipate operating margins will decrease in 2004, more
significantly in the first half of the year, reflecting the
timing of projects.



| |                 
| | ----------------
| | Interest Expense

Interest expense in 2003, 2002, and 2001 was
$84.8 million, $91.3 million and $99.5 million,
respectively. The decrease in interest expense is attributable
to our debt refinancing activities in 2003 and 2002. The
benefits of these transactions were partially offset by
$2.8 million in bridge financing commitment fees incurred
related to our acquisition financing for Perbio.



| |                   
| | ------------------
| | Other Expense, Net

In 2003 and 2002, other expense, net, includes
charges associated with our refinancing activities; and in 2001,
includes charges primarily related to the write-down of equity
investments.

Other expense, net, includes the following for
the years ended December 31, 2003, 2002 and 2001 (in
millions):

|                                            |  |      |      |      |  |      |      |  |  |   |      |  
|------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ---- | -
|                                            |  | 2003 |      | 2002 |  | 2001
|                                            |  |      |      |      |  |     
|Call premiums                               |  | $    | 43.8 |      |  | $    |     |  |  | $ |     |  
|Write-off of deferred financing fees        |  |      | 22.1 |      |  |      | 4.1  |  |  |   |     |  
|Acquisition-related foreign currency hedges |  |      | 15.7 |      |  |      |     |  |  |   |     |  
|Fixed-swap unwind costs                     |  |      |     |      |  |      | 7.1  |  |  |   |     |  
|Equity investments                          |  |      |     |      |  |      |     |  |  |   | 6.0  |  
|Interest income and other                   |  |      | (3.9 | )    |  |      | 1.1  |  |  |   | (4.7 | )
|                                            |  |      |      |      |  |      |      |  |  |   |      |  
|                                            |  | $    | 77.7 |      |  | $    | 12.3 |  |  | $ | 1.3  |  
|                                            |  |      |      |      |  |      |      |  |  |   |      |  

18



---



##### Table of Contents





| |                     
| | --------------------
| | Income Tax Provision

Our 2003 effective tax rate was 28%, down from
32% in 2002 as a result of our ongoing implementation of tax
planning initiatives. Our 2003 effective tax rate benefited by
the charges we recorded related to our debt refinancings, and
the charges related to Perbio resulting in a tax provision of
18.4%. Our 2002 effective tax rate was 32%, down from 34% in
2001 due to the implementation of tax planning initiatives, the
elimination of non-deductible goodwill amortization and the
impact of the restructuring and stock compensation charges.



| |                                           
| | ------------------------------------------
| | Cumulative Effect of Accounting
    Change

During 2002, we completed our transitional
assessment in accordance with Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible
Assets (SFAS 142) to determine if
goodwill was impaired as of January 1, 2002. As a result,
we recorded a non-cash charge of $63.8 million
($46.1 million, net of tax) in our statement of operations
reflecting the cumulative effect of the accounting change to
adjust goodwill to its current fair-value. The scientific
products and services segment and laboratory workstations
segment accounted for $19.7 million and $44.1 million
of the charge, respectively.

The impairment charge in the scientific products
and services segment related to certain of our smaller-market
international distribution businesses where operating
performance was lower than originally forecasted. Our laboratory
workstations segment is sensitive to changes in capital
spending, and several of the markets to which the laboratory
workstations segment sells, including the technology industry,
experienced a significant economic slowdown causing a reduction
in capital spending in those markets. As a result, sales growth
was significantly less than originally forecasted, resulting in
decreased profitability.

SFAS 142 also requires that goodwill be
tested annually and between annual tests if events occur or
circumstances change that would more likely than not reduce the
fair value of a reporting unit below its carrying amount. We
have elected to perform the annual tests for indications of
goodwill impairment as of October 31 each year. As of
October 31, 2003 and 2002, there were no impairments of
goodwill.

Liquidity and Capital Resources

Cash generated from operating activities was
$218.0 million in 2003 compared with $159.3 million in
2002. The increase in cash from operations in 2003 was related
primarily to an increase in net income and continued
improvements in working capital management, partially offset by
approximately $53 million in contributions to our pension
plan and supplemental nonqualified executive retirement program.
Cash generated from operating activities was $159.3 million
in 2002 compared with $158.6 million in 2001. The increase
in net income in 2002 was offset by $20 million in cash
pension contributions and $7.6 million of spending related
to our 2001 restructuring plans. In 2004, we anticipate an
increase in net income and continued improvements in working
capital management to improve cash generated from operating
activities.

We used $766.4 million of cash for investing
activities in 2003 compared with $105.4 million in 2002.
The increase in cash used in investing activities is primarily
attributable to the acquisition of Perbio and continued capital
spending for our chemical manufacturing capabilities, our new
west coast warehouse that opened late in 2003 and spending
associated with Perbio facility expansions. In addition, we paid
$15.7 million to purchase options to hedge foreign currency
exposures related to the Perbio acquisition. We used $105.4
million of cash for investing activities in 2002 compared with
$419.6 million in 2001. The change in cash used for
investing activities from 2001 to 2002 is primarily attributable
to a decrease in acquisition spending. We expect 2004 capital
spending to be consistent with 2003.

Financing activities generated
$583.7 million of cash in 2003 compared with using
$94.6 million of cash in 2002 and are discussed below.

19



---



##### Table of Contents



During 2003 we completed certain financing
transactions, which we refer to as the Completed
Transactions. The Completed Transactions include the
following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The issuance and sale on July 7, 2003 of
    $300 million of our 2.50% convertible senior notes due 2023.                                                                                                                                                                                                                                                                                    
|
| |  | The purchase in January and November 2003 of
    $149.2 million of our 7 1/8% senior notes due 2005,
    plus premium and accrued interest net of a $0.4 million
    write-off of original debt discount.                                                                                                                                                                                    
|
| |  | The amendment on December 3, 2003 of our
    senior credit facility to create a $440 million term loan
    facility that refinanced the outstanding term loan facility at a
    lower interest rate.                                                                                                                                                                                         
|
| |  | The issuance and sale in August and November 2003
    of $300 million of our 8% senior subordinated notes due
    2013.                                                                                                                                                                                                                                                                      
|
| |  | The issuance and sale on January 14, 2003 of
    $200 million of our 8 1/8% senior subordinated notes
    due 2012 less the redemption on November 24, 2003 of
    $46.0 million principal amount of our outstanding
    8 1/8% senior subordinated notes, plus premium and accrued
    interest.                                                                                            
|
| |  | The redemption in February and March 2003 of
    $600 million principal amount of our 9% senior subordinated
    notes due 2008, plus premium and accrued interest.                                                                                                                                                                                                                          
|
| |  | The issuance and sale on September 30, 2003
    of 6,634,526 shares of our common stock for proceeds of
    $260.6 million, net of underwriters discounts and offering
    costs. These shares were issued pursuant to our registration
    statement on Form S-3 filed with the SEC on
    September 15, 2003 under which we can issue up to
    $750 million of debt and equity securities.

Since December 31, 2003, we have completed
certain financing transactions, which we refer to as the
Subsequent Transactions. The Subsequent Transactions
include the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The amendment of our existing $225 million
    receivables securitization facility in February 2004 extending
    the facilitys maturity date to February 2005. All other
    material terms and conditions remained unchanged.                                                                                                                                                                                                              
|
| |  | The utilization of available borrowing under our
    accounts receivable securitization facility and revolving credit
    facilities in March 2004 to finance the acquisition of Oxoid.
    These amounts were substantially repaid with the proceeds from
    our 3.25% convertible senior subordinated notes. Qualifying
    accounts receivable of $21.8 million remained sold through
    our accounts receivable securitization facility.
|
| |  | The issuance and sale on March 3, 2004 of
    $300 million of our 3.25% convertible senior subordinated
    notes due 2024. These notes were issued pursuant to our
    registration statement on Form S-3 filed with the SEC on
    September 15, 2003 under which we can issue up to
    $750 million of debt and equity securities.                                                                                                        

20



---



##### Table of Contents



The following table sets forth our capitalization
as of December 31, 2002 on an actual basis, the effect of
the Completed Transactions and as of December 31, 2003 on
an actual basis and as adjusted to reflect the Subsequent
Transactions.

You should read this table along with our
financial statements and related notes included elsewhere herein.

As of December 31, 2003, as adjusted for the
Subsequent Transactions, we had the ability to borrow an
aggregate of $365.0 million under our accounts receivable
securitization facility and revolving credit facility.

|                                 |                                             |                      |       |              |         |                         |       |             |       |  |       |       |         |  |       |       |         | 
|-------------------------------- | ------------------------------------------- | -------------------- | ----- | ------------ | ------- | ----------------------- | ----- | ----------- | ----- |  | ----- | ----- | ------- |  | ----- | ----- | ------- | 
|                                 |                                             |                      |       |              |         |                        
|                                 |                                             |                      |       |              |         | As of December 31, 2003
|                                 |                                             | As of                |       | Completed    |         |                        
|                                 |                                             | December 31, 2002    |       | Transactions |         | Actual                  |       | As Adjusted
|                                 |                                             |                      |       |              |         |                         |       |            
|Debt, including short-term debt: |                                             |                      |       |              |         |                         |       |             |       |  |       |       |         |  |       |      
|                                 | Revolving Credit Facility(1)                |                      | $     |             |         |                         | $     |            |       |  | $     |      |         |  | $     |      |        
|                                 | Term Facility                               |                      |       |             |         |                         |       | 440.0       |       |  |       | 440.0 |         |  |       | 440.0 |        
|                                 | 7 1/8% Senior Notes                         |                      |       | 149.6        |         |                         |       | (149.2      | )     |  |       | 0.4   |         |  |       | 0.4   |        
|                                 | 2.50% Convertible Senior Notes              |                      |       |             |         |                         |       | 300.0       |       |  |       | 300.0 |         |  |       | 300.0 |        
|                                 | Other Debt                                  |                      |       | 50.0         |         |                         |       | (13.8       | )     |  |       | 36.2  |         |  |       | 36.2  |        
|                                 | 3.25% Convertible Senior Subordinated Notes |                      |       |             |         |                         |       |            |       |  |       |      |         |  |       | 300.0 |        
|                                 | 9% Senior Subordinated Notes                |                      |       | 596.1        |         |                         |       | (596.1      | )     |  |       |      |         |  |       |      |        
|                                 | 8 1/8% Senior Subordinated Notes            |                      |       | 150.0        |         |                         |       | 160.4       |       |  |       | 310.4 |         |  |       | 310.4 |        
|                                 | 8% Senior Subordinated Notes                |                      |       |             |         |                         |       | 311.1       |       |  |       | 311.1 |         |  |       | 311.1 |        
|                                 |                                             |                      |       |              |         |                         |       |             |       |  |       |       |         |  |       |      
|                                 |                                             | Total Debt           |       |              | 945.7   |                         |       |             | 452.4 |  |       |       | 1,398.1 |  |       |       | 1,698.1 | 
|Stockholders Equity             |                                             |                      | 133.5 |              |         |                         | 260.6 |             |       |  | 575.4 |       |         |  | 575.4 |      
|                                 |                                             |                      |       |              |         |                         |       |             |       |  |       |       |         |  |       |      
|                                 |                                             | Total Capitalization |       | $            | 1,079.2 |                         |       | $           | 713.0 |  |       | $     | 1,973.5 |  |       | $     | 2,273.5 | 
|                                 |                                             |                      |       |              |         |                         |       |             |       |  |       |       |         |  |       |      



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | On December 3, 2003, we amended our senior
    credit facility to create a $440.0 million term loan C
    facility that refinanced the outstanding term loan facilities at
    a lower interest rate, and increased the revolving credit
    commitments from $175.0 million to $190.0 million. The
    $190.0 million revolving credit facility is available for
    working capital and general corporate purposes. As of
    December 31, 2003, approximately $28.2 million of this
    facility was utilized for letters of credit outstanding.

In April 2003, the Company entered into various
pay-fixed interest rate swaps to hedge a portion of the
variability of cash flows related to changes in interest rates
on borrowings of variable rate debt obligations. The interest
rate swaps have a notional value of $200 million and expire
at various dates between March 2008 and March 2010.

Financing activities used $94.6 million of
cash in 2002 versus cash provided by financing activities of
$270.0 million in 2001. The use of cash in 2002 was
primarily related to the repayment of bank term debt totaling
$211.3 million which was retired using proceeds from the
issuance of $150 million of 8 1/8% subordinated notes
in April 2002. Cash provided by financing activities in 2001
primarily consisted of our May 2001 underwritten offering of
common stock from which we received net proceeds of
$289.9 million.

21



---



##### Table of Contents



The following table summarizes maturities for our
significant financial obligations as of December 31, 2003
(in millions):

|                                                                  |                               |                        |         |           |  |           |      |           |  |         |      |      |  |   |      |      |  |   |         |         | 
|----------------------------------------------------------------- | ----------------------------- | ---------------------- | ------- | --------- |  | --------- | ---- | --------- |  | ------- | ---- | ---- |  | - | ---- | ---- |  | - | ------- | ------- | 
|                                                                  |                               |                       
|                                                                  |                               | Payments Due by Period
|                                                                  |                               |                       
|                                                                  |                               |                        |         | Less Than |  |           |      | More Than
|Contractual Obligations                                           |                               | Total                  |         | 1 Year    |  | 1-3 Years |      | 3-5 Years |  | 5 Years
|                                                                  |                               |                        |         |           |  |           |      |           |  |        
|Debt, including short-term debt(a)                                |                               | $                      | 1,378.6 |           |  | $         | 11.3 |           |  | $       | 18.1 |      |  | $ | 10.6 |      |  | $ | 1,338.6 |        
|Capital Lease Obligations                                         |                               |                        | 2.0     |           |  |           | 0.7  |           |  |         | 1.2  |      |  |   | 0.1  |      |  |   |        |        
|Operating Leases                                                  |                               |                        | 134.1   |           |  |           | 25.5 |           |  |         | 36.5 |      |  |   | 27.5 |      |  |   | 44.6    |        
|Unconditional Purchase Obligations(b)                             |                               |                        | 0.9     |           |  |           | 0.8  |           |  |         | 0.1  |      |  |   |     |      |  |   |        |        
|Other Long-Term Liabilities Reflected on the
    Balance Sheet(c) |                               |                        | 14.3    |           |  |           |     |           |  |         | 6.8  |      |  |   | 3.2  |      |  |   | 4.3     |        
|                                                                  |                               |                        |         |           |  |           |      |           |  |         |      |      |  |   |      |      |  |   |         |        
|                                                                  | Total Contractual Obligations |                        | $       | 1,529.9   |  |           | $    | 38.3      |  |         | $    | 62.7 |  |   | $    | 41.4 |  |   | $       | 1,387.5 | 
|                                                                  |                               |                        |         |           |  |           |      |           |  |         |      |      |  |   |      |      |  |   |         |        



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Amounts represent the expected cash payments for
    our debt and do not include any unamortized discounts or
    premiums and deferred issuance costs.                                                                                                                                                                                                                                                                                 
|   
|(b) | Unconditional purchase obligations include
    agreements to purchase goods or services that are enforceable
    and legally binding and that specify all significant terms,
    including: fixed or minimum quantities to be purchased; fixed,
    minimum or variable price provisions; and the approximate timing
    of the transaction. Purchase obligations exclude agreements that
    are cancelable at anytime without penalty.
|   
|(c) | Includes only long-term liabilities where both
    the timing and amount of payment streams are known.                                                                                                                                                                                                                                                                                                                                  

In addition to the contractual obligations noted
above, the Company has outstanding standby letters of credit
totaling $28.2 million expiring over the next year.

We expect to satisfy our short-term funding
requirements from free operating cash flow, together with cash
and cash equivalents on hand or available through our Credit
Facility. A change in demand for the Companys goods and
services, while unlikely, would reduce free operating cash flow
available to fund our operations. If such a decrease in demand
were significant and free operating cash flow were reduced
significantly, we could utilize the Receivables Securitization
facility (see Item 8  Financial Statements
and Supplementary Data  Note 21 Subsequent
Events) to the extent that we have qualified receivables
to sell through the facility. We believe that these funding
sources are sufficient to meet our ongoing operating, capital
expenditure and debt service requirements for at least the next
twelve months. Cash requirements for periods beyond the next
twelve months depend on our profitability, our ability to manage
working capital requirements and our growth rate. We may seek to
raise additional funds from public or private debt or equity
financings, or from other sources for general corporate purposes
or for the acquisition of businesses or products. There can be
no assurance that additional funds will be available at all or
that, if available, will be obtained at terms favorable to us.
Additional financing could also be dilutive.

22



---



##### Table of Contents



Description of Indebtedness

The following is a summary of our indebtedness,
including our accounts receivable facility, followed by more
detailed descriptions:

|                                                |  |         |           |          |  |         |      |            |  |                |  |                           
|----------------------------------------------- |  | ------- | --------- | -------- |  | ------- | ---- | ---------- |  | -------------- |  | --------------------------
|                                               
|                                               
|Instrument                                      |  | Pricing |           | Maturity |  | Ratings |      | Collateral
|                                               
|                                               
|Receivable Securitization Facility              |  |         | LIBOR+45  |          |  |         | 2005 |            |  | A/ A           |  | Select Accounts Receivable
|                                               
|Revolving Credit Facility                       |  |         | LIBOR+300 |          |  |         | 2008 |            |  | Ba3/ BB+       |  | Material Domestic Assets  
|                                               
|Term Facility                                   |  |         | LIBOR+200 |          |  |         | 2010 |            |  | Ba3/ BB+       |  | Material Domestic Assets  
|                                               
|7 1/8% Senior Notes                             |  |         | 7.125%    |          |  |         | 2005 |            |  | B1/ BB+        |  | Principal Domestic Assets 
|                                               
|2.50% Convertible Senior Notes                  |  |         | 2.500%    |          |  |         | 2023 |            |  | B1/ BB-        |  | Unsecured                 
|                                               
|Other Debt                                      |  |         | Various   |          |  |         | 2004 |            |  | Not Applicable |  | General                   
|                                               
|3.25% Convertible Senior Subordinated
    Notes |  |         | 3.250%    |          |  |         | 2024 |            |  | B2/ B+         |  | Unsecured                 
|                                               
|8 1/8% Senior Subordinated
    Notes            |  |         | 8.125%    |          |  |         | 2012 |            |  | B2/ B+         |  | Unsecured                 
|                                               
|8% Senior Subordinated Notes                    |  |         | 8.000%    |          |  |         | 2013 |            |  | B2/ B+         |  | Unsecured                 
|                                               

Our Credit Facility requires us to meet certain
financial ratio covenants, including among others, a total
leverage ratio, a senior leverage ratio and a cash interest
expense coverage ratio. As of December 31, 2003, we were in
compliance with all covenants under our Credit Facility.



| |                
| | ---------------
| | Credit Facility

On February 14, 2003, we entered into a new
credit facility that replaced our prior credit facility, and in
connection with our acquisition of Perbio, we amended and
restated this new credit facility in September 2003 (the
Original Credit Facility) to provide for, among
other things, an additional $250 million term loan facility
as part of the financing of our acquisition of Perbio. On
December 3, 2003, we amended our Original Credit Facility
to create a $440 million term loan facility (the
Tranche C Term Loan Facility) to refinance the
outstanding term loan facilities at a lower interest rate, to
create an additional $15 million revolving credit
commitment (the New Revolving Credit Commitment) and
to name Deutsche Bank AG, New York Branch as the
Administrative Agent. On February 25, 2004 we further
amended the credit facility in connection with our acquisition
of Oxoid. The following summarizes the terms of our Original
Credit Facility, a copy of which is filed as exhibit 10.1 to our
current report on Form 8-K, filed with the SEC on
September 18, 2003, as amended by the First Amendment to
the Amended and Restated Credit Agreement, dated as of
December 3, 2003, a copy of which was filed with the SEC on
Form 8-K on December 9, 2003, and as further amended
by the Second Amendment to the Amended and Restated Credit
Agreement, dated as of February 25, 2004 (as so amended,
the Credit Facility).

The Credit Facility consists of (i) a
$440 million Tranche C Term Loan Facility, (ii) a
$190 million revolving credit facility, including the new
Revolving Credit Commitment (the Revolving Credit
Facility) and (iii) upon request, and subject to the
fulfillment of certain conditions, an additional incremental
term loan facility (the Incremental Term Loan
Facility) of up to a maximum amount that varies depending,
among other things, on the level of our financial covenants and
the amount of senior unsecured debt incurred by us since
February 14, 2003. Deutsche Bank AG, New York Branch is the
Administrative Agent for the syndicate of lenders providing the
Credit Facility, Deutsche Bank Securities Inc. and Banc of
America Securities LLC are Joint Lead Arrangers and Credit
Suisse First Boston, acting through its Cayman Islands Branch,
and Bank of America, N.A. are Syndication Agents.

We borrowed a portion of the Revolving Credit
Facility on February 14, 2003 to refinance amounts
outstanding under the $175 million revolving credit portion
of our prior credit facility. On March 21, 2003, we drew
$400 million under the Original Term Loan Facility to
finance the redemption of our then remaining 9% Senior
Subordinated Notes due 2008. On September 10, 2003, we drew
$250 million under the

23



---



##### Table of Contents



Tranche B-1 Term Loan Facility in connection
with financing a portion of the purchase price for the Perbio
Acquisition. On September 30, 2003 and October 23,
2003, we repaid $51.6 million and $157.4 million,
respectively, of the term loans under our Original Credit
Facility. On December 3, 2003, we drew $440 million
from the Tranche C Term Loan Facility to refinance the then
outstanding amounts under the Original Term Loan Facility and
the Tranche B-1 Term Loan Facility in their entirety and added
the New Revolving Credit Commitment to the then-existing
$175 million Revolving Credit Facility, making a
$190 million Revolving Credit Facility.


The loans under the Revolving Credit Facility
bear interest at our election at either the Adjusted LIBO Rate
plus a margin of between 2.25% and 3.00% per annum, or at the
Prime Rate plus a margin of between 1.25% and 2.00% per annum,
depending in each case on our Total Leverage Ratio. The loans
under the Tranche C Term Loan Facility bear interest at our
election at either the Adjusted LIBO Rate plus a margin of
between 1.75% and 2.00% per annum or the Prime Rate plus a
margin between 0.75% and 1.00% per annum, depending on our Total
Leverage Ratio. Commitment fees are payable on the unborrowed
amounts of the Revolving Credit Facility (which shall be
determined without taking into account any local currency loan
described below) at a rate of between 0.375% and 0.50% per
annum, depending on our Total Leverage Ratio, while such
commitments remain outstanding.

The Adjusted LIBO Rate is equal to
(subject to rounding upwards) the LIBO rate for U.S. dollar
loans (except where otherwise indicated below) multiplied by a
fraction, the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of
the maximum reserve percentages established by the Federal
Reserve Board (or applicable local governmental authority) to
which the Administrative Agent is subject with respect to such
adjusted LIBO rate. The Prime Rate is a fluctuating
interest rate equal to the higher of (i) the rate of
interest announced publicly by a reference bank as its prime
rate and (ii) a rate equal to (subject to rounding
upwards)  1/2 of 1% per annum above the weighted average of
the rates on overnight Federal Funds transactions with members
of the Federal Reserve System arranged by Federal Funds brokers.

The Revolving Credit Facility includes a
sub-limit for the issuance of local letters of credit. The
Credit Facility permits borrowers to be designated in the future
to borrow loans denominated in their local currencies from
individual lenders thereunder, either on a negotiated basis or
through a competitive bidding process. Negotiated local currency
loans bear interest at the negotiated rate and loans obtained
pursuant to a competitive bidding process bear interest at a
rate equal either to (subject to rounding upwards) (a) the
Adjusted LIBO Rate (determined by reference to the LIBO rate for
the specified currency and the related reserve requirements
promulgated by the applicable governmental authority) plus a
margin specified by the applicable lender or (b) a fixed
rate specified by such lender. These local currency loans will
reduce the availability of the Revolving Credit Facility.

Prime Rate interest is payable quarterly in
arrears and interest based on the Adjusted LIBO Rate is payable
in arrears at the earlier of (i) the end of the applicable
interest period and (ii) every three months after the first
day of the relevant interest period. Borrowings bearing interest
at a rate determined by reference to the Adjusted LIBO Rate are
available in one, two, three- or six-month interest periods or,
in certain cases, in nine-month or one-week interest periods.

The commitments under the Revolving Credit
Facility expire, and the loans outstanding thereunder mature, on
March 31, 2008. The Tranche C Term Loan Facility
requires us to make quarterly repayments of principal equal to
approximately $1.1 million from December 31, 2004
through March 31, 2009, and quarterly repayments of
principal equal to approximately $105 million each
beginning June 30, 2009 through the maturity of the Term
Loan Facilities on March 31, 2010.

Our obligations under the Credit Facility, as
well as under certain swap and other similar agreements with the
lenders, or parties related thereto (collectively, the
Obligations), are secured by substantially all our
assets and the assets of our material domestic subsidiaries as
well as of the parent of the subsidiary formed for purposes of a
receivable financing and each domestic subsidiary borrower
(each, a Grantor), including a pledge of stock or
other ownership interests of all material domestic subsidiaries
that are direct subsidiaries of any Grantor and the limited
liability company interests of the receivables subsidiary, but
generally limited to a

24



---



##### Table of Contents



pledge of 65% of the stock or other ownership
interests of material foreign subsidiaries and material foreign
subsidiary holding companies, in each case that is a direct
subsidiary of any Grantor. The Obligations are further
guaranteed by us and certain of our subsidiaries. Our
7 1/8% senior notes due 2005 issued and outstanding under
the indenture, dated as of December 18, 1995, are equally
and ratably secured with respect to certain collateral.


The Credit Facility requires us to meet the
following financial tests:

Interest Expense Coverage Ratio.We cannot permit the ratio of
(a) Consolidated EBITDA to (b) Consolidated Cash
Interest Expense, in each case for any period of four
consecutive fiscal quarters ending on any date during any period
set forth below, to be less than the ratio set forth below
opposite such period:

|                                                       |  |       |              | 
|------------------------------------------------------ |  | ----- | ------------ | 
|Period                                                 |  | Ratio
|                                                       |  |      
|January 1, 2004 to and including
    December 31, 2004 |  |       | 3.00 to 1.00 | 
|Thereafter                                             |  |       | 3.25 to 1.00 | 

Total Leverage Ratio.We cannot permit the Total Leverage
Ratio as of the last day of any fiscal quarter ending during any
period set forth below to exceed the ratio set forth below
opposite such period:

|                                                       |  |       |              | 
|------------------------------------------------------ |  | ----- | ------------ | 
|Period                                                 |  | Ratio
|                                                       |  |      
|January 1, 2004 to and including
    December 31, 2004 |  |       | 4.50 to 1.00 | 
|January 1, 2005 to and including
    December 31, 2005 |  |       | 4.00 to 1.00 | 
|Thereafter                                             |  |       | 3.50 to 1.00 | 

Senior Leverage
Ratio.We cannot permit the Senior
Leverage Ratio as of the last day of any fiscal quarter ending
during any period set forth below to exceed the ratio set forth
below opposite such period:

|                                                       |  |       |              | 
|------------------------------------------------------ |  | ----- | ------------ | 
|Period                                                 |  | Ratio
|                                                       |  |      
|January 1, 2004 to and including
    December 31, 2004 |  |       | 3.50 to 1.00 | 
|Thereafter                                             |  |       | 3.00 to 1.00 | 

The Credit Facility contains additional
covenants, including, without limitation, restrictions on
(a) indebtedness, (b) the incurrence of liens,
(c) loans and investments, as well as prohibitions on the
payment of dividends to, or the repurchase or redemption of
stock from, shareholders, (d) the sale of assets,
(e) mergers, acquisitions and other business combinations,
(f) voluntary prepayment of certain debt of the Company or
its subsidiaries, (g) transactions with affiliates,
(h) entry into swap or similar agreements, (i) capital
expenditures and various financial covenants and (j) other
matters customarily restricted in such credit facilities.
Pursuant to the terms of the Credit Facility, and subject to
applicable grace periods, in certain circumstances, a default
will occur upon the non-payment of principal or interest when
due under the Credit Facility or upon the non-fulfillment of the
covenants described above, or upon the occurrence of certain
changes in control of the ownership of the Company or of any of
various other events described therein. If such a default
occurs, the lenders under the Credit Facility will be entitled
to accelerate the amounts due under the Credit Facility and may
require all such amounts to be immediately paid in full. The
lenders under the Credit Facility may also take all remedies
permitted to be taken by a secured creditor under the security
documents entered into to secure the Credit Facility and the
Uniform Commercial Code. Loans under the Term Loan Facility are
required to be prepaid with 100% of net cash proceeds of certain
asset sales, certain insurance and condemnation proceeds and
certain debt issuances of the Company or any of its subsidiaries.



| |                                            
| | -------------------------------------------
| | 2.50% Convertible Senior Notes due
    2023

On July 7, 2003, we sold in a private
offering $300 million principal amount of our 2.50%
convertible senior notes due 2023. We have filed, and on
January 6, 2004 caused to become effective, a shelf
registration statement with respect to the resale of these notes
and the sale of the shares of common stock issuable upon
conversion of these notes.

The following summary is a description of the
material provisions of the indenture, dated July 7, 2003,
by and between us and J.P. Morgan Trust Company, National
Association as trustee, for such notes. It does not

25



---



##### Table of Contents



restate the indenture in its entirety, nor does
it mention many of its key provisions. A copy of the indenture
is filed as an exhibit to this Form 10-K, and the following
summary is qualified in its entirety by reference to it.


Interest on the notes is payable on April
1 and October 1 of each year. The notes mature on
October 1, 2023. The notes may be converted into shares of
our common stock (unless earlier redeemed or repurchased by us)
under the following circumstances: (1) note holders may
convert their notes in a conversion period on any date on or
prior to October 1, 2018, if the closing sale price of our
common stock for at least 20 trading days in the period of
the 30 consecutive trading days ending on the first days of
such conversion period was more than 120% of the then current
conversion price of the notes; (2) if, on any date after
October 1, 2018, the closing sale price of our common stock
is more than 120% of the then current conversion price of the
notes, then note holders will have such conversion right at all
times thereafter; (3) we have called the notes for
redemption; (4) we distribute to all or substantially all
holders of our common stock rights, options or warrants
entitling them to purchase common stock at less than the closing
sale price of our common stock on the day preceding the
declaration for such distribution; (5) we distribute to all
or substantially all holders of our common stock cash, assets,
debt securities or capital stock, which distribution has a per
share value as determined by our board of directors exceeding
10% of the closing sale price of our common stock on the day
preceding the declaration for such distribution; or
(6) during any period in which the credit rating of the
notes assigned by Moodys is Caa1 or lower and by
Standard & Poors is CCC+ or lower, or neither
Moodys (or its successors) nor Standard &
Poors (or its successors) continue to rate the notes. Note
holders may also convert their notes into shares of our common
stock for the five business day period after any five
consecutive trading day period in which the average trading
price for the notes was less than 97% of the average conversion
value for the notes during that period.

Upon conversion, we will have the right to
deliver, in lieu of common stock, cash or a combination of cash
and common stock. It is our current intention to satisfy our
obligation upon a conversion of the notes first, in cash, in an
amount equal to the principal amount of the notes converted and
second, in shares of our common stock, to satisfy the remainder,
if any, of our conversion obligation. Our ability to deliver
cash at the time of conversion will be subject to many factors,
including the amount of cash we have available to us, whether
the agreements governing our indebtedness would permit such a
cash settlement, our then existing cash needs, and other
factors. The initial conversion rate is 21.0686 shares of common
stock per each $1,000 principal amount of notes. This is
equivalent to an initial conversion price of $47.46 per share.

On or after October 2, 2010, we have the
option to redeem all or a portion of the notes that have not
been previously converted or repurchased at a redemption price
of 100% of the principal amount plus accrued interest and
liquidated damages owed, if any, to the redemption date. Note
holders have the option, subject to certain conditions, to
require us to repurchase any notes held by them on
October 1, 2010, October 1, 2015 and October 1,
2020, or upon a change in control, at prices equal to 100% of
the principal amount of the notes plus accrued interest and
liquidated damages owed, if any, to the date of repurchase. We
may pay the repurchase price for any notes repurchased on
October 1, 2010 in cash. We may choose to pay the
repurchase price for any notes repurchased on October 1,
2015 or October 1, 2020 in cash, shares of our common
stock, or a combination of cash and shares of our common stock;
provided, however, that we may, at our sole discretion,
terminate at any time our right to pay all or a portion of the
repurchase price on either of these dates in shares of our
common stock. If we elect to pay note holders in common stock or
a combination of cash and common stock, our common stock will be
valued at 95% of the average closing sale price for the five
trading days ending on the third trading day preceding the
applicable purchase date. In addition, upon a change in control,
note holders will have the right, subject to certain conditions
and restrictions, to require us to repurchase some or all of
their notes at a price equal to 100% of the principal amount,
plus any accrued and unpaid interest and liquidated damages
owed, if any, to the date of purchase.



| |                                              
| | ---------------------------------------------
| | 8 1/8% Senior Subordinated Notes due
    2012

On April 24, 2002, we issued and sold
$150 million principal amount of our 8 1/8% senior
subordinated notes due 2012, and on January 14, 2003 issued
and sold another $200 million of such notes, and on
November 24, 2003 redeemed $46 million of such notes.
These two series of notes were issued under the same

26



---



##### Table of Contents



indenture, dated as of April 24, 2002 by and
between us and J.P. Morgan Trust Company, National
Association as trustee, and are treated as a single class of
securities for all purposes.


The following summary is a description of the
material provisions of the indenture. It does not restate the
indenture in its entirety, nor does it mention many of its key
provisions. A copy of the Indenture is filed as an exhibit to
this Form 10-K, and the following summary is qualified in
its entirety by reference to it.

Our 8 1/8% senior subordinated notes mature
on May 1, 2012. We pay interest on May 1 and
November 1 of each year.

We will be able to redeem the notes at our
option, in whole or in part on a pro rata basis at any time and
from time to time, on and after May 1, 2007 at specified
redemption prices. Also, on or prior to May 1, 2005, at our
option, we may redeem in the aggregate up to 40% of the
aggregate principal amount of the notes at a redemption price
equal to 108.125% of the principal amount of the notes, plus
accrued and unpaid interest, if any, to the date of redemption,
with the proceeds of one or more equity offerings.

The notes are unsecured senior subordinated
obligations and are subordinated in right of payment to all our
existing and future senior debt, including debt under the Credit
Facility and our 2.50% convertible senior notes. The notes rank
equally in right of payment with our other senior subordinated
debt, including our 8% senior subordinated notes due 2013 and
the new 3.25% convertible senior subordinated notes. The notes
are effectively subordinated to any current or future secured
indebtedness outstanding.

If a change of control triggering event occurs,
each holder of the notes will have the right to require us to
purchase such holders notes at a purchase price equal to
101% of the principal amount of the notes, together with accrued
and unpaid interest, if any, to the date of purchase. On and
after May 1, 2007, we may exercise our optional redemption
right to redeem all or a portion of the notes, at specified
redemption prices, even if a change of control has occurred.
After May 1, 2010, this redemption price will be lower than
the price we have to pay if holders require us to purchase the
notes upon the occurrence of a change of control. If a change of
control triggering event occurs, prior to repurchasing the
notes, we must first either repay our credit facility or get a
waiver or consent from the lenders under our credit facility to
repurchase the notes from the note holders.

The indenture restricts our ability and the
ability of our restricted subsidiaries to, among other things:
(1) incur additional indebtedness; (2) pay dividends
or make other distributions in respect of its capital stock;
(3) repurchase equity interests or subordinated
indebtedness; (4) create certain liens; (5) enter into
certain transactions with affiliates; (6) consummate
certain asset sales; and (7) merge or consolidate. If we or
any of our restricted subsidiaries are not in compliance with
certain of the indentures financial covenants, our ability
to consummate our acquisition and investment strategy will be
impaired and will require prior approval or waiver by the
holders of notes. These covenants are subject to important
exceptions and qualifications.

The indenture pursuant to which the notes have
been issued sets forth certain events the occurrence of which
constitutes an event of default. An event of default occurs if,
among other things, Fisher: (1) fails to pay interest when
due for 30 days, (2) fails to pay principal when due,
(3) defaults in the performance of a covenant regarding the
merger or sale of substantially all assets of Fisher,
(4) defaults in the observance or performance of other
covenants for 30 days after written notice from the trustee
of holders representing 25% or more of the outstanding principal
amount of the notes, (5) fails to pay or has accelerated
certain other indebtedness aggregating $15 million or more,
(6) is subject to one or more unpaid judgments aggregating
$15 million or more, or (7) one of its significant
subsidiaries, files for or is otherwise subject to a declaration
of bankruptcy.

Upon the happening of any event of default, the
trustee or the holders of at least 25% in principal amount of
outstanding notes may declare the principal of and accrued
interest on all the notes to be due and payable by notice in
writing to Fisher and the trustee specifying the respective
event of default and that it is a notice of
acceleration, and the notes shall become immediately due
and payable. If an event of default with respect to bankruptcy
proceedings of Fisher occurs and is continuing, all notes will
become immediately due and payable without any declaration or
other act on the part of the trustee or any holder of notes.

27



---



##### Table of Contents





| |                                          
| | -----------------------------------------
| | 8% Senior Subordinated Notes due
    2013

On August 20, 2003, we issued and sold
$150 million principal amount of our 8% senior subordinated
notes due 2013, and on November 4, 2003 issued and sold
another $150 million of such notes. These two series of
notes were issued under the same indenture, dated as of
August 20, 2003 by and between us and J.P. Morgan
Trust Company, National Association as trustee, and are treated
as a single class of securities for all purposes. The notes
issued on November 4, 2003 were privately placed, and we
are required to effect a registered exchange offer to exchange
those notes for notes that have been registered under the
Securities Act (or if we cannot effect such exchange offer, to
file a resale registration statement for the transfer of such
notes). We filed on March 2, 2004 a registration statement
on Form S-4 with respect to such exchange offer.

The following summary is a description of the
material provisions of the indenture. It does not restate the
indenture in its entirety, nor does it mention many of its key
provisions. A copy of the Indenture is filed as an exhibit to
this Form 10-K, and the following summary is qualified in
its entirety by reference to it.

Our 8% senior subordinated notes mature on
September 1, 2013. We pay interest on March 1 and
September 1 of each year.

We will be able to redeem the notes at our
option, in whole or in part on a pro rata basis at any time and
from time to time, on and after September 1, 2008 at
specified redemption prices. At any period prior to
September 1, 2008, we may redeem the notes at a redemption
price of 100% of their principal amount plus a specified
make-whole premium. Also, on or prior to September 1, 2006,
at our option, we may redeem in the aggregate up to 40% of the
aggregate principal amount of the notes at a redemption price
equal to 108% of the principal amount of the notes, plus accrued
and unpaid interest, if any, to the date of redemption, with the
proceeds of one or more equity offerings.

The notes are unsecured senior subordinated
obligations and are subordinated in right of payment to all our
existing and future senior debt, including debt under the Credit
Facility and our 2.50% convertible senior notes. The notes rank
equally in right of payment with our other senior subordinated
debt, including our 8 1/8% senior subordinated notes due
2012 and the new 3.25% convertible notes. The notes are
effectively subordinated to any current or future secured
indebtedness outstanding.

If a change of control triggering event occurs,
each holder of the notes will have the right to require us to
purchase such holders notes at a purchase price equal to
101% of the principal amount of the notes, together with accrued
and unpaid interest, if any, to the date of purchase. On and
after September 1, 2008, we may exercise our optional
redemption right to redeem all or a portion of the notes, at
specified redemption prices, even if a change of control has
occurred. After September 1, 2011, this redemption price
will be lower than the price we have to pay if holders require
us to purchase the notes upon the occurrence of a change of
control. If a change of control triggering event occurs, prior
to repurchasing the notes, we must first either repay our credit
facility or get a waiver or consent from the lenders under our
credit facility to repurchase the notes from the note holders.

The indenture restricts our ability and the
ability of our restricted subsidiaries to, among other things:
(1) incur additional indebtedness; (2) pay dividends
or make other distributions in respect of its capital stock;
(3) repurchase equity interests or subordinated
indebtedness; (4) create certain liens; (5) enter into
certain transactions with affiliates; (6) consummate
certain asset sales; and (7) merge or consolidate. If we or
any of our restricted subsidiaries are not in compliance with
certain of the indentures financial covenants, our ability
to consummate our acquisition and investment strategy will be
impaired and will require prior approval or waiver by the
holders of notes. These covenants are subject to important
exceptions and qualifications.

The indenture pursuant to which the notes will be
issued sets forth certain events the occurrence of which
constitutes an event of default. An event of default occurs if,
among other things, Fisher: (1) fails to pay interest when
due for 30 days, (2) fails to pay principal when due,
(3) defaults in the performance of a covenant regarding the
merger or sale of substantially all assets of Fisher,
(4) defaults in the observance of performance of other
covenants for 30 days after written notice from the trustee
of holders representing 25% or more of the outstanding principal
amount of the notes, (5) fails to pay or has accelerated
certain other indebtedness aggregating $25 million or more,
(6) is subject to one or more unpaid judgments aggregating

28



---



##### Table of Contents



$25 million or more, or (7) or one of
its significant subsidiaries, files for or is otherwise subject
to a declaration of bankruptcy.


Upon the happening of any event of default, the
trustee or the holders of at least 25% in principal amount of
outstanding notes may declare the principal of and accrued
interest on all the notes to be due and payable by notice in
writing to Fisher and the trustee specifying the respective
event of default and that it is a notice of
acceleration, and the notes shall become immediately due
and payable. If an event of default with respect to bankruptcy
proceedings of Fisher occurs and is continuing, all notes will
become immediately due and payable without any declaration or
other act on the part of the trustee or any holder of notes.



| |                                                         
| | --------------------------------------------------------
| | 3.25% Convertible Senior Subordinated Notes
    due 2024

On March 3, 2004, we issued and sold
$300 million principal amount of our 3.25% convertible
senior subordinated notes due March 1, 2024. We sold these
notes under a shelf registration statement dated
September 3, 2003 pursuant to which we may issue and sell
up to $750 million of our debt and equity securities.

The following summary is a description of the
material provisions of the supplemental indenture, dated
March 3, 2004, by and between us and J.P. Morgan Trust
Company, National Association, as trustee, for such notes. It
does not restate the supplemental indenture in its entirety, nor
does it mention many of its key provisions. A copy of the
supplemental indenture is filed as an exhibit to this
Form 10-K, and the following summary is qualified in its
entirety by reference to it.

Interest on the notes is payable on March 1
and September 1 of each year. The notes mature on
March 1, 2024. The notes may be converted into shares of
our common stock (unless earlier redeemed or repurchased by us)
under the following circumstances: (1) note holders may
convert their notes in a conversion period on any date on or
prior to March 1, 2019, if the closing sale price of our
common stock for at least 20 trading days in the period of the
30 consecutive trading days ending on the first days of such
conversion period was more than 120% of the then current
conversion price of the notes; (2) if, on any date after
March 1, 2019, the closing sale price of our common stock
is more than 120% of the then current conversion price of the
notes, then note holders will have such conversion right at all
times thereafter; (3) we have called the notes for
redemption; (4) we distribute to all or substantially all
holders of our common stock rights, options of warrants
entitling them to purchase common stock at less than the closing
sale price of our common stock on the day preceding the
declaration for such distribution; (5) we distribute to all
or substantially all holders of our common stock cash, assets,
debt securities or capital stock, which distribution has a per
share value as determined by our board of directors exceeding
10% of the closing sale price of our common stock on the day
preceding the declaration for such distribution; or
(6) during any period in which the credit rating of the
notes assigned by Moodys is Caa2 or lower and by
Standard & Poors is CCC or lower, or neither
Moodys (or its successors) nor Standard &
Poors (or its successors) continue to rate the notes. Note
holders may also convert their notes into shares of our common
stock for the five business day period after any five
consecutive trading day period in which the average trading
price for the notes was less than 97% of the average conversion
value for the notes during that period.

Upon conversion, we will have the right to
deliver, in lieu of common stock, cash or a combination of cash
and common stock. It is our current intention to satisfy our
obligation upon a conversion of the notes first, in cash, in an
amount equal to the principal amount of the notes converted and
second, in shares of our common stock, to satisfy the remainder,
if any, of our conversion obligation. Our ability to deliver
cash at the time of conversion will be subject to many factors,
including the amount of cash we have available to us, whether
the agreements governing our indebtedness would permit such a
cash settlement, our then existing cash needs, and other
factors. The initial conversion rate is 12.4378 shares of common
stock per each $1,000 principal amount of notes. This is
equivalent to an initial conversion price of $80.40 per share.

On or after March 2, 2011, we have the
option to redeem all or a portion of the notes that have not
been previously converted or repurchased at a redemption price
of 100% of the principal amount plus accrued interest and
liquidated damages owed, if any, to the redemption date. Note
holders have the option, subject to certain conditions, to
require us to repurchase any notes held by them on March 1,
2011, March 1, 2016 and

29



---



##### Table of Contents



March 1, 2021, or upon a change in control,
at prices equal to 100% of the principal amount of the notes
plus accrued interest and liquidated damages owed, if any, to
the date of repurchase. We may choose to pay the repurchase
price for any notes repurchased on March 1, 2011,
March 1, 2016 and March 1, 2021 in cash, shares of our
common stock, or a combination of cash and shares of our common
stock; provided, however, that we may, at our sole
discretion, terminate at any time our right to pay all or a
portion of the repurchase price on either of these dates in
shares of our common stock. If we elect to pay note holders in
common stock or a combination of cash and common stock, our
common stock will be valued at 95% of the average closing sale
price for the five trading days ending on the third trading day
preceding the applicable purchase date. In addition, upon a
change in control, note holders will have the right, subject to
certain conditions and restrictions, to require us to repurchase
some or all of their notes at a price equal to 100% of the
principal amount, plus any accrued and unpaid interest and
liquidated damages owed, if any, to the date of purchase.




| |                        
| | -----------------------
| | Securitization Facility

On February 14, 2003, we entered into a new
365-day receivables securitization facility, which we amended on
February 12, 2004 extending the maturity date to
February 10, 2005. All other material terms and conditions
remain unchanged. The following summary is a description of the
material provisions of the relevant agreements. It does not
restate such agreements in their entirety, nor does it mention
many of their key provisions. A copy of such agreements are
filed as exhibits to this Form 10-K, and the following
summary is qualified in its entirety by reference to them.

The Receivables Securitization Facility provides
for the sale, on a revolving basis, of all of the accounts
receivable of Fisher Scientific Company L.L.C., Cole-Parmer
Instrument Company, Fisher Clinical Services Inc., and Fisher
Hamilton L.L.C. to FSI Receivables Company LLC, formerly named
FSI Receivables Corp. (FSI), a special purpose,
bankruptcy remote indirect wholly owned subsidiary of the
Company. On the same date, FSI and Fisher, as servicer, entered
into a receivables transfer agreement with certain financial
institutions, which provides for the transfer on a revolving
basis of an undivided percentage ownership interest in a
designated pool of accounts receivable up to a maximum amount of
$225 million to be funded in cash from time to time to FSI.
Under the terms of the Receivables Securitization Facility, the
originators retain collection and administrative
responsibilities for the receivables in the pool. The effective
funded interest rate on the Receivables Securitization Facility
is approximately one month LIBOR plus a usage fee of 45 basis
points. The unfunded annual commitment fee is 25 basis points.

Critical Accounting Policies

The discussion and analysis of our financial
condition and results of operations are based on our
consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the
United states of America. The preparation of these financial
statements requires us to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. On an on-going basis,
management evaluates its estimates and judgments. Those
estimates and assumptions are based on our historical
experience, our observance of trends in the industry, and
various other factors that are believed to be reasonable under
the circumstances and form the basis for making judgments about
the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions.

Our significant accounting policies are described
in Item 8  Financial Statements and
Supplementary Data  Note 2  Summary
of Significant Accounting Policies and are herein
incorporated by reference. We believe the critical accounting
policies discussed below are those most important for an
understanding of our financial condition and results of
operations.

Revenue
Recognition we record
distribution revenue and manufactured product revenue when
persuasive evidence of an arrangement exists, the price is fixed
or determinable, title and risk of loss has been transferred to
the customer and collectibility of the resulting receivable is
reasonably assured. Risk of loss is generally transferred to the
customer upon delivery. Products are typically delivered without
significant post-

30



---



##### Table of Contents



sale obligations to customers. When significant
post-sale obligations exist, revenue recognition is deferred
until the obligations are satisfied. We record reductions to
revenue for estimated returns. Should a greater number of
products be returned to us, additional reductions to revenue may
be required. We also provide for the estimated cost of product
warranties at the time revenue is recognized. Although our
facilities undergo quality assurance and testing procedures
throughout the production process and we monitor our suppliers
for Fisher branded products, our warranty obligation is affected
by product failure rates, material usage and service delivery
costs incurred in correcting a product failure. Although our
actual product returns and warranty costs have not historically
fluctuated, should actual product failure rates, material usage
or service delivery costs differ from our estimates, revisions
to the estimated warranty liability may be required.
Pharmaceutical outsourcing service revenues, which can consist
of specialized packaging, warehousing and distribution of
products, and arrangements with multiple elements, are
recognized as each of the elements are provided. The Company
recognizes revenue for each element based on the fair value of
the element provided, which has been determined by referencing
historical pricing policies when the element is sold separately.


Environmental
Liabilities we record
accruals for environmental liabilities based on current
interpretations of environmental laws and regulations when it is
probable that a liability has been incurred and the amount can
be reasonably estimated. Our estimates are based upon several
factors, including reports prepared by environmental specialists
and managements knowledge and experience with these
environmental matters. Inherent uncertainties exist in these
estimates due to unknown conditions, changing laws and
regulations and changes in the manner or method of enforcement
of such laws and regulations. Accrued liabilities for
investigation, remediation and operation and maintenance of
cleanup sites were $32.5 million and $31.0 million at
December 31, 2003 and 2002, respectively. Although
management uses its best estimates when establishing accruals
for environmental liabilities, if interpretations of applicable
laws and regulations, cleanup methods or the extent of our
responsibility change from our current estimates, revisions to
our estimated environmental liability may be required.

Goodwill
we perform an evaluation of whether goodwill is impaired
annually or when events occur or circumstances change that would
more likely than not reduce the fair value of a reporting unit
below its carrying amount. Fair value is determined using a
combination of discounted cash flow and multiple of earnings
valuation techniques. Our estimates are based upon historical
trends, managements knowledge and experience, and overall
economic factors. While we believe our estimates are reasonable,
different assumptions regarding items such as future cash flows
and volatility in the markets we serve could affect our
evaluations and result in write-downs to the carrying amount of
our goodwill.

Pension
Plans we have defined
benefit pension plans covering a significant number of domestic
and international employees. Accounting for these plans requires
the use of assumptions, including estimates on the expected
long-term rate of return on assets, discount rates and the
average rate of increase in employee compensation. In order to
make informed assumptions, management, consults with actuaries
and reviews public market data and general economic information.
Our pension cost is based on certain assumptions, including our
expected long-term rate of return on plan assets and discount
rate. A majority of our plans benefit obligations and assets
relate to our U.S.-based plan, which returned a gain of
approximately 15% on plan assets for 2003 and generated a
ten-year weighted-average return on plan assets of approximately
9.5%. A 50 basis point change in the assumption of our
expected long-term rate of return on plan assets for our
U.S.-based plan would result in a change in our pension cost of
approximately $1.2 million. A 50 basis point change in
the assumption of our discount rate for our U.S.-based plan
would result in a change in our benefit obligation of
approximately $9.0 million. We continually assess these
assumptions based on market conditions, and if those conditions
change, our pension cost and pension obligation may be adjusted
accordingly.

Convertible
Notes we have
$600 million of convertible notes outstanding. The notes
may be converted into shares of our common stock (unless earlier
redeemed or repurchased by us) under various circumstances. The
conversion events are discussed in more detail under
Description of Indebtedness included herein. The
notes are not yet convertible. Upon conversion, we have the
right to deliver, in lieu of common stock, cash or a combination
of cash and common stock. Once the notes become convertible, the
dilutive effect of the convertible notes shall be reflected in
diluted EPS by application of the if-converted
method or the so-called treasury stock method.
By application of the if-converted method, 6.3 million and
3.7 million shares would

31



---



##### Table of Contents



be included in the weighted average common shares
used in computing diluted net income per share at an initial
conversion price of $47.46 and $80.40 per share for our
2.50% convertible senior notes and our 3.25% convertible senior
subordinated notes, respectively. By application of the treasury
stock method, 1.1 million and 0.6 million shares would
be included in the weighted average common shares outstanding
used in computing diluted net income per share at 120% of the
initial conversion prices for the 2.50% convertible senior notes
and the 3.25% convertible senior subordinated notes,
respectively. When convertible, the Company may select the
treasury stock method for calculating EPS.


Stock
Options we measure
compensation expense for our stock-based employee compensation
plans using the intrinsic value method prescribed by APB Opinion
No. 25, Accounting for Stock Issued to
Employees. Under the intrinsic value method, compensation
cost is the excess, if any, of the quoted market price of the
stock at the grant date over the amount an employee must pay to
acquire the stock. Statement of Financial Accounting Standards
No. 123, Accounting for Stock-Based
Compensation (SFAS 123) defines a fair
value method of accounting for an employee stock option or
similar equity instrument. Under SFAS 123, fair value of
the stock option is determined using an option-pricing model
that takes into account the stock price at the grant date, the
exercise price, the expected life of the option, the volatility
of the underlying stock and its expected dividends, and the
risk-free interest rate over the expected life of the option,
and is amortized as compensation cost over the vesting period of
the stock option. We determine the fair value of our stock
options using the Black-Scholes option-pricing model. Had we
recorded compensation expense as prescribed by SFAS 123, our net
income in 2003, 2002 and 2001 would have been
$59.2 million, $41.5 million and $29.0 million,
respectively, and our diluted net income per share would have
been $0.98, $0.72 and $0.55, respectively.

Recent Accounting Pronouncements

For information on recent accounting
pronouncements, refer to Item 8  Financial
Statements and Supplementary Data 
Note 22  Recent Accounting Pronouncements,
which is incorporated herein by reference.

Cautionary Factors Regarding Forward-Looking
Statements

This Annual Report on Form 10-K includes
forward-looking statements within the meaning of
Section 21E of the Exchange Act. All statements other than
statements of historical facts included in this Form 10-K
may constitute forward-looking statements. Words such as
anticipates, estimates,
expects, projects, intends,
plans, believes and words and terms of
similar substance used in connection with any discussion of
future operating results or financial performance identify
forward-looking statements.

The Company has based forward-looking statements
on its current expectations and projections about future events.
Although the Company believes that its assumptions made in
connection with the forward-looking statements are reasonable,
there can be no assurances that the assumptions and expectations
will prove to have been correct. All forward-looking statements
reflect the Companys present expectations of future events
and are subject to a number of important assumptions, factors,
and risks and uncertainties that could cause actual results to
differ materially from those described in the forward-looking
statements. The factors listed in Item 1 
Business  Risk Factors, as well as any
cautionary language in this Form 10-K, provide examples of
these risks and uncertainties. Some of the other uncertainties
and assumptions to which these forward-looking statements are
subject include the following:



| |   |                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our outstanding indebtedness and leverage, and
    the restrictions imposed by our indebtedness;                                                                                                      
|
| |  | the effects of domestic and international
    economic and business conditions on our businesses;                                                                                                     
|
| |  | the high degree of competition of certain of our
    businesses, and the potential for new competitors to enter into
    these businesses;                                                            
|
| |  | the extent to which we undertake new acquisitions
    or enter into strategic joint ventures or partnerships, and the
    terms of any such acquisition or strategic joint venture or
    partnership;

32



---



##### Table of Contents





| |   |                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | future modifications to existing laws and
    regulations, including those regarding the environment;                                                                             
|
| |  | discovery of unknown contingent liabilities,
    including environmental contamination at our facilities and
    liability with respect to products we distribute and manufacture;
|
| |  | fluctuations in interest rates and in foreign
    currency exchange rates;                                                                                                        
|
| |  | availability, or increases in the cost, of raw
    materials and other inputs used to make our products;                                                                          
|
| |  | the loss of major customers or suppliers,
    including any provider of shipping services; and                                                                                    
|
| |  | our ability to generate free cash flow or to
    obtain sufficient resources to finance working capital and
    capital expenditure needs.                                        

You are cautioned not to place undue reliance on
the forward-looking statements, which speak only as of the date
of this Form 10-K. The Company is under no obligation, and
expressly disclaims any obligation, to update or alter any
forward-looking statements, whether as a result of new
information, future events or otherwise. You should review any
additional disclosures the Company makes in its filings with the
SEC, including its Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and our proxy statements for our
shareholders meetings.






|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures
    About Market Risk

We measure our market risk related to our
holdings of financial instruments based on changes in interest
rates, foreign currency rates and commodities utilizing a
sensitivity analysis. The sensitivity analysis measures the
potential loss in fair values, cash flows and earnings based on
a hypothetical 10% change in these market rates. We used
year-end market rates on our financial instruments to perform
the sensitivity analysis. We do not include items such as lease
contracts, insurance contracts, and obligations for pension and
other post-retirement benefits in the analysis.

Our primary interest rate exposures relate to
cash, fixed and variable rate debt and interest rate swaps and
options. The potential loss in fair values is based on an
immediate change in the net present values of our interest
rate-sensitive exposures resulting from a 10% change in interest
rates. The potential loss in cash flows and earnings is based on
the change in the net interest income/ expense over a one-year
period due to an immediate 10% change in rates. A hypothetical
10% change in interest rates would not have had a material
impact on our fair values, cash flows or earnings for 2003, 2002
or 2001.

Our primary currency rate exposures relate to our
intercompany debt, foreign cash and foreign currency forward and
option contracts. The potential loss in fair values is based on
an immediate change in the U.S. dollar equivalent balances
of our currency exposures due to a 10% shift in exchange rates.
The potential loss in cash flows and earnings is based on the
change in cash flow and earnings over a one-year period
resulting from an immediate 10% change in currency exchange
rates. A hypothetical 10% change in the currency exchange rates
would not have had a material impact on our fair values, cash
flows or earnings for either 2003, 2002 or 2001.

Our primary commodity exposures relate to our use
of diesel fuel for transportation and natural gas for
manufacturing and heating purposes. The potential loss in cash
flows and earnings is based on the change in the net present
value of our commodity exposures resulting from an immediate 10%
change in market rates. A hypothetical 10% change in market
rates would not have had a material impact on our fair values,
cash flows or earnings for either 2003, 2002 or 2001.

In the normal course of business, we use
derivative financial instruments, including interest rate swaps
and options and foreign currency forward exchange contracts and
options, and commodity swaps and options to manage market risks.
Additional information regarding our financial instruments is
contained in Item 8  Financial Statements
and Supplementary Data 
Note 11  Fair Value of Financial
Instruments and Note 10  Debt.
The objective in managing our exposure to changes in interest
rates is to limit the impact of these changes on earnings and
cash flow and to lower our overall borrowing costs. The
objective in managing our exposure to changes in foreign
currency exchange rates is to reduce volatility on earnings and

33



---



##### Table of Contents



cash flow associated with these changes. The
objective in managing our exposure to energy commodities is to
reduce our volatility on earnings and cash flow associated with
these changes. Our principal currency exposures are in the major
European currencies and in the Canadian dollar. We do not hold
derivatives for trading purposes.


We operate manufacturing and logistical
facilities as well as offices around the world and utilize fixed
and floating rate debt to finance global operations. As a
result, we are subject to business risks inherent in non-U.S.
activities, including political and economic uncertainty, import
and export limitations, and market risk related to changes in
interest rates and foreign currency exchange rates. We believe
the political and economic risks related to foreign operations
are mitigated due to the stability of the countries in which our
largest foreign operations are located.

34



---



##### Table of Contents








|        |                                                
|------- | -----------------------------------------------
|Item 8. | Financial Statements and Supplementary
    Data

FISHER SCIENTIFIC INTERNATIONAL INC.

INDEX TO FINANCIAL STATEMENTS

|                                                                                                                                                          |  |       |    | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- | -- | 
|                                                                                                                                                          |  | Pages
|                                                                                                                                                          |  |      
|Independent Auditors Report                                                                                                                              |  |       | 36 | 
|Statement of Operations for the years ended
    December 31, 2003, 2002 and 2001                                                                          |  |       | 37 | 
|Balance Sheet as of December 31, 2003 and
    2002                                                                                                        |  |       | 38 | 
|Statement of Cash Flows for the years ended
    December 31, 2003, 2002 and 2001                                                                          |  |       | 39 | 
|Statement of Changes in Stockholders Equity
    (Deficit) and Other Comprehensive Income (Loss) for the years
    ended December 31, 2003, 2002 and 2001 |  |       | 40 | 
|Notes to Financial Statements                                                                                                                             |  |       | 41 | 

35



---



##### Table of Contents



INDEPENDENT AUDITORS REPORT

To the Board of Directors of Fisher Scientific
International Inc.:

We have audited the accompanying balance sheets
of Fisher Scientific International Inc. and subsidiaries (the
Company) as of December 31, 2003 and 2002, and
the related statements of operations, cash flows, and changes in
stockholders equity (deficit) and other comprehensive
income (loss) for each of the three years in the period ended
December 31, 2003. Our audits also included the financial
statement schedule listed in Item 15(a)(2). These financial
statements and the financial statement schedule are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements and the financial statement schedule based on our
audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements present
fairly, in all material respects, the financial position of
Fisher Scientific International Inc. and subsidiaries as of
December 31, 2003 and 2002, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 2003, in conformity with
accounting principles generally accepted in the United States of
America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material
respects the information set forth therein.

As discussed in Note 17 to the financial
statements, effective January 1, 2002, the Company changed
its method of accounting for goodwill and intangible assets upon
adoption of Statement of Financial Accounting Standard
No. 142, Goodwill and Other Intangible Assets.

/s/ DELOITTE & TOUCHE LLP

New York, New York

March 2, 2004


36



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.

STATEMENT OF OPERATIONS

|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |      | 
|--------------------------------------------------------------------------------- | ------- | ------------------------------------ | ------- | ---- |  | ---- | ------- | ---- |  | - | ------- | ---- | 
|                                                                                  |         |                                     
|                                                                                  |         | Year Ended December 31,             
|                                                                                  |         |                                     
|                                                                                  |         | 2003                                 |         | 2002 |  | 2001
|                                                                                  |         |                                      |         |      |  |     
|                                                                                  |         |                                     
|                                                                                  |         | (In millions, except per share data)
|Sales                                                                             |         | $                                    | 3,564.4 |      |  | $    | 3,238.4 |      |  | $ | 2,880.0 |     
|Cost of sales                                                                     |         |                                      | 2,624.9 |      |  |      | 2,383.3 |      |  |   | 2,142.8 |     
|Selling, general and administrative expense                                       |         |                                      | 680.9   |      |  |      | 612.2   |      |  |   | 546.4   |     
|Restructuring and other charges (credits)                                         |         |                                      |        |      |  |      | (2.2    | )    |  |   | 59.7    |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Income from operations                                                            |         |                                      | 258.6   |      |  |      | 245.1   |      |  |   | 131.1   |     
|Interest expense                                                                  |         |                                      | 84.8    |      |  |      | 91.3    |      |  |   | 99.5    |     
|Other expense, net                                                                |         |                                      | 77.7    |      |  |      | 12.3    |      |  |   | 1.3     |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Income before income taxes and cumulative effect
    of accounting change         |         |                                      | 96.1    |      |  |      | 141.5   |      |  |   | 30.3    |     
|Income tax provision                                                              |         |                                      | 17.7    |      |  |      | 44.8    |      |  |   | 13.9    |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Income before cumulative effect of accounting
    change                          |         |                                      | 78.4    |      |  |      | 96.7    |      |  |   | 16.4    |     
|Cumulative effect of accounting change, net of tax                                |         |                                      |        |      |  |      | (46.1   | )    |  |   |        |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Net income                                                                        |         | $                                    | 78.4    |      |  | $    | 50.6    |      |  | $ | 16.4    |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Basic income per common share before cumulative
    effect of accounting change   |         | $                                    | 1.38    |      |  | $    | 1.77    |      |  | $ | 0.33    |     
|Cumulative effect of accounting change, net of tax                                |         |                                      |        |      |  |      | (0.84   | )    |  |   |        |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Basic net income per common share                                                 |         | $                                    | 1.38    |      |  | $    | 0.93    |      |  | $ | 0.33    |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Diluted income per common share before cumulative
    effect of accounting change |         | $                                    | 1.29    |      |  | $    | 1.67    |      |  | $ | 0.31    |     
|Cumulative effect of accounting change, net of tax                                |         |                                      |        |      |  |      | (0.80   | )    |  |   |        |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Diluted net income per common share                                               |         | $                                    | 1.29    |      |  | $    | 0.87    |      |  | $ | 0.31    |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Weighted average common shares outstanding:                                       |         |                                      |         |      |  |      |         |      |  |   |         |     
|                                                                                  | Basic   |                                      |         | 56.9 |  |      |         | 54.5 |  |   |         | 49.4 | 
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|                                                                                  | Diluted |                                      |         | 60.6 |  |      |         | 57.9 |  |   |         | 53.0 | 
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     

See the accompanying notes to financial
statements.

37



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.

BALANCE SHEET

|                                         |                                                                                                                                                                                                                  |                            |                                            |        |         |         |       |        |         |         | 
|---------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | ------ | ------- | ------- | ----- | ------ | ------- | ------- | 
|                                         |                                                                                                                                                                                                                  |                           
|                                         |                                                                                                                                                                                                                  | December 31,              
|                                         |                                                                                                                                                                                                                  |                           
|                                         |                                                                                                                                                                                                                  | 2003                       |                                            | 2002  
|                                         |                                                                                                                                                                                                                  |                            |                                            |       
|                                         |                                                                                                                                                                                                                  |                           
|                                         |                                                                                                                                                                                                                  | (In millions, except      
|                                         |                                                                                                                                                                                                                  | share and per share data) 
|ASSETS                                  
|Current assets:                          |                                                                                                                                                                                                                  |                            |                                            |        |         |         |       |       
|                                         | Cash and cash equivalents                                                                                                                                                                                        |                            | $                                          | 83.8   |         |         | $     | 38.8   |        
|                                         | Accounts receivable, net                                                                                                                                                                                         |                            |                                            | 432.7  |         |         |       | 358.0  |        
|                                         | Inventories                                                                                                                                                                                                      |                            |                                            | 355.4  |         |         |       | 267.8  |        
|                                         | Other current assets                                                                                                                                                                                             |                            |                                            | 138.9  |         |         |       | 104.8  |        
|                                         |                                                                                                                                                                                                                  |                            |                                            |        |         |         |       |       
|                                         |                                                                                                                                                                                                                  | Total current assets       |                                            |        | 1,010.8 |         |       |        | 769.4   |        
|Property, plant and equipment            |                                                                                                                                                                                                                  |                            | 440.9                                      |        |         |         | 332.7 |       
|Goodwill                                 |                                                                                                                                                                                                                  |                            | 1,006.9                                    |        |         |         | 508.1 |       
|Intangible assets                        |                                                                                                                                                                                                                  |                            | 241.0                                      |        |         |         | 111.7 |       
|Other assets                             |                                                                                                                                                                                                                  |                            | 159.8                                      |        |         |         | 149.5 |       
|                                         |                                                                                                                                                                                                                  |                            |                                            |        |         |         |       |       
|                                         |                                                                                                                                                                                                                  | Total assets               |                                            | $      | 2,859.4 |         |       | $      | 1,871.4 |        
|                                         |                                                                                                                                                                                                                  |                            |                                            |        |         |         |       |       
|LIABILITIES AND STOCKHOLDERS
    EQUITY
|Current liabilities:                     |                                                                                                                                                                                                                  |                            |                                            |        |         |         |       |       
|                                         | Short-term debt                                                                                                                                                                                                  |                            | $                                          | 12.0   |         |         | $     | 23.9   |        
|                                         | Accounts payable                                                                                                                                                                                                 |                            |                                            | 377.7  |         |         |       | 347.9  |        
|                                         | Accrued and other current liabilities                                                                                                                                                                            |                            |                                            | 258.8  |         |         |       | 211.5  |        
|                                         |                                                                                                                                                                                                                  |                            |                                            |        |         |         |       |       
|                                         |                                                                                                                                                                                                                  | Total current liabilities  |                                            |        | 648.5   |         |       |        | 583.3   |        
|Long-term debt                           |                                                                                                                                                                                                                  |                            | 1,386.1                                    |        |         |         | 921.8 |       
|Other liabilities                        |                                                                                                                                                                                                                  |                            | 249.4                                      |        |         |         | 232.8 |       
|                                         |                                                                                                                                                                                                                  |                            |                                            |        |         |         |       |       
|                                         |                                                                                                                                                                                                                  | Total liabilities          |                                            |        | 2,284.0 |         |       |        | 1,737.9 |        
|                                         |                                                                                                                                                                                                                  |                            |                                            |        |         |         |       |       
|Commitments and contingencies            |                                                                                                                                                                                                                  |                            |                                            |        |         |         |       |       
|Stockholders equity:                    |                                                                                                                                                                                                                  |                            |                                            |        |         |         |       |       
|                                         | Preferred stock ($0.01 par value;
    15,000,000 shares authorized, none outstanding)                                                                                                                            |                            |                                            |       |         |         |       |       |        
|                                         | Common stock ($0.01 par value;
    500,000,000 shares authorized; 63,218,083 and
    54,675,513 shares issued; 62,955,438 and
    54,638,907 shares outstanding at December 31, 2003 and
    2002, respectively) |                            |                                            | 0.6    |         |         |       | 0.5    |        
|                                         | Capital in excess of par value                                                                                                                                                                                   |                            |                                            | 964.5  |         |         |       | 676.4  |        
|                                         | Accumulated deficit                                                                                                                                                                                              |                            |                                            | (426.5 | )       |         |       | (504.9 | )      
|                                         | Accumulated other comprehensive income (loss)                                                                                                                                                                    |                            |                                            | 40.0   |         |         |       | (37.5  | )      
|                                         | Treasury stock, at cost, (262,645 and 36,606
    shares at December 31, 2003 and 2002, respectively)                                                                                                             |                            |                                            | (3.2   | )       |         |       | (1.0   | )      
|                                         |                                                                                                                                                                                                                  |                            |                                            |        |         |         |       |       
|                                         |                                                                                                                                                                                                                  | Total stockholders equity |                                            |        | 575.4   |         |       |        | 133.5   |        
|                                         |                                                                                                                                                                                                                  |                            |                                            |        |         |         |       |       
|                                         |                                                                                                                                                                                                                  |                            | Total liabilities and stockholders equity |        | $       | 2,859.4 |       |        | $       | 1,871.4 | 
|                                         |                                                                                                                                                                                                                  |                            |                                            |        |         |         |       |       

See the accompanying notes to financial
statements.

38



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.

STATEMENT OF CASH FLOWS

|                                                                 |                                                                                   |                                                                         |                           |          |        |       |       |        |        |       |      |        |        |       |  
|---------------------------------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | ------------------------- | -------- | ------ | ----- | ----- | ------ | ------ | ----- | ---- | ------ | ------ | ----- | -
|                                                                 |                                                                                   |                                                                        
|                                                                 |                                                                                   | Year Ended December 31,                                                
|                                                                 |                                                                                   |                                                                        
|                                                                 |                                                                                   | 2003                                                                    |                           | 2002     |        | 2001 
|                                                                 |                                                                                   |                                                                         |                           |          |        |      
|                                                                 |                                                                                   |                                                                        
|                                                                 |                                                                                   | (In millions)                                                          
|Cash flows from operating activities:                            |                                                                                   |                                                                         |                           |          |        |       |       |        |        |       |      |       
|                                                                 | Net income                                                                        |                                                                         | $                         | 78.4     |        |       | $     | 50.6   |        |       | $    | 16.4   |       
|                                                                 | Adjustments to reconcile net income to cash
    provided by operating activities: |                                                                         |                           |          |        |       |       |        |        |       |      |        |       
|                                                                 |                                                                                   | Depreciation and amortization                                           |                           |          | 82.8   |       |       |        | 74.9   |       |      |        | 82.0   |      
|                                                                 |                                                                                   | Call premiums and deferred financing charges                            |                           |          | 65.9   |       |       |        | 11.2   |       |      |        |       |      
|                                                                 |                                                                                   | Deferred income taxes                                                   |                           |          | (0.5   | )     |       |        | 36.1   |       |      |        | (0.3   | )    
|                                                                 |                                                                                   | Other noncash expenses                                                  |                           |          | 18.2   |       |       |        | 1.2    |       |      |        | 6.0    |      
|                                                                 |                                                                                   | Restructuring and other charges (credits)                               |                           |          |       |       |       |        | (2.2   | )     |      |        | 46.1   |      
|                                                                 |                                                                                   | (Gain) loss on sale of property, plant and
    equipment and write-offs |                           |          | 0.6    |       |       |        | 1.0    |       |      |        | (0.6   | )    
|                                                                 |                                                                                   | Cumulative effect of accounting change, net of tax                      |                           |          |       |       |       |        | 46.1   |       |      |        |       |      
|                                                                 |                                                                                   | Changes in working capital:                                             |                           |          |        |       |       |        |        |       |      |        |        |      
|                                                                 |                                                                                   |                                                                         | Accounts receivables, net |          |        | (17.0 | )     |        |        | (11.6 | )    |        |        | 8.9   |  
|                                                                 |                                                                                   |                                                                         | Inventories               |          |        | 37.6  |       |        |        | 5.5   |      |        |        | 10.0  |  
|                                                                 |                                                                                   |                                                                         | Accounts payable          |          |        | 7.8   |       |        |        | 6.0   |      |        |        | 13.8  |  
|                                                                 |                                                                                   |                                                                         | Other assets              |          |        | (59.7 | )     |        |        | (34.4 | )    |        |        | (31.4 | )
|                                                                 |                                                                                   |                                                                         | Other liabilities         |          |        | 3.9   |       |        |        | (25.1 | )    |        |        | 7.7   |  
|                                                                 |                                                                                   |                                                                         |                           |          |        |       |       |        |        |       |      |       
|                                                                 |                                                                                   | Cash provided by operating activities                                   |                           |          | 218.0  |       |       |        | 159.3  |       |      |        | 158.6  |      
|                                                                 |                                                                                   |                                                                         |                           |          |        |       |       |        |        |       |      |       
|Cash flows from investing activities:                            |                                                                                   |                                                                         |                           |          |        |       |       |        |        |       |      |       
|                                                                 | Acquisitions, net of cash acquired                                                |                                                                         |                           | (672.0   | )      |       |       | (61.1  | )      |       |      | (371.2 | )     
|                                                                 | Capital expenditures                                                              |                                                                         |                           | (80.2    | )      |       |       | (43.9  | )      |       |      | (40.1  | )     
|                                                                 | Purchase of financial instruments                                                 |                                                                         |                           | (15.7    | )      |       |       |       |        |       |      |       |       
|                                                                 | Proceeds from sale of property, plant and
    equipment                           |                                                                         |                           | 0.3      |        |       |       | 0.2    |        |       |      | 2.4    |       
|                                                                 | Other investments                                                                 |                                                                         |                           | 1.2      |        |       |       | (0.6   | )      |       |      | (10.7  | )     
|                                                                 |                                                                                   |                                                                         |                           |          |        |       |       |        |        |       |      |       
|                                                                 |                                                                                   | Cash used in investing activities                                       |                           |          | (766.4 | )     |       |        | (105.4 | )     |      |        | (419.6 | )    
|                                                                 |                                                                                   |                                                                         |                           |          |        |       |       |        |        |       |      |       
|Cash flows from financing activities:                            |                                                                                   |                                                                         |                           |          |        |       |       |        |        |       |      |       
|                                                                 | Proceeds from sale of common stock                                                |                                                                         |                           | 260.6    |        |       |       |       |        |       |      | 289.9  |       
|                                                                 | Proceeds from stock options exercised                                             |                                                                         |                           | 19.8     |        |       |       | 6.4    |        |       |      | 3.1    |       
|                                                                 | Long-term debt proceeds                                                           |                                                                         |                           | 1,470.7  |        |       |       | 163.3  |        |       |      |       |       
|                                                                 | Long-term debt payments                                                           |                                                                         |                           | (1,077.9 | )      |       |       | (228.1 | )      |       |      | (29.5  | )     
|                                                                 | Change in short-term debt, net                                                    |                                                                         |                           | (16.2    | )      |       |       | (26.4  | )      |       |      | 7.2    |       
|                                                                 | Acquisition of treasury stock                                                     |                                                                         |                           |         |        |       |       |       |        |       |      | (0.7   | )     
|                                                                 | Debt financing costs                                                              |                                                                         |                           | (29.5    | )      |       |       | (9.8   | )      |       |      |       |       
|                                                                 | Call premiums                                                                     |                                                                         |                           | (43.8    | )      |       |       |       |        |       |      |       |       
|                                                                 |                                                                                   |                                                                         |                           |          |        |       |       |        |        |       |      |       
|                                                                 |                                                                                   | Cash provided by (used in) financing activities                         |                           |          | 583.7  |       |       |        | (94.6  | )     |      |        | 270.0  |      
|                                                                 |                                                                                   |                                                                         |                           |          |        |       |       |        |        |       |      |       
|Effect of exchange rate changes on cash and cash
    equivalents |                                                                                   |                                                                         | 9.7                       |          |        |       | 4.4   |        |        |       | 0.1  |       
|                                                                 |                                                                                   |                                                                         |                           |          |        |       |       |        |        |       |      |       
|Net change in cash and cash equivalents                          |                                                                                   |                                                                         | 45.0                      |          |        |       | (36.3 | )      |        |       | 9.1  |       
|Cash and cash equivalents  beginning
    of year                |                                                                                   |                                                                         | 38.8                      |          |        |       | 75.1  |        |        |       | 66.0 |       
|                                                                 |                                                                                   |                                                                         |                           |          |        |       |       |        |        |       |      |       
|Cash and cash equivalents  end of year                          |                                                                                   | $                                                                       | 83.8                      |          |        | $     | 38.8  |        |        | $     | 75.1 |       
|                                                                 |                                                                                   |                                                                         |                           |          |        |       |       |        |        |       |      |       
|Supplemental Cash Flow Information:                              |                                                                                   |                                                                         |                           |          |        |       |       |        |        |       |      |       
|                                                                 | Cash paid during the year for:                                                    |                                                                         |                           |          |        |       |       |        |        |       |      |        |       
|                                                                 |                                                                                   | Income taxes, net of refunds                                            |                           | $        | 11.7   |       |       | $      | 15.6   |       |      | $      | 8.5    |      
|                                                                 |                                                                                   |                                                                         |                           |          |        |       |       |        |        |       |      |       
|                                                                 |                                                                                   | Interest                                                                |                           | $        | 93.1   |       |       | $      | 83.5   |       |      | $      | 92.2   |      
|                                                                 |                                                                                   |                                                                         |                           |          |        |       |       |        |        |       |      |       

See the accompanying notes to financial
statements.

39



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.

STATEMENT OF CHANGES IN STOCKHOLDERS
EQUITY (DEFICIT)

AND OTHER COMPREHENSIVE INCOME
(LOSS)


|                             |                                                          |                                     |            |            |  |           |     |              |  |             |       |               |  |                 |       |        |   |        |      |       |   |   |        |      |  |   |       |       |   |  |         |         |  |   |      |      |   |   |        |       |   | 
|---------------------------- | -------------------------------------------------------- | ----------------------------------- | ---------- | ---------- |  | --------- | --- | ------------ |  | ----------- | ----- | ------------- |  | --------------- | ----- | ------ | - | ------ | ---- | ----- | - | - | ------ | ---- |  | - | ----- | ----- | - |  | ------- | ------- |  | - | ---- | ---- | - | - | ------ | ----- | - | 
|                             |                                                          |                                     |            |            |  |           |     |              |  |             |       |               |  |                 |       |        |   |       
|                             |                                                          |                                     |            |            |  |           |     |              |  |             |       | Accumulated   |  | Treasury Stock, |       |       
|                             |                                                          | Common Stock                        |            | Capital in |  | Shares    |     | Shares To Be |  |             |       | Other         |  | at Cost         |       |       
|                             |                                                          |                                     |            | Excess of  |  | Deposited |     | Distributed  |  | Accumulated |       | Comprehensive |  |                 |       |       
|                             |                                                          | Shares                              |            | Amount     |  | Par Value |     | In Trust     |  | From Trust  |       | Deficit       |  | Income (Loss)   |       | Shares |   | Amount |      | Total
|                             |                                                          |                                     |            |            |  |           |     |              |  |             |       |               |  |                 |       |        |   |        |      |      
|                             |                                                          |                                    
|                             |                                                          | (In millions, except share data)   
|Balance at January 1, 2001   |                                                          |                                     | 40,132,296 |            |  | $         | 0.4 |              |  | $           | 326.0 |               |  | $               | (30.1 | )      |   | $      | 30.1 |       |   | $ | (571.9 | )    |  | $ | (65.9 | )     |   |  | 15,907  |         |  | $ | (0.3 | )    |   | $ | (311.7 | )    
|                             | Net income                                               |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        | 16.4 |  |   |       |      |   |  |         |         |  |   |      |     |   |   |        | 16.4  |  
|                             | Foreign currency translation adjustment                  |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       | (10.1 | ) |  |         |        |  |   |      |     |   |   |        | (10.1 | )
|                             | Unrealized investment gain                               |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       | 0.5   |   |  |         |        |  |   |      |     |   |   |        | 0.5   |  
|                             | Unrealized loss on cash flow hedges                      |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       | (6.6  | ) |  |         |        |  |   |      |     |   |   |        | (6.6  | )
|                             | Minimum pension liability                                |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       | 0.3   |   |  |         |        |  |   |      |     |   |   |        | 0.3   |  
|                             |                                                          | Subtotal-other comprehensive income |            |            |  |           |     |              |  |             |       |               |  |                 |       |        |   |        |      |       |   |   |        |      |  |   |       |       |   |  |         |         |  |   |      |      |   |   |        |       |   | 
|                             | Proceeds from issuance of common stock, net              |                                     |            | 12,800,000 |  |           |     | 0.1          |  |             |       | 289.8         |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       |      |   |  |         |        |  |   |      |     |   |   |        | 289.9 |  
|                             | Proceeds from stock options                              |                                     |            | 1,262,188  |  |           |     |             |  |             |       | 3.1           |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       |      |   |  |         |        |  |   |      |     |   |   |        | 3.1   |  
|                             | Tax benefit from stock options                           |                                     |            |           |  |           |     |             |  |             |       | 8.7           |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       |      |   |  |         |        |  |   |      |     |   |   |        | 8.7   |  
|                             | Conversion of employee stock options to common
    stock |                                     |            |           |  |           |     |             |  |             |       | 33.5          |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       |      |   |  |         |        |  |   |      |     |   |   |        | 33.5  |  
|                             | Acquisition of treasury stock                            |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       |      |   |  |         | 20,699  |  |   |      | (0.7 | ) |   |        | (0.7  | )
|                             | Trust activity                                           |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       | (20.5  | ) |        |      | 20.5  |   |   |        |     |  |   |       |      |   |  |         |        |  |   |      |     |   |   |        |      |  
|                             |                                                          |                                     |            |            |  |           |     |              |  |             |       |               |  |                 |       |        |   |        |      |       |   |   |        |      |  |   |       |       |   |  |         |         |  |   |      |      |   |   |        |      
|Balance at December 31, 2001 |                                                          |                                     | 54,194,484 |            |  |           | 0.5 |              |  |             | 661.1 |               |  |                 | (50.6 | )      |   |        | 50.6 |       |   |   | (555.5 | )    |  |   | (81.8 | )     |   |  | 36,606  |         |  |   | (1.0 | )    |   |   | 23.3   |      
|                             | Net income                                               |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        | 50.6 |  |   |       |      |   |  |         |        |  |   |      |     |   |   |        | 50.6  |  
|                             | Foreign currency translation adjustment                  |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       | 48.8  |   |  |         |        |  |   |      |     |   |   |        | 48.8  |  
|                             | Unrealized investment loss                               |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       | (1.3  | ) |  |         |        |  |   |      |     |   |   |        | (1.3  | )
|                             | Unrealized gain on cash flow hedges                      |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       | 1.3   |   |  |         |        |  |   |      |     |   |   |        | 1.3   |  
|                             | Realization of losses on cash flow hedges                |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       | 5.3   |   |  |         |        |  |   |      |     |   |   |        | 5.3   |  
|                             | Minimum pension liability                                |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       | (9.8  | ) |  |         |        |  |   |      |     |   |   |        | (9.8  | )
|                             |                                                          | Subtotal-other comprehensive income |            |            |  |           |     |              |  |             |       |               |  |                 |       |        |   |        |      |       |   |   |        |      |  |   |       |       |   |  |         |         |  |   |      |      |   |   |        |       |   | 
|                             | Proceeds from stock options                              |                                     |            | 481,029    |  |           |     |             |  |             |       | 6.4           |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       |      |   |  |         |        |  |   |      |     |   |   |        | 6.4   |  
|                             | Tax benefit from stock options                           |                                     |            |           |  |           |     |             |  |             |       | 8.9           |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       |      |   |  |         |        |  |   |      |     |   |   |        | 8.9   |  
|                             | Trust activity                                           |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       | 16.6   |   |        |      | (16.6 | ) |   |        |     |  |   |       |      |   |  |         |        |  |   |      |     |   |   |        |      |  
|                             |                                                          |                                     |            |            |  |           |     |              |  |             |       |               |  |                 |       |        |   |        |      |       |   |   |        |      |  |   |       |       |   |  |         |         |  |   |      |      |   |   |        |      
|Balance at December 31, 2002 |                                                          |                                     | 54,675,513 |            |  |           | 0.5 |              |  |             | 676.4 |               |  |                 | (34.0 | )      |   |        | 34.0 |       |   |   | (504.9 | )    |  |   | (37.5 | )     |   |  | 36,606  |         |  |   | (1.0 | )    |   |   | 133.5  |      
|                             | Net income                                               |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        | 78.4 |  |   |       |      |   |  |         |        |  |   |      |     |   |   |        | 78.4  |  
|                             | Foreign currency translation adjustment                  |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       | 69.2  |   |  |         |        |  |   |      |     |   |   |        | 69.2  |  
|                             | Unrealized investment gain                               |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       | 0.7   |   |  |         |        |  |   |      |     |   |   |        | 0.7   |  
|                             | Unrealized gain on cash flow hedges                      |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       | 0.5   |   |  |         |        |  |   |      |     |   |   |        | 0.5   |  
|                             | Minimum pension liability                                |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       | 6.0   |   |  |         |        |  |   |      |     |   |   |        | 6.0   |  
|                             | Unrealized gain on SERP                                  |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       | 1.1   |   |  |         |        |  |   |      |     |   |   |        | 1.1   |  
|                             |                                                          | Subtotal-other comprehensive income |            |            |  |           |     |              |  |             |       |               |  |                 |       |        |   |        |      |       |   |   |        |      |  |   |       |       |   |  |         |         |  |   |      |      |   |   |        |       |   | 
|                             | Proceeds from issuance of common stock, net              |                                     |            | 6,634,526  |  |           |     | 0.1          |  |             |       | 260.5         |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       |      |   |  |         |        |  |   |      |     |   |   |        | 260.6 |  
|                             | Exercise of stock options and warrants                   |                                     |            | 1,908,044  |  |           |     |             |  |             |       | 19.8          |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       |      |   |  |         |        |  |   |      |     |   |   |        | 19.8  |  
|                             | Tax benefit from stock options                           |                                     |            |           |  |           |     |             |  |             |       | 5.6           |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       |      |   |  |         |        |  |   |      |     |   |   |        | 5.6   |  
|                             | Acquisition of treasury stock                            |                                     |            |           |  |           |     |             |  |             |       | 2.2           |  |                 |       |       |   |        |      |      |   |   |        |     |  |   |       |      |   |  |         | 226,039 |  |   |      | (2.2 | ) |   |        |      |  
|                             | Trust activity                                           |                                     |            |           |  |           |     |             |  |             |       |              |  |                 |       | 8.5    |   |        |      | (8.5  | ) |   |        |     |  |   |       |      |   |  |         |        |  |   |      |     |   |   |        |      |  
|                             |                                                          |                                     |            |            |  |           |     |              |  |             |       |               |  |                 |       |        |   |        |      |       |   |   |        |      |  |   |       |       |   |  |         |         |  |   |      |      |   |   |        |      
|Balance at December 31, 2003 |                                                          |                                     | 63,218,083 |            |  | $         | 0.6 |              |  | $           | 964.5 |               |  | $               | (25.5 | )      |   | $      | 25.5 |       |   | $ | (426.5 | )    |  | $ | 40.0  |       |   |  | 262,645 |         |  | $ | (3.2 | )    |   | $ | 575.4  |      
|                             |                                                          |                                     |            |            |  |           |     |              |  |             |       |               |  |                 |       |        |   |        |      |       |   |   |        |      |  |   |       |       |   |  |         |         |  |   |      |      |   |   |        |      

See the accompanying notes to financial
statements.

40



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.

NOTES TO FINANCIAL STATEMENTS

Note 1  Nature of
Operations

Fisher Scientific International Inc.
(Fisher or the Company) was founded in
1902 and was incorporated as a Delaware Corporation in 1991. The
Companys operations are conducted throughout North and
South America, Europe, the Far East, Australia, the Middle East
and Africa directly or through one or more subsidiaries, joint
ventures, agents or dealers. During 2003, the Company changed
its business segments to reflect the way it currently manages
its businesses and now reports financial results on the basis of
the following three business segments:



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | Scientific products and services
    segment, which provides products and
    services used for scientific-research, drug-discovery and
    drug-development applications. This segment manufactures and
    distributes a broad range of consumable supply products,
    scientific instruments and apparatus and safety products. In
    addition, this segment provides pharmaceutical services for
    clinical trials, contract manufacturing and a number of other
    value-added services.
|
| | 2. | Healthcare products and services
    segment, which manufactures and
    distributes a wide array of diagnostic kits and reagents,
    consumable supplies and medical devices to hospitals, clinical
    laboratories and physicians offices. Additionally, this
    segment provides outsourced manufacturing services for
    diagnostic reagents, calibrators and controls to the healthcare
    and pharmaceutical industries.                                                              
|
| | 3. | Laboratory workstations
    segment, which manufactures and sells
    laboratory furniture and fume hoods and provides lab-design
    services for pharmaceutical and biotechnology customers,
    colleges, universities and secondary schools, hospitals and
    reference labs.                                                                                                                                                                                                                

All segment information for the periods presented
has been reclassified to conform to the new business segments.

Note 2  Summary of Significant
Accounting Policies

Principles of
Consolidation The
financial statements include the accounts of the Company and all
majority and wholly-owned subsidiaries. All intercompany
accounts and transactions have been eliminated.

Cash and Cash
Equivalents Cash and cash
equivalents consist primarily of highly liquid investments with
original maturities of three months or less at the date of
acquisition. These investments are carried at cost, which
approximates market value.

Inventories
Inventories are valued at the lower of cost or market, cost
being determined principally by the last-in, first-out
(LIFO) method for a majority of domestic
subsidiaries and by the first-in, first-out (FIFO)
method for all other subsidiaries. The LIFO cost method is
generally used for subsidiaries that have also elected LIFO cost
for tax purposes. The company periodically reviews quantities of
inventories on hand and compares these amounts to the expected
use of each product or product line. The Company records a
charge to cost of sales for the amount required to reduce the
carrying value of inventory to net realizable value. Costs
associated with the procurement and warehousing of inventories,
such as inbound freight charges, purchasing and receiving costs,
and internal transfer costs, are included in the cost of sales
line item within the statement of operations.

Property, Plant and
Equipment Property, plant
and equipment are recorded at cost. Major improvements are
capitalized while expenditures for maintenance, repairs and
minor improvements are charged to expense. When assets are
retired or otherwise disposed of, the assets and related
accumulated depreciation is eliminated from the accounts and any
resulting gain or loss is reflected in the statement of
operations. Depreciation is generally based upon the following
estimated useful lives: buildings and improvements 5 to
33 years; machinery, equipment and other 3 to
12 years. Depreciation is computed using the straight-line
method.

41



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Goodwill
Goodwill was amortized through December 31, 2001 for
goodwill acquired in business combinations completed prior to
June 30, 2001 using the straight-line method over periods
ranging from 5 to 40 years. In June 2001, the Financial
Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standard No. 142, Goodwill
and Other Intangible Assets (SFAS 142).
SFAS 142 requires the use of a nonamortization approach to
account for goodwill and indefinite-lived intangible assets and
required the Company to perform an evaluation of whether
goodwill and indefinite-lived intangible assets were impaired as
of January 1, 2002, the effective date of SFAS 142 for
the Company. Under the nonamortization approach, goodwill and
indefinite-lived intangible assets are not amortized but instead
are reviewed for impairment and written down with a resulting
charge to the results of operations in the period in which the
recorded value of goodwill and indefinite-lived intangible
assets exceeds its fair value. In accordance with SFAS 142,
the Company performed an initial test to evaluate whether
goodwill and indefinite-lived intangible assets were impaired as
of January 1, 2002 and determined goodwill was
impaired  see Note 17  Change
in Accounting Principle. The Company performs its annual
test for indications of impairment as of October 31 each
year. The Company completed annual tests for impairment as of
October 31, 2003 and 2002 and determined that goodwill and
indefinite-lived intangible assets were not impaired.

Intangible
Assets Intangible assets
with a finite useful life are amortized on a straight-line basis
over their estimated useful lives, with periods ranging from 5
to 20 years. Intangible assets with an indefinite useful
life are not amortized, but instead are reviewed for impairment.

Deferred Financing
Fees Deferred financing
fees of $24.9 million and $18.7 million at
December 31, 2003 and 2002, respectively, are included in
other assets and are amortized using the effective interest rate
method over the term of the related debt. During 2003, 2002 and
2001, the Company recorded amortization expense for deferred
financing fees of $3.9 million, $4.5 million, and
$5.0 million, respectively. Upon retiring debt, unamortized
deferred financing fees are recognized within other expense, net.

Impairment of Long-Lived
Assets Impairment losses
are recorded on long-lived assets used in operations when
indicators of impairment are present and the quoted market
price, if available, or the estimated undiscounted operating
cash flows generated by those assets are less than the
assets carrying value. Impairment losses are charged to
the statement of operations for the difference between the fair
value and carrying value of the asset. No impairment losses were
recorded on long-lived assets in 2003 or 2002.

Accounts
Payable The Company
maintains a zero balance cash management system for its
U.S. accounts payable. Accordingly, included in accounts
payable at December 31, 2003 and 2002, are
$64.0 million and $99.9 million of checks that did not
clear the bank, respectively.

Advertising
The Company expenses advertising costs as incurred, except for
certain direct-response advertising, which is capitalized and
amortized over its expected period of future benefit, generally
two years. Direct-response advertising consists of catalog
production and mailing costs and amortization begins on the date
the catalogs are mailed. Advertising expense, which includes
internal employment costs for marketing personnel and
amortization of capitalized direct-response advertising, was
$39.9 million, $37.5 million and $21.8 million
for the three years ended December 31, 2003, 2002, and
2001, respectively. Included in advertising expense was catalog
amortization of $14.3 million, $14.5 million, and $9.0 million
for 2003, 2002 and 2001, respectively.

Revenue
Recognition The Company
records distribution revenue and manufactured product revenue
when persuasive evidence of an arrangement exists, the price is
fixed or determinable, title and risk of loss has been
transferred to the customer and collectibility of the resulting
receivable is reasonably assured. Risk of loss is generally
transferred to the customer upon delivery. Products are
typically delivered without significant post-sale obligations to
customers. When significant post-sale obligations exist, revenue
recognition is deferred until the obligations are satisfied.
Provisions for discounts, warranties and rebates to customers,
and returns and other adjustments are provided for in the period
the related sales are recorded. Pharmaceutical outsourcing

42



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

service revenues, which can consist of
specialized packaging, warehousing and distribution of products,
and arrangements with multiple elements, are recognized as each
of the elements are provided. The Company recognizes revenue for
each element based on the fair value of the element provided,
which has been determined by referencing historical pricing
policies when the element is sold separately. Other service
revenue is recognized as the services are performed. Certain
contracts associated with the Companys laboratory
workstation segment are recorded under the
percentage-of-completion method of accounting. Changes in
estimates to complete and revisions in overall profit estimates
on percentage-of-completion contracts are recognized in the
period in which they are determined.

Research and
Development The Company
expenses costs associated with the development of new products.
Research and development expenses are charged to selling,
general and administrative expenses and were $11.8 million,
$7.7 million and $4.5 million for the years ended
December 31, 2003, 2002 and 2001, respectively.

Income
Taxes The Company accounts
for income taxes in accordance with Statement of Financial
Accounting Standard No. 109, Accounting for Income
Taxes (SFAS 109). SFAS 109 requires
the asset and liability approach to account for income taxes by
recognizing deferred tax assets and liabilities for the expected
future tax consequences of differences between the financial
statement basis and the tax basis of assets and liabilities,
calculated using exacted tax rates in effect for the year in
which the differences are expected to be reflected in the tax
return. The Company records a valuation allowance to reduce
deferred tax assets to the amount that is more likely than not
to be realized.

Stock-Based
Compensation The Company
measures compensation expense for its stock-based employee
compensation plans using the intrinsic value method. Had
compensation cost for the Companys stock option plans been
determined based on the fair value at grant date, as prescribed
by Statement of Financial Accounting Standard No. 123,
Accounting for Stock Based Compensation
(SFAS 123), the Companys 2003, 2002 and
2001 net income and net income per share would have been as
follows (in millions, except per share amounts):

|                                                                                                                     |         |      |      |      |  |      |      |      |  |   |      |      | 
|-------------------------------------------------------------------------------------------------------------------- | ------- | ---- | ---- | ---- |  | ---- | ---- | ---- |  | - | ---- | ---- | 
|                                                                                                                     |         | 2003 |      | 2002 |  | 2001
|                                                                                                                     |         |      |      |      |  |     
|Net income as reported                                                                                               |         | $    | 78.4 |      |  | $    | 50.6 |      |  | $ | 16.4 |     
|Add: stock-based employee compensation expense
    included in reported net income, net of tax                       |         |      |     |      |  |      |     |      |  |   | 21.1 |     
|Deduct: stock-based compensation expense
    determined using fair value based method for all awards, net of
    tax |         |      | 19.2 |      |  |      | 9.1  |      |  |   | 8.5  |     
|                                                                                                                     |         |      |      |      |  |      |      |      |  |   |      |     
|Net income, pro forma                                                                                                |         | $    | 59.2 |      |  | $    | 41.5 |      |  | $ | 29.0 |     
|                                                                                                                     |         |      |      |      |  |      |      |      |  |   |      |     
|Net income per common share                                                                                          |         |      |      |      |  |      |      |      |  |   |      |     
|As reported:                                                                                                         |         |      |      |      |  |      |      |      |  |   |      |     
|                                                                                                                     | Basic   |      | $    | 1.38 |  |      | $    | 0.93 |  |   | $    | 0.33 | 
|                                                                                                                     |         |      |      |      |  |      |      |      |  |   |      |     
|                                                                                                                     | Diluted |      | $    | 1.29 |  |      | $    | 0.87 |  |   | $    | 0.31 | 
|                                                                                                                     |         |      |      |      |  |      |      |      |  |   |      |     
|Pro forma                                                                                                            |         |      |      |      |  |      |      |      |  |   |      |     
|                                                                                                                     | Basic   |      | $    | 1.04 |  |      | $    | 0.76 |  |   | $    | 0.59 | 
|                                                                                                                     |         |      |      |      |  |      |      |      |  |   |      |     
|                                                                                                                     | Diluted |      | $    | 0.98 |  |      | $    | 0.72 |  |   | $    | 0.55 | 
|                                                                                                                     |         |      |      |      |  |      |      |      |  |   |      |     

43



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

The fair value of the Companys stock
options included in the preceding pro forma amounts were
estimated using the Black-Scholes option-pricing model with the
following weighted average assumptions:

|                        |  |      |         |      |  |      |         |   |  |  |         |  
|----------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  |  | ------- | -
|                        |  | 2003 |         | 2002 |  | 2001
|                        |  |      |         |      |  |     
|Risk free interest rate |  |      | 2.8     | %    |  |      | 3.8     | % |  |  | 4.5     | %
|Expected life of option |  |      | 5 years |      |  |      | 5 years |   |  |  | 5 years |  
|Volatility              |  |      | 41      | %    |  |      | 47      | % |  |  | 51      | %
|Expected divided yield  |  |      | 0       | %    |  |      | 0       | % |  |  | 0       | %

Foreign Currency
Translation Assets and
liabilities of the Companys foreign subsidiaries, where
the functional currency is the local currency, are translated
into U.S. dollars using year-end exchange rates. Revenues
and expenses of foreign subsidiaries are translated at the
average exchange rates in effect during the year. Adjustments
resulting from financial statement translations are included as
a separate component of stockholders equity. Gains and
losses resulting from foreign currency transactions are reported
on the income statement line item corresponding with the
transaction when recognized and were immaterial for all periods
presented.

Derivative Financial
Instruments The Company
accounts for derivative financial instruments in accordance with
Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging
Activities (SFAS 133), as amended. All
derivatives, whether designated in hedging relations or not, are
recorded on the balance sheet at fair value. If the derivative
is designated as a fair value hedge, the changes in the fair
value of the derivative and of the hedged item attributable to
the hedged risk are recognized in the results of operations. If
the derivative is designated as a cash flow hedge, the effective
portions of changes in the fair value of the derivative are
recorded in accumulated other comprehensive income
(OCI) and are recognized in the results of
operations when the hedged item affects earnings. Ineffective
portions of changes in the fair value of cash flow hedges are
recognized in the results of operations. For derivative
instruments not designated as hedging instruments, changes in
fair value are recognized in the results of operations in the
current period.

The nature of the Companys business
activities requires the management of various financial and
market risks, including those related to changes in interest
rates, foreign currency and commodity rates. The Company uses
derivative financial instruments to mitigate or eliminate
certain of those risks. The Company assesses, both at the
inception of the hedge and on an on-going basis, whether the
derivatives that are used in hedging transactions are highly
effective in offsetting changes in cash flows of hedged items.
When it is determined that a derivative is not highly effective
as a hedge, the Company discontinues hedge accounting
prospectively. The Company does not hold derivatives for trading
purposes.

The Company uses interest-rate swap and option
agreements in order to manage its exposure to interest rate
risk. These interest rate swaps are designated as cash flow
hedges of the Companys variable rate debt. During the
three years ended December 31, 2003, no ineffectiveness was
recognized in the results of operations on these hedges. Amounts
accumulated in OCI are reclassified into earnings as interest is
accrued on the hedge transactions. The amounts accumulated in
OCI will fluctuate based on changes in the fair value of the
Companys derivatives at each reporting period.

The Company enters into forward currency and
option contracts to hedge exposure to fluctuations in foreign
currency rates. For foreign currency contracts that are
designated as hedges, changes in the fair value are recorded in
OCI to the extent of hedge effectiveness and are subsequently
recognized in the results of operations once the forecasted
transactions are recognized. For forward currency contracts not
designated as hedges, changes in fair value are recognized in
other expense, net and are not material for each of the periods
presented.

44



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

The Company enters into commodity swaps and
option contracts to hedge exposure to fluctuations in commodity
prices. For contracts that are designated as hedges, changes in
the fair value are recorded in OCI to the extent of hedge
effectiveness and are subsequently recognized in the results of
operations once the forecasted transactions are recognized. For
contracts not designated as hedges, changes in fair value are
recognized in other expense, net and are not material for each
of the periods presented.

Other Comprehensive Income
(Loss) Other comprehensive
income (loss) refers to revenues, expenses, gains and losses
that under accounting principles generally accepted in the
United States are included in other comprehensive income (loss),
but are excluded from net income as these amounts are recorded
directly as an adjustment to stockholders equity, net of
tax. The Companys other comprehensive income (loss) is
composed of unrealized gains and losses on available-for-sale
securities, unrealized losses on cash flow hedges, minimum
pension liability and foreign currency translation adjustments.

Earnings per
Share Basic net income per
share is computed by dividing net income available for common
stockholders by the weighted average number of shares of common
stock outstanding during the period. Except where the result
would be antidilutive, diluted net income per share is computed
by dividing net income available for common stockholders by the
weighted average number of shares of common stock outstanding,
including potential common shares from the exercise of stock
option and warrants using the treasury stock method.

The following table sets forth basic and diluted
net income per share computational data for the years ended
December 31, 2003, 2002 and 2001 (in millions, except per
share amounts):

|                                                                                              |  |      |      |      |  |      |      |  |  |   |      | 
|--------------------------------------------------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ---- | 
|                                                                                              |  | 2003 |      | 2002 |  | 2001
|                                                                                              |  |      |      |      |  |     
|Net income available to common shareholders                                                   |  | $    | 78.4 |      |  | $    | 50.6 |  |  | $ | 16.4 | 
|                                                                                              |  |      |      |      |  |      |      |  |  |   |      | 
|Weighted average common shares outstanding used
    in computing basic net income per share   |  |      | 56.9 |      |  |      | 54.5 |  |  |   | 49.4 | 
|Common stock equivalents(a)                                                                   |  |      | 3.7  |      |  |      | 3.4  |  |  |   | 3.6  | 
|                                                                                              |  |      |      |      |  |      |      |  |  |   |      | 
|Weighted average common shares outstanding used
    in computing diluted net income per share |  |      | 60.6 |      |  |      | 57.9 |  |  |   | 53.0 | 
|                                                                                              |  |      |      |      |  |      |      |  |  |   |      | 
|Basic net income per share                                                                    |  | $    | 1.38 |      |  | $    | 0.93 |  |  | $ | 0.33 | 
|                                                                                              |  |      |      |      |  |      |      |  |  |   |      | 
|Diluted net income per share                                                                  |  | $    | 1.29 |      |  | $    | 0.87 |  |  | $ | 0.31 | 
|                                                                                              |  |      |      |      |  |      |      |  |  |   |      | 



---



|    |                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The weighted average amount of outstanding
    antidilutive common stock options excluded from the computation
    of diluted net income per share was 0.2 million,
    1.3 million and 0.9 million at December 31, 2003,
    2002 and 2001, respectively.

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

Reclassifications
Certain prior year amounts have been reclassified to conform to
their current presentation.

Note 3  Acquisitions

During 2003, the Company acquired more than 99%
of the outstanding stock of Perbio Science AB
(Perbio), a Swedish public company in a public
tender offer pursuant to the rules of the Stockholm Stock

45



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Exchange. The remaining equity of Perbio was
acquired during the first quarter of 2004. Perbio manufactures
and sells consumable tools for protein-related research and
protein-based biopharma drug production, primarily to customers
within the United States. The purchase price was approximately
$689 million in cash plus assumed net debt of approximately
$44 million. The Perbio acquisition was financed
principally through the sale of $300 million principal
amount of 2.50% convertible senior notes, the issuance and sale
of $150 million principal amount of 8% senior subordinated
notes and the borrowing of an additional $250 million of
term loans under the Companys senior credit facility. The
BioResearch and Cell Culture divisions of Perbio have been
included in the scientific products and services segment and the
medical device division of Perbio has been included in the
healthcare products and services segment from the date of
acquisition.

The following table summarizes the estimated fair
values of the assets acquired and liabilities assumed in the
Perbio acquisition at the date of the acquisition net of cash
and debt acquired. The allocation of purchase price for Perbio
has been made based upon management estimates and third-party
valuations that have not been finalized and revisions may be
necessary.

|                              |                           |               |       |       | 
|----------------------------- | ------------------------- | ------------- | ----- | ----- | 
|                              |                           | (in millions)
|Current assets                |                           | $             | 147.6 |      
|Property, plant and equipment |                           |               | 62.8  |      
|Intangible assets             |                           |               | 117.8 |      
|Goodwill                      |                           |               | 477.9 |      
|                              |                           |               |       |      
|                              | Total assets acquired     |               |       | 806.1 | 
|                              |                           |               |       |      
|Current liabilities           |                           |               | 47.1  |      
|Other liabilities             |                           |               | 26.3  |      
|                              |                           |               |       |      
|                              | Total liabilities assumed |               |       | 73.4  | 
|                              |                           |               |       |      
|                              | Net assets acquired       |               | $     | 732.7 | 
|                              |                           |               |       |      

The allocation of the Perbio purchase price
resulted in an allocation to identifiable intangible assets of
$117.8 million. The Company valued intangible assets
related to trademarks, trade names, customer lists, supplier
agreements and core technology. A majority of the intangible
assets acquired relate to trademarks and trade names.

The following unaudited pro forma financial
information presents the results of operations as if the Perbio
acquisition had occurred at the beginning of 2003 and 2002. The
unaudited pro forma financial information is provided for
information purposes only and does not purport to be indicative
of the Companys results of operations that would actually
have been achieved had the Perbio acquisition been completed for
the periods presented, or that may be achieved in the future (in
millions, except per share amounts).

|                                                                     |         |      |         |      |  |   |         |      | 
|-------------------------------------------------------------------- | ------- | ---- | ------- | ---- |  | - | ------- | ---- | 
|                                                                     |         | 2003 |         | 2002
|                                                                     |         |      |         |     
|Sales                                                                |         | $    | 3,732.7 |      |  | $ | 3,446.9 |     
|Income before cumulative effect of accounting
    change, net of tax |         |      | 76.2    |      |  |   | 94.0    |     
|Net income                                                           |         |      | 76.2    |      |  |   | 47.9    |     
|Net income per common share:                                         |         |      |         |      |  |   |         |     
|                                                                     | Basic   |      | $       | 1.34 |  |   | $       | 0.88 | 
|                                                                     | Diluted |      | $       | 1.26 |  |   | $       | 0.83 | 

In November 2002, the Company acquired Maybridge
Chemical Holdings Limited (Maybridge) and Mimotopes
Pty. Limited (Mimotopes.) Maybridge is a United
Kingdom-based provider of organic compounds and combinatorial
libraries for use in drug discovery. Mimotopes is an
Australia-based manufacturer of custom peptides and peptide
libraries used in conducting scientific research. These
acquisitions had an

46



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

aggregate purchase price of $53.2 million
and were funded with cash on hand. The results of Maybridge and
Mimotopes have been included in our scientific products and
services segment from their respective dates of acquisition.

In July 2002, the Company acquired a
Netherlands-based distributor operating under the names Retsch
and Emergo. Retsch and Emergo are distributors of instruments,
equipment and supplies to the scientific research and industrial
markets. The net purchase price of $7.9 million was funded
with cash on hand. The results of Retsch and Emergo have been
included in the scientific products and services segment from
the date of acquisition.

In April 2002, the Company acquired an additional
interest in Medical Analysis Systems, Inc. (MAS),
increasing the Companys existing ownership interest in MAS
acquired in June 2001, to 91%. In September 2002, the Company
caused MAS to merge with and into a wholly owned merger
subsidiary of the Company. The results of MAS have been included
in the healthcare products and services segment from the dates
of acquisition.

Note 4  Accounts
Receivable

The following is a summary of accounts receivable
at December 31, 2003 and 2002 (in millions):

|                                |                          |      |       |       |  |   |       |       | 
|------------------------------- | ------------------------ | ---- | ----- | ----- |  | - | ----- | ----- | 
|                                |                          | 2003 |       | 2002 
|                                |                          |      |       |      
|Gross accounts receivable       |                          | $    | 469.3 |       |  | $ | 393.6 |      
|Allowance for doubtful accounts |                          |      | (36.6 | )     |  |   | (35.6 | )    
|                                |                          |      |       |       |  |   |       |      
|                                | Accounts receivable, net |      | $     | 432.7 |  |   | $     | 358.0 | 
|                                |                          |      |       |       |  |   |       |      

In February 2003, the Company replaced its
existing receivables securitization facility (Receivables
Securitization) and entered into a $225 million
facility which provides for the sale, on a revolving basis, of
all of the accounts receivable of Fisher Scientific Company
L.L.C., Cole-Parmer Instrument Company, Fisher Clinical Services
Inc. and Fisher Hamilton L.L.C. to FSI Receivables Company LLC
(FSI), a special purpose, bankruptcy remote indirect
wholly owned subsidiary of the Company, which is consolidated.
On the same date, FSI and the Company, as servicer, entered into
a receivables transfer agreement with certain financial
institutions that provides for the transfer on a revolving
basis, an undivided percentage ownership interest in a
designated pool of accounts receivable up to a maximum amount of
$225 million. During 2003 and 2002, the Company collected
and reinvested, on a revolving basis, approximately
$57 million and $226 million of receivables,
respectively. Due to the short-term nature of the receivables,
the Companys retained interest in the pool during the year
is valued at historical cost which approximates fair value. The
effective funded interest rate on the Receivables Securitization
is approximately one month LIBOR plus a usage fee of 45 basis
points. The unfunded annual commitment fee is 25 basis points.
The Company recorded $0.9 million, $1.8 million and
$3.8 million of losses on the sale of receivables as
interest expense during the years ended December 31, 2003,
2002 and 2001, respectively. The full amount of the Receivables
Securitization facility was available at December 31, 2003
and 2002.

47



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Note 5  Inventories

Inventories consisted of the following as of
December 31, 2003 and 2002 (in millions):

|                |       |      |       |       |  |   |       |       | 
|--------------- | ----- | ---- | ----- | ----- |  | - | ----- | ----- | 
|                |       | 2003 |       | 2002 
|                |       |      |       |      
|Raw materials   |       | $    | 64.2  |       |  | $ | 46.6  |      
|Work in process |       |      | 22.6  |       |  |   | 10.6  |      
|Finished goods  |       |      | 268.6 |       |  |   | 210.6 |      
|                |       |      |       |       |  |   |       |      
|                | Total |      | $     | 355.4 |  |   | $     | 267.8 | 
|                |       |      |       |       |  |   |       |      

The value of inventory maintained using the LIFO
method was $141.4 million and $177.9 million, which
was below estimated replacement cost by approximately
$34.8 million and $33.6 million for the years ended
December 31, 2003 and 2002, respectively. The value of
inventory maintained using the FIFO method was
$214.0 million and $89.9 million as of
December 31, 2003 and 2002, respectively.

Note 6  Other Current
Assets

The following is a summary of other current
assets as of December 31, 2003 and 2002 (in millions):

|                      |       |      |      |       |  |   |      |       | 
|--------------------- | ----- | ---- | ---- | ----- |  | - | ---- | ----- | 
|                      |       | 2003 |      | 2002 
|                      |       |      |      |      
|Deferred income taxes |       | $    | 92.1 |       |  | $ | 70.6 |      
|Other                 |       |      | 46.8 |       |  |   | 34.2 |      
|                      |       |      |      |       |  |   |      |      
|                      | Total |      | $    | 138.9 |  |   | $    | 104.8 | 
|                      |       |      |      |       |  |   |      |      

Note 7  Property, Plant and
Equipment

The following is a summary of property, plant and
equipment by major class of asset as of December 31, 2003
and 2002 (in millions):

|                                 |                                    |      |        |       |  |   |        |       | 
|-------------------------------- | ---------------------------------- | ---- | ------ | ----- |  | - | ------ | ----- | 
|                                 |                                    | 2003 |        | 2002 
|                                 |                                    |      |        |      
|Land, buildings and improvements |                                    | $    | 324.5  |       |  | $ | 250.6  |      
|Machinery, equipment and other   |                                    |      | 383.8  |       |  |   | 297.1  |      
|                                 |                                    |      |        |       |  |   |        |      
|                                 | Total                              |      |        | 708.3 |  |   |        | 547.7 | 
|Accumulated depreciation         |                                    |      | (267.4 | )     |  |   | (215.0 | )    
|                                 |                                    |      |        |       |  |   |        |      
|                                 | Property, plant and equipment, net |      | $      | 440.9 |  |   | $      | 332.7 | 
|                                 |                                    |      |        |       |  |   |        |      

Depreciation expense was $53.0 million,
$47.0 million and $43.5 million for the years ended
December 31, 2003, 2002 and 2001, respectively.

48



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Note 8  Goodwill and Other
Intangible Assets

The following is a reconciliation of changes in
the carrying amounts of goodwill by segment for the year ended
December 31, 2003 (in millions):

|                                |                                         |              |       |              |   |              |       |       |  |   |      |   |  |   |         |       |  
|------------------------------- | --------------------------------------- | ------------ | ----- | ------------ | - | ------------ | ----- | ----- |  | - | ---- | - |  | - | ------- | ----- | -
|                                |                                         | Scientific   |       | Healthcare   |   |              |       |      
|                                |                                         | Products and |       | Products and |   | Laboratory   |       |      
|                                |                                         | Services     |       | Services     |   | Workstations |       | Total
|                                |                                         |              |       |              |   |              |       |      
|Balance as of December 31, 2002 |                                         | $            | 379.0 |              |   | $            | 76.1  |       |  | $ | 53.0 |   |  | $ | 508.1   |      
|                                | Acquisitions(a)                         |              |       | 447.4        |   |              |       | 33.5  |  |   |      |  |  |   |         | 480.9 |  
|                                | Purchase price allocation adjustment(b) |              |       | (16.2        | ) |              |       |      |  |   |      |  |  |   |         | (16.2 | )
|                                | Effect of foreign currency              |              |       | 34.1         |   |              |       |      |  |   |      |  |  |   |         | 34.1  |  
|                                |                                         |              |       |              |   |              |       |       |  |   |      |   |  |   |         |      
|Balance as of December 31, 2003 |                                         | $            | 844.3 |              |   | $            | 109.6 |       |  | $ | 53.0 |   |  | $ | 1,006.9 |      
|                                |                                         |              |       |              |   |              |       |       |  |   |      |   |  |   |         |      



---



|    |  |                                                                                                                                                                                                                                                                                                                                                  
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | The allocation of the purchase price for Perbio
    has been made based upon management estimates and third-party
    valuations that have not been finalized. Accordingly, the
    allocation of the purchase price is preliminary and revisions
    may be necessary.                                                                          
|   
|(b) |  | In March 2003, the Company finalized its
    third-party valuation of Maybridge. As a result, the Company
    recorded an adjustment of $16.2 million to the purchase
    price allocation for Maybridge reflecting an increase in the
    fair value of indefinite-lived intangible assets acquired with
    an offsetting decrease to goodwill.

The following is a summary of other intangible
assets subject to amortization at December 31, 2003 and
2002 (in millions):

|                                                                                                                                                                |  |      |      |      |  |   |      | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---- | ---- |  | - | ---- | 
|                                                                                                                                                                |  | 2003 |      | 2002
|                                                                                                                                                                |  |      |      |     
|Customer lists (net of accumulated amortization
    of $7.5 million and $5.9 million at December 31,
    2003 and 2002, respectively)                           |  | $    | 19.7 |      |  | $ | 15.1 | 
|Non-compete agreements (net of accumulated
    amortization of $18.3 million and $15.4 million at
    December 31, 2003 and 2002, respectively)                 |  |      | 3.2  |      |  |   | 5.8  | 
|Patents and tradenames (net of accumulated
    amortization of $9.9 million and $6.7 million at
    December 31, 2003 and 2002, respectively)                   |  |      | 8.5  |      |  |   | 8.9  | 
|Other amortizable intangible assets (net of
    accumulated amortization of $13.6 million and
    $9.2 million at December 31, 2003 and 2002,
    respectively) |  |      | 66.7 |      |  |   | 20.4 | 
|                                                                                                                                                                |  |      |      |      |  |   |      | 
|Amortizable intangible assets, net of accumulated
    amortization                                                                                              |  | $    | 98.1 |      |  | $ | 50.2 | 
|                                                                                                                                                                |  |      |      |      |  |   |      | 

For the years ended December 31, 2003, 2002
and 2001, the Company recorded amortization expense of
$12.1 million, $8.1 million and $6.8 million,
respectively, related to other amortizable intangible assets.

The estimated amortization expense for each of
the five succeeding years and thereafter is as follows (in
millions):

|                                |  |   |      | 
|------------------------------- |  | - | ---- | 
|For the Year Ended December 31, |  |   |      | 
|2004                            |  | $ | 16.8 | 
|2005                            |  |   | 14.0 | 
|2006                            |  |   | 13.7 | 
|2007                            |  |   | 13.1 | 
|2008                            |  |   | 12.8 | 
|thereafter                      |  |   | 27.7 | 

49



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

As of December 31, 2003 and 2002, the
Company had indefinite-lived intangible assets in the scientific
products and services segment of $130.8 million and
$52.2 million, respectively. As of December 31, 2003
and 2002, the Company had indefinite-lived intangible assets in
the healthcare products and services segment of
$12.1 million and $9.3 million, respectively.
Indefinite-lived intangible assets consist of tradenames
acquired through the Companys acquisitions of Cole-Parmer
and MAS in 2001, Maybridge in 2002 and Perbio in 2003.

Note 9  Accrued and Other
Current Liabilities

The following is a summary of accrued and other
current liabilities as of December 31, 2003 and 2002 (in
millions):

|                   |       |      |       |       |  |   |       |       | 
|------------------ | ----- | ---- | ----- | ----- |  | - | ----- | ----- | 
|                   |       | 2003 |       | 2002 
|                   |       |      |       |      
|Wages and benefits |       | $    | 77.3  |       |  | $ | 60.5  |      
|Interest           |       |      | 16.4  |       |  |   | 28.1  |      
|Other              |       |      | 165.1 |       |  |   | 122.9 |      
|                   |       |      |       |       |  |   |       |      
|                   | Total |      | $     | 258.8 |  |   | $     | 211.5 | 
|                   |       |      |       |       |  |   |       |      

Note 10  Debt

The following is a summary of debt obligations as
of December 31, 2003 and 2002 (in millions):

|                                                                                                            |                      |      |       |         |  |   |       |       | 
|----------------------------------------------------------------------------------------------------------- | -------------------- | ---- | ----- | ------- |  | - | ----- | ----- | 
|                                                                                                            |                      | 2003 |       | 2002   
|                                                                                                            |                      |      |       |        
|Term Facility                                                                                               |                      | $    | 440.0 |         |  | $ |      |      
|7 1/8% Notes due 2005 (net of a discount of
    $0.4 million at December 31, 2002)                          |                      |      | 0.4   |         |  |   | 149.6 |      
|2.50% Convertible Senior Notes due 2023
    convertible at $47.46 per share                                 |                      |      | 300.0 |         |  |   |      |      
|Other Debt                                                                                                  |                      |      | 36.2  |         |  |   | 50.0  |      
|9% Senior Subordinated Notes due 2008 (net of a
    discount of $3.9 million at December 31, 2002)          |                      |      |      |         |  |   | 596.1 |      
|8 1/8% Senior Subordinated Notes, due 2012
    (includes $6.4 million of premiums at December 31,
    2003) |                      |      | 310.4 |         |  |   | 150.0 |      
|8% Senior Subordinated Notes, due 2013 (includes
    $11.1 million of premiums at December 31, 2003)        |                      |      | 311.1 |         |  |   |      |      
|                                                                                                            |                      |      |       |         |  |   |       |      
|                                                                                                            | Total debt           |      |       | 1,398.1 |  |   |       | 945.7 | 
|Less: short-term portion                                                                                    |                      |      | (12.0 | )       |  |   | (23.9 | )    
|                                                                                                            |                      |      |       |         |  |   |       |      
|                                                                                                            | Total long-term debt |      | $     | 1,386.1 |  |   | $     | 921.8 | 
|                                                                                                            |                      |      |       |         |  |   |       |      

On February 14, 2003, the Company entered
into a new credit facility that replaced the prior credit
facility and on September 10, 2003 amended and restated
this new credit facility (the Original Credit
Facility) to provide for, among other things, an
additional $250 million term loan facility. On
December 3, 2003, the Company amended the Original Credit
Facility to create a $440 million term loan facility (the
Tranche C Term Loan Facility) to refinance the
outstanding term loan facility at a lower interest rate, and to
create an additional $15 million revolving credit commitment
(the New Revolving Credit Commitment). As of
December 31, 2003, the Credit Facility consists of
(i) a $440 million Tranche C Term Loan Facility,
(ii) a $190 million revolving credit facility,
including the new Revolving Credit Commitment (the
Revolving Credit Facility) and (iii) upon
request, and subject to the fulfillment of certain conditions,
an additional incremental term loan facility (the
Incremental Term Loan Facility) of up to a maximum
amount that

50



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

varies depending, among other things, on the
level of the Companys financial covenants and the amount
of senior unsecured debt incurred by the Company since
February 14, 2003.

The loans under the Revolving Credit Facility
bear interest at the Adjusted LIBO Rate plus a margin of between
2.25% and 3.00% per annum. The loans under the Tranche C
Term Loan Facility bear interest at the Adjusted LIBO Rate plus
a margin of between 1.75% and 2.0% per annum. The Companys
weighted-average borrowing rate for the Tranche C Term Loan
Facility was 6.1% for the year ended December 31, 2003.
Commitment fees are payable on the unborrowed amounts of the
Revolving Credit Facility at a rate of between 0.375% and 0.50%
per annum, depending on the Companys Total Leverage Ratio,
while such commitments remain outstanding. As of
December 31, 2003, $161.8 million of borrowings were
available under the Revolving Facility. The commitments under
the Revolving Credit Facility expire, and the loans outstanding
thereunder mature, on March 31, 2008. The Tranche C
Term Loan Facility requires the Company to make quarterly
repayments of principal equal to approximately $1.1 million
from December 31, 2004 through March 31, 2009, and
quarterly repayments of principal equal to approximately
$105 million each quarter beginning June 30, 2009
through the maturity of the Tranche C Term Loan Facility on
March 31, 2010. In April 2003, the Company entered into
various pay-fixed interest rate swaps to hedge a portion of the
variability of cash flows related to changes in interest rates
on borrowings of variable rate debt obligations. The interest
rate swaps have a total notional value of $200 million and
expire at various dates between March 2008 and March 2010.

On July 7, 2003, the Company sold
$300 million principal amount of 2.50% convertible senior
notes. Interest on the notes is payable on April 1 and
October 1 of each year. The notes may be converted into
shares of the Companys common stock under the following
circumstances: (1) if the closing sale price of the
Companys common stock for a required period of trading
days was more than 120% of the current conversion price of the
notes; (2) if on any date after October 1, 2028, the
closing sale price of the Companys common stock is more
than 120% of the current conversion price of the notes, then
note holders will have such conversion right at all times
thereafter; (3) the Company has called the notes for
redemption; (4) the Company distributes to all or
substantially all holders of the Companys common stock
rights, options or warrants entitling them to purchase common
stock at less than the closing sale price of the Companys
common stock on the day preceding the declaration for such
distribution; (5) the Company distributes to all or
substantially all holders of the Companys common stock
cash, assets, debt securities or capital stock, which
distribution has a per share value as determined by the
Companys board of directors exceeding 10% of the closing
sale price of the Companys common stock on the day
preceding the declaration for such distribution; or
(6) during any period in which the credit rating of the
notes assigned by Moodys is Caa1 or lower and by
Standard & Poors is CCC+ or lower, or neither
Moodys (or its successors) nor Standard & Poors
(or its successors) continue to rate the notes. Upon
conversion, the Company has the right to deliver, in lieu of
common stock, cash or a combination of cash and common stock. It
is the Companys current intention to satisfy the
Companys obligation upon a conversion of the notes first,
in cash, in an amount equal to the principal amount of the notes
converted and second, in shares of the Companys common
stock, to satisfy the remainder, if any, of the Companys
conversion obligation. The initial conversion rate is
21.0686 shares of common stock per each
$1,000 principal amount of notes and is equivalent to an
initial conversion price of $47.46 per share.

On April 24, 2002, the Company issued and
sold $150 million principal amount of 8 1/8% senior
subordinated notes and on January 14, 2003 issued and sold
another $200 million of such notes. Interest on the
8 1/8% senior subordinated notes is payable May 1 and
November 1 of each year. The notes are unsecured senior
subordinated obligations and are subordinated in right of
payment to all existing and future senior debt, including debt
under the Credit Facility and the 2.50% convertible senior
notes. The notes rank equally in right of payment with other
senior subordinated debt.

51



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

On August 20, 2003, the Company issued and
sold $150 million principal amount of 8% senior
subordinated notes and on November 4, 2003 issued and sold
another $150 million of such notes. Interest on the 8%
senior subordinated notes is payable March 1 and September 1 of
each year. The notes are unsecured senior subordinated
obligations and are subordinated in right of payment to all
existing and future senior debt, including debt under the Credit
Facility and 2.50% convertible senior notes. The notes rank
equally in right of payment with other senior subordinated debt.

Proceeds from the 8 1/8% senior subordinated
notes issued in January 2003 and the $400 million term loan
facility entered into in February 2003 were used to refinance
the Companys 9% senior subordinated notes in February and
March 2003. During 2003, the Company also retired
$149.6 million principal amount of the 7 1/8% notes
and $46 million of the 8 1/8% notes.

Obligations of Fisher and the subsidiary
borrowers under the Credit Facility are secured by substantially
all assets of the Company and its material domestic
subsidiaries. Obligations of Fisher and the subsidiary borrowers
are further guaranteed by Fisher and each material domestic
subsidiary of the Company. The Companys debt obligations
restrict, among other things, the ability of the Company and its
subsidiaries to (a) incur debt, (b) pay dividends or
make certain other restricted payments, (c) enter into mergers,
acquisitions and other business combinations,
(d) voluntarily prepay certain debt of the Company or its
subsidiaries, and other various covenants that are customary for
similar obligations. The Company is in compliance with all
covenants at December 31, 2003.

The following table summarizes the maturities of
the Companys indebtedness at December 31, 2003:

|                |  |        |     |              |  |              |       |              |  |          |       |       |  |       |       |  |  |   |       |  |  |   |      |  |  |   |         | 
|--------------- |  | ------ | --- | ------------ |  | ------------ | ----- | ------------ |  | -------- | ----- | ----- |  | ----- | ----- |  |  | - | ----- |  |  | - | ---- |  |  | - | ------- | 
|                |  |        |     | 8%           |  | 8 1/8%       |       | 2.50%        |  |          |       |       |  |      
|                |  | 7 1/8% |     | Subordinated |  | Subordinated |       | Convertible  |  | Term     |       |       |  |      
|                |  | Notes  |     | Notes        |  | Notes        |       | Senior Notes |  | Facility |       | Other |  | Total
|                |  |        |     |              |  |              |       |              |  |          |       |       |  |      
|2004            |  | $      |    |              |  | $            |      |              |  | $        |      |       |  | $     |      |  |  | $ | 1.1   |  |  | $ | 10.9 |  |  | $ | 12.0    | 
|2005            |  |        | 0.4 |              |  |              |      |              |  |          |      |       |  |       |      |  |  |   | 4.5   |  |  |   | 5.1  |  |  |   | 10.0    | 
|2006            |  |        |    |              |  |              |      |              |  |          |      |       |  |       |      |  |  |   | 4.5   |  |  |   | 4.8  |  |  |   | 9.3     | 
|2007            |  |        |    |              |  |              |      |              |  |          |      |       |  |       |      |  |  |   | 4.5   |  |  |   | 0.9  |  |  |   | 5.4     | 
|2008            |  |        |    |              |  |              |      |              |  |          |      |       |  |       |      |  |  |   | 4.5   |  |  |   | 0.8  |  |  |   | 5.3     | 
|2009 and beyond |  |        |    |              |  |              | 300.0 |              |  |          | 304.0 |       |  |       | 300.0 |  |  |   | 420.9 |  |  |   | 13.7 |  |  |   | 1,338.6 | 
|                |  |        |     |              |  |              |       |              |  |          |       |       |  |       |       |  |  |   |       |  |  |   |      |  |  |   |         | 
|Total           |  | $      | 0.4 |              |  | $            | 300.0 |              |  | $        | 304.0 |       |  | $     | 300.0 |  |  | $ | 440.0 |  |  | $ | 36.2 |  |  | $ | 1,380.6 | 
|                |  |        |     |              |  |              |       |              |  |          |       |       |  |       |       |  |  |   |       |  |  |   |      |  |  |   |         | 

Note 11  Fair Value of Financial
Instruments

The Companys financial instruments consist
primarily of cash and cash equivalents held at financial
institutions, accounts receivable, accounts payable, short and
long-term debt, interest rate swaps and forward foreign currency
contracts. The carrying amounts for cash and cash equivalents,
accounts receivable, accounts payable, and short-term debt
approximate fair value due to the short-term nature of these
instruments.

52



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

The carrying amount and fair value of the
Companys long-term debt, forward foreign currency
contracts and interest-rate swap agreements are as follows (in
millions):

|                                   |                      |          |     |            |  |          |     |            |  |   |   |       |  |   |   |       | 
|---------------------------------- | -------------------- | -------- | --- | ---------- |  | -------- | --- | ---------- |  | - | - | ----- |  | - | - | ----- | 
|                                   |                      |          |     |           
|                                   |                      | 2003     |     | 2002      
|                                   |                      |          |     |           
|                                   |                      | Carrying |     |            |  | Carrying |     |           
|                                   |                      | Amount   |     | Fair Value |  | Amount   |     | Fair Value
|                                   |                      |          |     |            |  |          |     |           
|Long-term debt:                    |                      |          |     |            |  |          |     |            |  |   |   |       |  |   |   |      
|                                   | Convertible debt     |          | $   | 300.0      |  |          | $   | 333.9      |  |   | $ |      |  |   | $ |      | 
|                                   | Other                |          |     | 1,086.1    |  |          |     | 1,131.1    |  |   |   | 921.8 |  |   |   | 959.5 | 
|                                   |                      |          |     |            |  |          |     |            |  |   |   |       |  |   |   |      
|                                   | Total long-term debt |          | $   | 1,386.1    |  |          | $   | 1,465.0    |  |   | $ | 921.8 |  |   | $ | 959.5 | 
|                                   |                      |          |     |            |  |          |     |            |  |   |   |       |  |   |   |      
|Forward foreign currency contracts |                      | $        | 0.1 |            |  | $        | 0.1 |            |  | $ |  |       |  | $ |  |      
|                                   |                      |          |     |            |  |          |     |            |  |   |   |       |  |   |   |      
|Interest rate swap agreements      |                      | $        | 0.8 |            |  | $        | 0.8 |            |  | $ |  |       |  | $ |  |      
|                                   |                      |          |     |            |  |          |     |            |  |   |   |       |  |   |   |      

The fair value of debt with variable rates
approximates the net carrying value. The fair value of the
long-term fixed rate debt was estimated based on current quotes
from bond traders making a market in the debt instrument. The
fair value of the forward foreign currency contracts was
estimated based on what the Company would receive upon
liquidation of the contracts, taking into account the change in
currency exchange rates. The fair values of interest-rate swap
agreements are the estimated amounts that the Company would pay
or receive to terminate the agreements at the reporting date,
taking into account current interest rates, the market
expectation for future interest rates and the current
creditworthiness of the Company.

The Company also had off-balance-sheet standby
letters of credit with notional amounts of $28.2 and
$27.2 million with no unrealized gain or loss at
December 31, 2003 and 2002, respectively.

None of the Companys financial instruments
represents a concentration of credit risk as the Company deals
with a variety of major banks worldwide, and its accounts
receivable are spread among a number of customers and geographic
areas.

Note 12  Commitments and
Contingencies

The Company leases certain logistics, office, and
manufacturing facilities. The following is a summary of annual
future minimum lease and rental commitments under operating
leases as of December 31, 2003 (in millions):

|                           |  |   |       | 
|-------------------------- |  | - | ----- | 
|2004                       |  | $ | 25.5  | 
|2005                       |  |   | 20.3  | 
|2006                       |  |   | 16.2  | 
|2007                       |  |   | 14.4  | 
|2008                       |  |   | 13.1  | 
|Thereafter                 |  |   | 44.6  | 
|                           |  |   |       | 
|Net minimum lease payments |  | $ | 134.1 | 
|                           |  |   |       | 

Rent expense included in the accompanying
statement of operations was $23.6 million,
$23.1 million, and $20.5 million for the years ended
December 31, 2003, 2002 and 2001, respectively.

As of December 31, 2003, the Company had
outstanding letters of credit outstanding totaling
$28.2 million, which primarily represent guarantees issued
to local banks in support of borrowings by foreign subsidiaries
of the Company, guarantees with respect to various insurance
activities and performance letters of credit issued in the
normal course of business.

53



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

There are various lawsuits and claims pending
against the Company involving contract, product liability and
other issues. In addition, the Company has assumed certain
specified insurance liabilities, including liabilities related
to an inactive insurance subsidiary, primarily related to
certain historical businesses of its former parent. In view of
the Companys financial condition and the accruals
established for related matters, management does not believe
that the ultimate liability, if any, related to these matters
will have a material adverse effect on the Companys
financial condition, results of operations or cash flows.

The Company is currently involved in various
stages of investigation and remediation related to environmental
protection matters. The Company cannot predict the potential
costs related to environmental matters and the possible impact
on future operations given the uncertainties regarding the
extent of the required cleanup, the complexity and
interpretation of applicable laws and regulations, the varying
costs of alternative cleanup methods and the extent of the
Companys responsibility. However, these costs could be
material. The Company records accruals for environmental
liabilities, based on current interpretations of environmental
laws and regulations, when it is probable that a liability has
been incurred and the amount of such liability can be reasonably
estimated. The Company calculates estimates based upon several
factors, including reports prepared by environmental specialists
and managements knowledge and experience with these
environmental matters. The Company includes in these estimates
potential costs for investigation, remediation and operation and
maintenance of cleanup sites. Accrued liabilities for
environmental matters were $32.5 million and
$31.0 million at December 31, 2003 and 2002,
respectively.

Although these environmental liabilities do not
include third-party recoveries, the Company may be subject to
indemnification from third parties for liabilities relating to
certain sites. Management believes that this accrual is adequate
for the environmental liabilities the Company expects to incur.
As a result, the Company believes that the ultimate liability
with respect to environmental matters will not have a material
adverse effect on the Companys financial position, results
of operations or cash flows. However, the Company may be subject
to additional remedial or compliance costs due to future events,
such as changes in existing laws and regulations, changes in
agency direction or enforcement policies, developments in
remediation technologies or changes in the conduct of the
Companys operations, which could have a material adverse
effect on the Companys financial position, results of
operations or cash flows.

Note 13  Stockholders
Equity



| |                           
| | --------------------------
| | Preferred and Common Stock

The preferred and common stock of the Company are
each issuable in one or more series or classes, any or all of
which may have such voting powers, full or limited, or no voting
powers, and such designations, preferences and related
participating, optional or other special rights and
qualifications, limitations or restrictions thereof, as are set
forth in the Restated Certificate of Incorporation of Fisher or
any amendment thereto, or in the resolution or resolutions
providing for the issue of such stock adopted by Fishers
Board of Directors, which is expressly authorized to set such
terms for any such issue. Under the Restated Certificate of
Incorporation, the Company is authorized to issue up to
5,000,000,000 shares of common stock. As of
December 31, 2002, the Companys outstanding common
stock included 2,436,601 of nonvoting shares, none were
outstanding as of December 31, 2003. As of December 31,
2003 and 2002, respectively, there were warrants outstanding to
purchase 1,653,585 and 2,583,315 shares of common stock at
an exercise price of $9.65 per share. The change in the
number of warrants outstanding is the result of the exercise of
929,730 warrants by certain equity investors in 2003. Such
exercise was affected on a cashless basis resulting in the
issuance of 703,691 shares of common stock.

In September 2003, the Company issued and sold
6.6 million shares of common stock in a public offering at
a price of $40.75 per share. The Company sold these shares
under a shelf registration statement pursuant to
which it may issue and sell up to $750 million of its debt
and equity securities. Proceeds to the Company from the offering
were approximately $261 million, net of underwriters
discounts and offering costs.

54



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

In February 2002, certain of the Companys
stockholders sold 7.4 million shares of common stock in an
underwritten public offering. The Company did not receive any of
the proceeds from this offering.

On May 9, 2001, the Company sold
12.8 million shares of common stock to the public at a
price of $24.00 per share. An additional 1.0 million
shares were sold by employees and other individuals from shares
distributed from a rabbi trust set up in connection with the
Companys recapitalization in 1998. Proceeds to the Company
from the offering was $289.9 million, net of
underwriters discounts and offering costs. The Company did
not receive any proceeds for the sale of shares by the selling
stockholders.



| |            
| | -----------
| | Stock Plans

Under the Companys 2003 Equity and
Incentive Plan (2003 Plan), the Company may
grant up to 2,700,000 shares of common stock in the form of
incentive stock options, non-qualified stock options, other
stock based awards, including but not limited to restricted
stock units or dividend payments. No more than 15% of the shares
reserved for issuance shall be issued as restricted stock,
restricted units or similar full share value awards. The
aggregate awards granted during any fiscal year to any single
individual shall not exceed either 1,100,000 shares subject to
options or stock appreciation rights or 400,000 shares subject
to other stock-based awards (other than stock appreciation
rights). Options granted have a term of five or ten years and
generally vest over three years. The exercise price of any
options may not be granted at less than fair market value of the
common stock on the date of the grant. As of December 31,
2003, 809,500 shares are available for grant.

Under the Companys 2001 Equity and
Incentive Plan (2001 Plan), the Company may
grant up to 8,000,000 shares of common stock in the form of
incentive stock options, non-qualified stock options, other
stock based awards, including but not limited to restricted
stock units or dividend payments. No more than
3,000,000 shares of common stock may be awarded in respect
to options, restricted stock, restricted stock units or other
stock-based awards to any individual under the 2001 Plan.
Options granted have a term of five or ten years and generally
vest over three years. The exercise price of any option may not
be granted at less than the fair market value of the common
stock on the date of the grant. As of December 31, 2003,
1,624,503 shares are available for grant.

Upon adoption of the 2001 Plan, the Company
ceased granting awards under the 1998 Equity and Incentive Plan
(1998 Plan). As of December 31, 2003,
there were 3,285,840 shares outstanding under the
1998 Plan. Awards under the 1998 Plan were authorized to be
made in the form of options (whether incentive or otherwise),
stock appreciation rights, restricted stock, dividend
equivalents and other stock based awards. Options granted under
the 1998 Plan have a term of ten years and generally vest either
over a three to five year period in equal installments, or in
one installment nine years from the date of grant, unless sooner
vested upon the achievement of certain performance targets or
other factors. The Company also granted options to purchase
758,333 shares of common stock having a ten year term and
vesting five to nine years from the date of grant, unless sooner
vested upon the achievement of certain performance targets or
unless put to the Company by the executive or
called by the Company in accordance with the terms
of the respective grant agreements. The total put
and/or call rights are limited to $10.0 million
plus interest and is recorded in other liabilities.

55



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

A summary of the status of the Companys
stock option plans as of December 31, 2003, 2002 and 2001,
and changes during the years then ended is presented in the
following table:

|                                               |  |            |        |          |  |            |       |          |  |            |       |          |  |   |       |  |  |  |        |   |  |   |       | 
|---------------------------------------------- |  | ---------- | ------ | -------- |  | ---------- | ----- | -------- |  | ---------- | ----- | -------- |  | - | ----- |  |  |  | ------ | - |  | - | ----- | 
|                                               |  |            |        |          |  |           
|                                               |  | 2003       |        | 2002     |  | 2001      
|                                               |  |            |        |          |  |           
|                                               |  |            |        | Weighted |  |            |       | Weighted |  |            |       | Weighted
|                                               |  |            |        | Average  |  |            |       | Average  |  |            |       | Average 
|                                               |  | Shares     |        | Exercise |  | Shares     |       | Exercise |  | Shares     |       | Exercise
|                                               |  | (in 000s) |        | Price    |  | (in 000s) |       | Price    |  | (in 000s) |       | Price   
|                                               |  |            |        |          |  |            |       |          |  |            |       |         
|Outstanding at beginning of year               |  |            | 7,740  |          |  | $          | 19.73 |          |  |            | 7,587 |          |  | $ | 18.45 |  |  |  | 7,393  |   |  | $ | 15.68 | 
|Granted                                        |  |            | 4,883  |          |  |            | 34.49 |          |  |            | 1,065 |          |  |   | 28.93 |  |  |  | 3,253  |   |  |   | 26.38 | 
|Exercised                                      |  |            | (978   | )        |  |            | 20.24 |          |  |            | (481  | )        |  |   | 13.18 |  |  |  | (309   | ) |  |   | 10.71 | 
|Canceled/ Expired/ Forfeited                   |  |            | (606   | )        |  |            | 27.93 |          |  |            | (431  | )        |  |   | 27.26 |  |  |  | (2,750 | ) |  |   | 21.08 | 
|                                               |  |            |        |          |  |            |       |          |  |            |       |          |  |   |       |  |  |  |        |   |  |   |       | 
|Outstanding at end of year                     |  |            | 11,039 |          |  | $          | 25.77 |          |  |            | 7,740 |          |  | $ | 19.73 |  |  |  | 7,587  |   |  | $ | 18.45 | 
|                                               |  |            |        |          |  |            |       |          |  |            |       |          |  |   |       |  |  |  |        |   |  |   |       | 
|Exercisable at end of year                     |  |            | 5,402  |          |  | $          | 18.65 |          |  |            | 4,461 |          |  | $ | 14.26 |  |  |  | 4,034  |   |  | $ | 11.54 | 
|Weighted average fair value of options granted |  |            |        |          |  | $          | 13.96 |          |  |            |       |          |  | $ | 13.11 |  |  |  |        |   |  | $ | 13.16 | 

The following table summarizes information about
stock options outstanding at December 31, 2003:

|                        |                 |                     |  |                  |        |                |  |             |     |                |  |   |       |  |  |  |       |  |  |   |       | 
|----------------------- | --------------- | ------------------- |  | ---------------- | ------ | -------------- |  | ----------- | --- | -------------- |  | - | ----- |  |  |  | ----- |  |  | - | ----- | 
|                        |                 |                    
|Options Outstanding     |                 | Options Exercisable
|                        |                 |                    
|                        |                 | Number              |  | Weighted Average |        | Weighted       |  | Number      |     | Weighted      
|                        |                 | Outstanding         |  | Remaining        |        | Average        |  | Exercisable |     | Average       
|Range of Exercise Price |                 | (in 000s)          |  | Contractual Life |        | Exercise Price |  | (in 000s)  |     | Exercise Price
|                        |                 |                     |  |                  |        |                |  |             |     |               
|                        | $ 7.00  $11.00 |                     |  |                  | 2,732  |                |  |             | 4.1 |                |  | $ | 9.50  |  |  |  | 2,732 |  |  | $ | 9.50  | 
|                        | 11.01   26.00  |                     |  |                  | 1,872  |                |  |             | 7.0 |                |  |   | 23.27 |  |  |  | 1,275 |  |  |   | 22.94 | 
|                        | 26.01   38.00  |                     |  |                  | 3,826  |                |  |             | 8.0 |                |  |   | 29.29 |  |  |  | 998   |  |  |   | 30.03 | 
|                        | 38.01   46.00  |                     |  |                  | 2,593  |                |  |             | 5.8 |                |  |   | 39.38 |  |  |  | 397   |  |  |   | 39.25 | 
|                        | 46.01   54.00  |                     |  |                  | 16     |                |  |             | 9.6 |                |  |   | 47.30 |  |  |  |      |  |  |   |      | 
|                        |                 |                     |  |                  |        |                |  |             |     |                |  |   |       |  |  |  |       |  |  |   |       | 
|                        |                 |                     |  |                  | 11,039 |                |  |             |     |                |  |   |       |  |  |  | 5,402 |  |  |   |       | 
|                        |                 |                     |  |                  |        |                |  |             |     |                |  |   |       |  |  |  |       |  |  |   |       | 



| |                     
| | --------------------
| | Restricted Unit Plan

Pursuant to the restricted unit plan of the
Company, each non-employee director of the Company received a
one-time grant of 25,000 units upon becoming a director of the
Company. The units represent the right to receive an equivalent
number of shares of common stock upon separation from service as
a member of the Board of Directors, subject to certain
restrictions. The units are subject to certain transfer
restrictions for a specified period during which the director
has the right to receive dividends. The units vest 25% for each
year of service. Unvested units are generally forfeited if the
director ceases to be a non-employee director prior to the end
of the restricted period.

56



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Note 14  Other Expense,
Net

Other expense, net, consists of interest income
on cash and cash equivalents and other non-operating income and
expense items. Other expense, net, includes the following for
the years ended December 31, 2003, 2002 and 2001 (in
millions):

|                                            |  |      |      |      |  |      |      |  |  |   |      |  
|------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ---- | -
|                                            |  | 2003 |      | 2002 |  | 2001
|                                            |  |      |      |      |  |     
|Call premiums                               |  | $    | 43.8 |      |  | $    |     |  |  | $ |     |  
|Write-off of deferred financing fees        |  |      | 22.1 |      |  |      | 4.1  |  |  |   |     |  
|Acquisition-related foreign currency hedges |  |      | 15.7 |      |  |      |     |  |  |   |     |  
|Fixed-swap unwind costs                     |  |      |     |      |  |      | 7.1  |  |  |   |     |  
|Equity investments                          |  |      |     |      |  |      |     |  |  |   | 6.0  |  
|Interest income and other                   |  |      | (3.9 | )    |  |      | 1.1  |  |  |   | (4.7 | )
|                                            |  |      |      |      |  |      |      |  |  |   |      |  
|                                            |  | $    | 77.7 |      |  | $    | 12.3 |  |  | $ | 1.3  |  
|                                            |  |      |      |      |  |      |      |  |  |   |      |  

Note 15  Income Taxes

The domestic and foreign components of income
before income taxes are as follows for the years ended
December 31, 2003, 2002 and 2001 (in millions):

|         |                            |      |      |      |  |      |      |       |  |   |      |      | 
|-------- | -------------------------- | ---- | ---- | ---- |  | ---- | ---- | ----- |  | - | ---- | ---- | 
|         |                            | 2003 |      | 2002 |  | 2001
|         |                            |      |      |      |  |     
|Domestic |                            | $    | 37.0 |      |  | $    | 88.9 |       |  | $ | 0.6  |     
|Foreign  |                            |      | 59.1 |      |  |      | 52.6 |       |  |   | 29.7 |     
|         |                            |      |      |      |  |      |      |       |  |   |      |     
|         | Income before income taxes |      | $    | 96.1 |  |      | $    | 141.5 |  |   | $    | 30.3 | 
|         |                            |      |      |      |  |      |      |       |  |   |      |     

The components of the income tax provision are as
follows for the years ended December 31, 2003, 2002 and
2001 (in millions):

|                                       |         |                |      |      |      |      |      |      |      |   |      |      |      |  
|-------------------------------------- | ------- | -------------- | ---- | ---- | ---- | ---- | ---- | ---- | ---- | - | ---- | ---- | ---- | -
|                                       |         | 2003           |      | 2002 |      | 2001
|                                       |         |                |      |      |      |     
|Current income tax expense:            |         |                |      |      |      |      |      |      |      |   |      |     
|                                       | Federal |                | $    | 11.2 |      |      | $    | 0.5  |      |   | $    |     |     
|                                       | State   |                |      | 2.3  |      |      |      | 1.8  |      |   |      | 1.5  |     
|                                       | Foreign |                |      | 4.7  |      |      |      | 6.4  |      |   |      | 12.7 |     
|                                       |         |                |      |      |      |      |      |      |      |   |      |     
|                                       |         | Total current  |      |      | 18.2 |      |      |      | 8.7  |   |      |      | 14.2 |  
|                                       |         |                |      |      |      |      |      |      |      |   |      |     
|Deferred income tax expense (benefit): |         |                |      |      |      |      |      |      |      |   |      |     
|                                       | Federal |                |      | 0.7  |      |      |      | 29.4 |      |   |      | 0.6  |     
|                                       | State   |                |      | 0.2  |      |      |      | 1.3  |      |   |      | (0.3 | )   
|                                       | Foreign |                |      | (1.4 | )    |      |      | 5.4  |      |   |      | (0.6 | )   
|                                       |         |                |      |      |      |      |      |      |      |   |      |     
|                                       |         | Total deferred |      |      | (0.5 | )    |      |      | 36.1 |   |      |      | (0.3 | )
|                                       |         |                |      |      |      |      |      |      |      |   |      |     
|Total income tax provision             |         | $              | 17.7 |      |      | $    | 44.8 |      |      | $ | 13.9 |     
|                                       |         |                |      |      |      |      |      |      |      |   |      |     

57



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

A reconciliation of income tax expense at the
U.S. statutory rate to the recorded income tax provision is as
follows for the years ended December 31, 2003, 2002 and
2001 (in millions):

|                                                             |                      |      |       |      |  |      |      |      |  |   |      |      | 
|------------------------------------------------------------ | -------------------- | ---- | ----- | ---- |  | ---- | ---- | ---- |  | - | ---- | ---- | 
|                                                             |                      | 2003 |       | 2002 |  | 2001
|                                                             |                      |      |       |      |  |     
|Taxes computed at statutory rate                             |                      | $    | 33.6  |      |  | $    | 49.5 |      |  | $ | 10.6 |     
|Foreign tax rate differential                                |                      |      | (19.4 | )    |  |      | (9.2 | )    |  |   | (2.2 | )   
|Valuation allowance on foreign losses not tax
    benefitted |                      |      | 2.0   |      |  |      | 2.2  |      |  |   | 1.0  |     
|State income taxes, net of federal benefit                   |                      |      | 1.6   |      |  |      | 2.1  |      |  |   | 1.7  |     
|Nondeductible permanent items, net                           |                      |      | 0.7   |      |  |      | 1.4  |      |  |   | 2.8  |     
|Other                                                        |                      |      | (0.8  | )    |  |      | (1.2 | )    |  |   |     |     
|                                                             |                      |      |       |      |  |      |      |      |  |   |      |     
|                                                             | Income tax provision |      | $     | 17.7 |  |      | $    | 44.8 |  |   | $    | 13.9 | 
|                                                             |                      |      |       |      |  |      |      |      |  |   |      |     

The tax effects of temporary items that gave rise
to significant portions of the deferred tax assets and
liabilities are as follows as of December 31, 2003 and 2002
(in millions):

|                          |                                                 |                                |      |       |       |   |       |       |       | 
|------------------------- | ----------------------------------------------- | ------------------------------ | ---- | ----- | ----- | - | ----- | ----- | ----- | 
|                          |                                                 | 2003                           |      | 2002 
|                          |                                                 |                                |      |      
|Deferred tax assets:      |                                                 |                                |      |       |       |   |       |      
|                          | Postretirement benefit costs other than pension |                                | $    | 21.2  |       |   | $     | 22.8  |      
|                          | Environmental accruals                          |                                |      | 11.2  |       |   |       | 10.6  |      
|                          | Operating loss                                  |                                |      | 91.4  |       |   |       | 68.0  |      
|                          | Accrued employee benefits                       |                                |      | 19.9  |       |   |       | 23.8  |      
|                          | Restructuring accruals                          |                                |      | 1.5   |       |   |       | 3.6   |      
|                          | Charitable Loss                                 |                                |      | 4.7   |       |   |       | 3.8   |      
|                          | Reserves and other accruals                     |                                |      | 23.2  |       |   |       | 14.6  |      
|                          | Inventory reserves                              |                                |      | 8.9   |       |   |       | 10.4  |      
|                          | Allowance for doubtful accounts                 |                                |      | 8.0   |       |   |       | 9.3   |      
|                          | Investments                                     |                                |      | 7.7   |       |   |       | 7.6   |      
|                          | Other items not deductible until paid           |                                |      | 18.0  |       |   |       | 14.6  |      
|                          |                                                 |                                |      |       |       |   |       |      
|                          | Gross deferred tax assets                       |                                |      | 215.7 |       |   |       | 189.1 |      
|                          | Less valuation allowance                        |                                |      | (42.7 | )     |   |       | (36.2 | )    
|                          |                                                 |                                |      |       |       |   |       |      
|                          |                                                 | Total deferred tax assets      |      |       | 173.0 |   |       |       | 152.9 | 
|                          |                                                 |                                |      |       |       |   |       |      
|Deferred tax liabilities: |                                                 |                                |      |       |       |   |       |      
|                          | Goodwill and other intangibles                  |                                |      | 41.7  |       |   |       | 18.7  |      
|                          | Property, plant and equipment                   |                                |      | 21.9  |       |   |       | 11.5  |      
|                          | Pension                                         |                                |      | 18.3  |       |   |       | 3.2   |      
|                          | Other                                           |                                |      | 16.7  |       |   |       | 10.6  |      
|                          |                                                 |                                |      |       |       |   |       |      
|                          |                                                 | Total deferred tax liabilities |      |       | 98.6  |   |       |       | 44.0  | 
|                          |                                                 |                                |      |       |       |   |       |      
|Net deferred tax assets   |                                                 | $                              | 74.4 |       |       | $ | 108.9 |      
|                          |                                                 |                                |      |       |       |   |       |      

58



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

At December 31, 2003, the net deferred tax
asset is classified on the balance sheet as $92.1 million
of current deferred tax assets and $17.7 million of
long-term deferred tax liabilities. At December 31, 2002,
the net deferred tax asset is classified on the balance sheet as
$70.6 million of current deferred tax assets and
$38.3 million of long-term deferred tax assets. The Perbio
acquisition resulted in an increase to deferred tax liabilities
of $21.3 million primarily relating to intangible assets
acquired.

Deferred tax assets include the benefit of net
operating loss carryforwards subject to appropriate valuation
allowances. The Company evaluates the tax benefits of operating
loss carryforwards on an ongoing basis taking into consideration
such factors as the future reversals of existing taxable
temporary differences, projected future operating results, the
available carryforward period and other circumstances. At
December 31, 2003, the Company had accumulated net
operating loss carryforwards for tax purposes expiring as
follows (in millions):

|              |       |         |       |       |  |         |       |       |  |   |       |       | 
|------------- | ----- | ------- | ----- | ----- |  | ------- | ----- | ----- |  | - | ----- | ----- | 
|              |       | Foreign |       | State |  | Federal
|              |       |         |       |       |  |        
|2004  2013   |       | $       | 17.0  |       |  | $       | 67.1  |       |  | $ |      |      
|2014  2023   |       |         |      |       |  |         | 158.8 |       |  |   | 106.7 |      
|No Expiration |       |         | 129.0 |       |  |         |      |       |  |   |      |      
|              |       |         |       |       |  |         |       |       |  |   |       |      
|              | Total |         | $     | 146.0 |  |         | $     | 225.9 |  |   | $     | 106.7 | 
|              |       |         |       |       |  |         |       |       |  |   |       |      

The valuation allowances at December 31,
2003 and 2002 predominantly represent allowances against foreign
and state net operating losses which are not anticipated to
result in future tax benefits.

Undistributed earnings of the Companys
foreign subsidiaries amounted to approximately
$122.9 million at December 31, 2003. Upon distribution
of those earnings in the form of dividends or otherwise, the
Company would be subject to both U.S. income taxes (subject
to an adjustment for foreign tax credits) and withholding taxes
payable to the various foreign countries. The Company intends to
periodically make distributions from its foreign subsidiaries to
its U.S. parent. These distributions will only be made at
such time that they are deemed to be tax efficient.

The Company is currently under federal audit by
the Internal Revenue Service for the taxable years 1999 through
2001. The Company believes that adequate provisions have been
made with respect to the federal tax audit and the Company
believes the resolution of such audits will not have a material
adverse effect on the Companys financial position, results
of operations, or cash flows. There are no other significant
domestic or foreign tax audits in process or pending.

Note 16  Employee Benefit
Plans

The Company has defined benefit pension plans
available to substantially all employees that are either fully
paid for by the Company or provide for mandatory employee
contributions as a condition of participation. Under the cash
balance plan in the United States, a participating employee
accumulates a cash balance account which is credited monthly
with an allocation equal to 3.5% of compensation and interest.
The Company funds annually, at a minimum, the statutorily
required minimum amount as actuarially determined. During 2003,
the Company made voluntary contributions of approximately
$30 million and $20 million, respectively, to the U.S.
and international plans. The Company is not required to
contribute to its pension plans in 2004.

The Company also maintains a supplemental
nonqualified executive retirement program for certain of its
executives. The benefit obligation related to this program is
included in the table below and is approximately
$25 million and $20 million at December 31, 2003
and 2002, respectively. Assets set aside in a rabbi trust
established for this program, that approximate the obligation,
are included in other assets on our balance sheet.

59



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

The Company, generally at its own discretion,
provides a postretirement healthcare program that is
administered by the Company to employees who elect to and are
eligible to participate. The Company funds a portion of the
costs of this program on a self-insured and insured-premium
basis and, for the years ended December 31, 2003, 2002 and
2001, made payments totaling $1.2 million,
$1.7 million and $1.8 million, respectively.

The changes in benefit obligations and plan
assets under the defined benefit pension plans and accumulated
benefit obligations were as follows at December 31, 2003
and 2002 (in millions):

|                                        |                                 |                  |       |                |   |       |       |       |   |   |      |      |   |   |      |      |  
|--------------------------------------- | ------------------------------- | ---------------- | ----- | -------------- | - | ----- | ----- | ----- | - | - | ---- | ---- | - | - | ---- | ---- | -
|                                        |                                 |                  |       |                |   |      
|                                        |                                 |                  |       |                |   | Other
|                                        |                                 |                  |       | Postretirement
|                                        |                                 | Pension Benefits |       | Benefits      
|                                        |                                 |                  |       |               
|Change in Benefit Obligation            |                                 | 2003             |       | 2002           |   | 2003  |       | 2002 
|                                        |                                 |                  |       |                |   |       |       |      
|Benefit obligation at beginning of year |                                 | $                | 293.8 |                |   | $     | 260.6 |       |   | $ | 25.1 |      |   | $ | 23.2 |     
|                                        | Service costs                   |                  |       | 12.6           |   |       |       | 10.9  |   |   |      | 0.4  |   |   |      | 0.4  |  
|                                        | Interest costs                  |                  |       | 19.0           |   |       |       | 17.7  |   |   |      | 1.6  |   |   |      | 1.6  |  
|                                        | Plan participants contribution |                  |       | 1.0            |   |       |       | 0.7   |   |   |      |     |   |   |      |     |  
|                                        | Actuarial (gain) loss           |                  |       | 20.9           |   |       |       | 14.9  |   |   |      | 0.7  |   |   |      | 1.5  |  
|                                        | Benefits paid                   |                  |       | (17.4          | ) |       |       | (16.1 | ) |   |      | (0.9 | ) |   |      | (1.7 | )
|                                        | Currency translation adjustment |                  |       | 13.7           |   |       |       | 5.1   |   |   |      | 1.3  |   |   |      | 0.1  |  
|                                        |                                 |                  |       |                |   |       |       |       |   |   |      |      |   |   |      |     
|Benefit obligation at end of year       |                                 | $                | 343.6 |                |   | $     | 293.8 |       |   | $ | 28.2 |      |   | $ | 25.1 |     
|                                        |                                 |                  |       |                |   |       |       |       |   |   |      |      |   |   |      |     

|                                               |                                 |                  |       |       |   |   |       |       |   |  |  |  |  |  |  |  | 
|---------------------------------------------- | ------------------------------- | ---------------- | ----- | ----- | - | - | ----- | ----- | - |  |  |  |  |  |  |  | 
|                                               |                                 |                  |       |       |   |  
|                                               |                                 | Pension Benefits |       |       |   |  
|                                               |                                 |                  |       |       |   |  
|Change in Plan Assets                          |                                 | 2003             |       | 2002  |   |   |       |      
|                                               |                                 |                  |       |       |   |   |       |      
|Fair value of plan assets at beginning of year |                                 | $                | 249.7 |       |   | $ | 260.0 |       |   |  |  |  |  |  |  | 
|                                               | Actual return on plan assets    |                  |       | 33.7  |   |   |       | (21.1 | ) |  |  |  |  |  |  |  | 
|                                               | Employer contribution           |                  |       | 50.6  |   |   |       | 22.3  |   |  |  |  |  |  |  |  | 
|                                               | Plan participants contribution |                  |       | 1.0   |   |   |       | 0.7   |   |  |  |  |  |  |  |  | 
|                                               | Benefits paid                   |                  |       | (17.4 | ) |   |       | (16.1 | ) |  |  |  |  |  |  |  | 
|                                               | Currency translation adjustment |                  |       | 11.6  |   |   |       | 3.9   |   |  |  |  |  |  |  |  | 
|                                               |                                 |                  |       |       |   |   |       |       |   |  |  |  |  |  |  | 
|Fair value of plan assets at end of year       |                                 | $                | 329.2 |       |   | $ | 249.7 |       |   |  |  |  |  |  |  | 
|                                               |                                 |                  |       |       |   |   |       |       |   |  |  |  |  |  |  | 

The funded status of the Companys defined
benefit pension and postretirement programs was as follows at
December 31, 2003 and 2002 (in millions):

|                                                                                               |  |                  |       |                |  |       |       |      |  |   |       |   |  |   |       |  
|---------------------------------------------------------------------------------------------- |  | ---------------- | ----- | -------------- |  | ----- | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                                                               |  |                  |       |                |  |      
|                                                                                               |  |                  |       |                |  | Other
|                                                                                               |  |                  |       | Postretirement
|                                                                                               |  | Pension Benefits |       | Benefits      
|                                                                                               |  |                  |       |               
|                                                                                               |  | 2003             |       | 2002           |  | 2003  |       | 2002
|                                                                                               |  |                  |       |                |  |       |       |     
|Funded status                                                                                  |  | $                | (14.4 | )              |  | $     | (44.1 | )    |  | $ | (28.1 | ) |  | $ | (25.1 | )
|Unrecognized net actuarial (gain) loss                                                         |  |                  | 81.8  |                |  |       | 69.8  |      |  |   | (22.1 | ) |  |   | (24.8 | )
|Unrecognized prior service costs                                                               |  |                  | (3.5  | )              |  |       | (4.1  | )    |  |   | (4.7  | ) |  |   | (6.9  | )
|Unrecognized net transition obligation                                                         |  |                  | 0.4   |                |  |       | 0.3   |      |  |   |      |   |  |   |      |  
|Adjustment required to recognize minimum liability                                             |  |                  | (3.4  | )              |  |       | (15.3 | )    |  |   |      |   |  |   |      |  
|                                                                                               |  |                  |       |                |  |       |       |      |  |   |       |   |  |   |       |  
|Accrued benefit asset (liability)                                                              |  | $                | 60.9  |                |  | $     | 6.6   |      |  | $ | (54.9 | ) |  | $ | (56.8 | )
|                                                                                               |  |                  |       |                |  |       |       |      |  |   |       |   |  |   |       |  
|Accumulated benefit obligation at the end of year
    included in the benefit obligation above |  | $                | 316.2 |                |  | $     | 277.6 |      |  |   |       |   |  |   |       |  
|                                                                                               |  |                  |       |                |  |       |       |      |  |   |       |   |  |   |       |  

60



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Weighted-average assumptions used to determine
the projected benefit obligations for the years ended
December 31, 2003, 2002 and 2001 are as follows:

|                                                  |  |      |       |      |  |      |       |  |  |  |       | 
|------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  |  | ----- | 
|                                                  |  | 2003 |       | 2002 |  | 2001
|                                                  |  |      |       |      |  |     
|Discount rate                                     |  |      | 6.00% |      |  |      | 6.75% |  |  |  | 6.75% | 
|Average rate of increase in employee compensation |  |      | 4.00% |      |  |      | 4.00% |  |  |  | 4.00% | 

Weighted-average assumptions used to determine
the net benefit cost (income) the years ended December 31,
2003, 2002 and 2001 are as follows:

|                                                  |  |      |       |      |  |      |       |  |  |  |       | 
|------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  |  | ----- | 
|                                                  |  | 2003 |       | 2002 |  | 2001
|                                                  |  |      |       |      |  |     
|Discount rate                                     |  |      | 6.75% |      |  |      | 6.75% |  |  |  | 7.25% | 
|Average rate of increase in employee compensation |  |      | 4.00% |      |  |      | 4.00% |  |  |  | 4.00% | 
|Expected long-term rate of return on assets       |  |      | 8.25% |      |  |      | 8.75% |  |  |  | 9.75% | 

The overall expected long-term rate of return is
developed from the expected future return of each asset class,
weighted by the expected allocation of pension assets to that
asset class. The Company considers historical performance for
the types of assets in which the plans invest, independent
market forecasts and management estimates when developing the
expected rate of return for each class of assets. The
measurement date for our plans is October 31.

The net periodic pension benefits cost (income)
and postretirement healthcare benefit includes the following
components for the years ended December 31, 2003, 2002 and
2001 (in millions):

|                                                     |                                    |                  |       |                         |  |      |       |      |  |      |       |      |   |   |      |      |   |   |      |      |   |   |      |      |  
|---------------------------------------------------- | ---------------------------------- | ---------------- | ----- | ----------------------- |  | ---- | ----- | ---- |  | ---- | ----- | ---- | - | - | ---- | ---- | - | - | ---- | ---- | - | - | ---- | ---- | -
|                                                     |                                    |                  |       |                         |  |      |       |     
|                                                     |                                    |                  |       | Other                  
|                                                     |                                    | Pension Benefits |       | Postretirement Benefits
|                                                     |                                    |                  |       |                        
|                                                     |                                    | 2003             |       | 2002                    |  | 2001 |       | 2003 |  | 2002 |       | 2001
|                                                     |                                    |                  |       |                         |  |      |       |      |  |      |       |     
|Components of net periodic benefit (income)
    cost |                                    |                  |       |                         |  |      |       |      |  |      |       |      |   |   |      |      |   |   |      |      |   |   |      |     
|Service cost                                         |                                    | $                | 12.6  |                         |  | $    | 10.9  |      |  | $    | 10.7  |      |   | $ | 0.4  |      |   | $ | 0.4  |      |   | $ | 0.4  |     
|Interest cost                                        |                                    |                  | 19.0  |                         |  |      | 17.7  |      |  |      | 17.0  |      |   |   | 1.6  |      |   |   | 1.6  |      |   |   | 1.6  |     
|Expected return on plan assets                       |                                    |                  | (25.1 | )                       |  |      | (24.0 | )    |  |      | (25.6 | )    |   |   |     |      |   |   |     |      |   |   |     |     
|Amortization of unrecognized net (gain) loss         |                                    |                  | 0.4   |                         |  |      | 0.3   |      |  |      | 0.2   |      |   |   | (2.3 | )    |   |   | (2.1 | )    |   |   | (2.2 | )   
|Amortization of unrecognized prior service benefit   |                                    |                  | (0.5  | )                       |  |      | (0.5  | )    |  |      | (0.5  | )    |   |   | (1.5 | )    |   |   | (2.2 | )    |   |   | (2.2 | )   
|Amortization of unrecognized net transition asset    |                                    |                  | (0.1  | )                       |  |      | (0.1  | )    |  |      | (0.1  | )    |   |   |     |      |   |   |     |      |   |   |     |     
|Recognized net actuarial (gain) loss                 |                                    |                  | 0.7   |                         |  |      | 0.1   |      |  |      | (0.3  | )    |   |   |     |      |   |   | 0.1  |      |   |   | 0.6  |     
|Settlement/curtailment (gain) loss                   |                                    |                  | 1.3   |                         |  |      | (0.1  | )    |  |      | (1.8  | )    |   |   |     |      |   |   |     |      |   |   |     |     
|                                                     |                                    |                  |       |                         |  |      |       |      |  |      |       |      |   |   |      |      |   |   |      |      |   |   |      |     
|                                                     | Net periodic benefit cost (income) |                  | $     | 8.3                     |  |      | $     | 4.3  |  |      | $     | (0.4 | ) |   | $    | (1.8 | ) |   | $    | (2.2 | ) |   | $    | (1.8 | )
|                                                     |                                    |                  |       |                         |  |      |       |      |  |      |       |      |   |   |      |      |   |   |      |      |   |   |      |     

In 1993, the Company amended certain of its
existing postretirement healthcare programs creating an
unrecognized prior service benefit. The unrecognized prior
service benefit is being amortized over approximately
13 years.

The Companys investment policy for its
pension and postretirement plans is to balance risk and return
through a diversified portfolio of U.S. equities, non-U.S.
equities, fixed income securities and private equity
investments. Maturities for fixed income securities are managed
such that sufficient liquidity exists to meet near-term benefit
payment obligations.

61



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

The Companys weighted-average asset
allocations at October 31, 2003 and 2002 are as follows:

|                  |       |      |     |      |  |  |     |      | 
|----------------- | ----- | ---- | --- | ---- |  |  | --- | ---- | 
|Asset Category    |       | 2003 |     | 2002
|                  |       |      |     |     
|Equity securities |       |      | 37% |      |  |  | 40% |     
|Debt securities   |       |      | 60% |      |  |  | 57% |     
|Real estate       |       |      | 3%  |      |  |  | 3%  |     
|                  |       |      |     |      |  |  |     |     
|                  | Total |      |     | 100% |  |  |     | 100% | 
|                  |       |      |     |      |  |  |     |     

The weighted-average asset allocations presented
above are consistent with the Companys asset allocation
targets.

A 7.25% annual rate of increase in per capita
cost of covered healthcare benefits was assumed for 2002 and
beyond. A change in the assumed healthcare cost trend rate by
1 percentage point effective January 2003 would change the
accumulated postretirement benefit obligation as of
December 31, 2003 by approximately $0.8 million and
the aggregate of the service and interest cost components of net
periodic postretirement benefit cost (income) for the year ended
December 31, 2003 by approximately $0.1 million.

The Company also maintains a defined contribution
savings and profit sharing plan (the Plan). Eligible
employees are allowed to participate in the Plan immediately
upon employment. Participants may elect to contribute between
1 percentage and 15 percentage of their annual
compensation as defined in the Plan. The Company is obligated to
contribute an amount equal to 25 percentage of each
employees basic contribution, as defined, and may, at the
discretion of the Company, contribute additional amounts. For
the years ended December 31, 2003, 2002 and 2001, the
Companys contributions to the Plan were $4.8 million,
$4.4 million, and $3.8 million, respectively.

Note 17  Change in Accounting
Principle

During 2002, the Company completed its
transitional assessment in accordance with SFAS 142 to
determine if goodwill was impaired as of January 1, 2002.
As a result the Company recorded a non-cash charge of
$63.8 million ($46.1 million, net of tax) in our
statement of operations reflecting the cumulative effect of the
accounting change to adjust goodwill to its current fair-value.
The scientific products and services segment and laboratory
workstations segment accounted for $19.7 million and $44.1
million of the charge, respectively.

The impairment charge in the scientific products
and services segment related to certain of our smaller-market
international distribution businesses where operating
performance was lower than originally forecasted. The laboratory
workstations segment is sensitive to changes in capital
spending, and several of the markets to which the laboratory
workstations segment sells, including the technology industry,
experienced a significant economic slowdown causing a reduction
in capital spending in those markets. As a result, sales growth
was significantly less than originally forecasted, resulting in
decreased profitability.

SFAS 142 also requires that goodwill be
tested annually and between annual tests if events occur or
circumstances change that would more likely than not reduce the
fair value of a reporting unit below its carrying amount. We
have elected to perform the annual tests for indications of
goodwill impairment as of October 31 each year. As of
October 31, 2003 and 2002, there were no impairments of
goodwill.

In accordance with SFAS 142, the Company
discontinued the amortization of goodwill effective
January 1, 2002. The following is a reconciliation of net
income, as reported, to net income and net income per

62



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

share for the years ended December 31, 2003,
2002, and 2001, excluding goodwill amortization (in millions,
except per share amounts):

|                                            |                                                                   |                         |      |      |  |      |      |      |  |   |      |      | 
|------------------------------------------- | ----------------------------------------------------------------- | ----------------------- | ---- | ---- |  | ---- | ---- | ---- |  | - | ---- | ---- | 
|                                            |                                                                   |                        
|                                            |                                                                   | Year Ended December 31,
|                                            |                                                                   |                        
|                                            |                                                                   | 2003                    |      | 2002 |  | 2001
|                                            |                                                                   |                         |      |      |  |     
|Net income as reported                      |                                                                   | $                       | 78.4 |      |  | $    | 50.6 |      |  | $ | 16.4 |     
|Goodwill amortization, net of tax           |                                                                   |                         |     |      |  |      |     |      |  |   | 14.4 |     
|                                            |                                                                   |                         |      |      |  |      |      |      |  |   |      |     
|Net income, excluding goodwill amortization |                                                                   | $                       | 78.4 |      |  | $    | 50.6 |      |  | $ | 30.8 |     
|                                            |                                                                   |                         |      |      |  |      |      |      |  |   |      |     
|Basic earnings per share                    |                                                                   |                         |      |      |  |      |      |      |  |   |      |     
|                                            | Basic net income per share as reported                            |                         | $    | 1.38 |  |      | $    | 0.93 |  |   | $    | 0.33 | 
|                                            | Goodwill amortization                                             |                         |      |     |  |      |      |     |  |   |      | 0.29 | 
|                                            |                                                                   |                         |      |      |  |      |      |      |  |   |      |     
|                                            | Basic net income per share, excluding goodwill
    amortization   |                         | $    | 1.38 |  |      | $    | 0.93 |  |   | $    | 0.62 | 
|                                            |                                                                   |                         |      |      |  |      |      |      |  |   |      |     
|Diluted earnings per share                  |                                                                   |                         |      |      |  |      |      |      |  |   |      |     
|                                            | Diluted net income per share as reported                          |                         | $    | 1.29 |  |      | $    | 0.87 |  |   | $    | 0.31 | 
|                                            | Goodwill amortization                                             |                         |      |     |  |      |      |     |  |   |      | 0.27 | 
|                                            |                                                                   |                         |      |      |  |      |      |      |  |   |      |     
|                                            | Diluted net income per share, excluding goodwill
    amortization |                         | $    | 1.29 |  |      | $    | 0.87 |  |   | $    | 0.58 | 
|                                            |                                                                   |                         |      |      |  |      |      |      |  |   |      |     

Note 18  Restructuring and Other
Charges

During 2001, the Company implemented
restructuring plans (collectively the 2001 Restructuring
Plan) focused on the integration of certain international
operations and acquisitions and a streamlining of the domestic
operations, including the consolidation of office, warehouse and
manufacturing facilities and the discontinuance of certain
product lines. As a result of these actions, the Company
recorded a restructuring charge of $27.0 million. The 2001
Restructuring Plan includes $18.3 million related to
estimated employee separation costs and $8.7 million of
other exit costs. The charge for employee separation
arrangements relates to termination and other severance costs
associated with 780 salaried and hourly employees. The
other exit costs primarily represent lease-cancellation costs
and costs associated with the discontinuance of certain product
lines. The scientific products and services, healthcare products
and services and laboratory workstations segments accounted for
$15.9 million, $11.0 million and $0.1 million,
respectively, of this charge. The Company also recorded a
restructuring credit of $0.8 million for the reversal of
certain costs accrued for restructuring plans recorded prior to
2001.

During 2002, the Company recorded net
restructuring credits of $2.2 million for the reversal for
certain costs accrued for the 2001 Restructuring Plan.
$2.0 million of the restructuring credits are primarily
related to a reduction in estimated severance costs due to
certain employees electing to voluntarily separate from the
Company. The scientific products and services and healthcare
products and services segments accounted for $2.1 million
and $0.1 million of the restructuring credit, respectively.

As of December 31, 2003, $2.2 million
in accruals related to ongoing lease commitments are included on
the balance sheet related to the 2001 Restructuring Plan. Total
cash payments since the inception of the restructuring plan have
amounted to $22.6 million, of which $16.3 million
pertains to employee severance and $6.3 million pertains to
other exit costs.

In connection with the May 2001 stock offering,
the Company accelerated the vesting of options to purchase
approximately 2.3 million shares of common stock having an
average exercise price of $20.85 per share. These options were
then converted into the right to receive approximately
1.0 million shares of common stock, issued and deposited
into a rabbi trust. The number of shares issued was determined
by dividing the spread value of the option (the
difference between the last reported sale price on
March 30, 2001 of $35.44,

63



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

the date of the transaction, and the exercise
price of the option) by $35.44. As a result, the Company
recorded a primarily non-cash compensation charge of
$33.5 million in 2001.

Note 19  Segment and
Geographic Financial Information

During 2003, the Company changed the way it
reports segments to reflect the way the business is now managed.
The Company reports financial results on the basis of three
reportable segments: scientific products and services,
healthcare products and services, and laboratory workstations.

Selected business segment financial information
for the years ended December 31, 2003, 2002 and 2001 is
presented below (in millions):

|                                          |                   |       |         |                        |  |      |         |         |  |      |         |         |  |   |       |       |  |   |       |       |  |   |       |       | 
|----------------------------------------- | ----------------- | ----- | ------- | ---------------------- |  | ---- | ------- | ------- |  | ---- | ------- | ------- |  | - | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- | 
|                                          |                   |       |         |                       
|                                          |                   | Sales |         | Income from Operations
|                                          |                   |       |         |                       
|                                          |                   | 2003  |         | 2002                   |  | 2001 |         | 2003    |  | 2002 |         | 2001   
|                                          |                   |       |         |                        |  |      |         |         |  |      |         |        
|Scientific products and services          |                   | $     | 2,501.0 |                        |  | $    | 2,258.0 |         |  | $    | 1,973.8 |         |  | $ | 230.0 |       |  | $ | 206.2 |       |  | $ | 175.8 |      
|Healthcare products and services          |                   |       | 877.2   |                        |  |      | 806.7   |         |  |      | 746.6   |         |  |   | 35.7  |       |  |   | 25.2  |       |  |   | 24.2  |      
|Laboratory workstations                   |                   |       | 206.1   |                        |  |      | 193.9   |         |  |      | 178.6   |         |  |   | 11.1  |       |  |   | 11.7  |       |  |   | 8.7   |      
|Eliminations                              |                   |       | (19.9   | )                      |  |      | (20.2   | )       |  |      | (19.0   | )       |  |   | (0.1  | )     |  |   | (0.2  | )     |  |   | 0.3   |      
|                                          |                   |       |         |                        |  |      |         |         |  |      |         |         |  |   |       |       |  |   |       |       |  |   |       |      
|                                          | Segment sub-total |       |         | 3,564.4                |  |      |         | 3,238.4 |  |      |         | 2,880.0 |  |   |       | 276.7 |  |   |       | 242.9 |  |   |       | 209.0 | 
|Restructuring and other charges (credits) |                   |       |        |                        |  |      |        |         |  |      |        |         |  |   |      |       |  |   | (2.2  | )     |  |   | 61.2  |      
|Inventory step-up                         |                   |       |        |                        |  |      |        |         |  |      |        |         |  |   | 18.1  |       |  |   |      |       |  |   |      |      
|Goodwill amortization                     |                   |       |        |                        |  |      |        |         |  |      |        |         |  |   |      |       |  |   |      |       |  |   | 16.7  |      
|                                          |                   |       |         |                        |  |      |         |         |  |      |         |         |  |   |       |       |  |   |       |       |  |   |       |      
|                                          | Total             |       | $       | 3,564.4                |  |      | $       | 3,238.4 |  |      | $       | 2,880.0 |  |   | $     | 258.6 |  |   | $     | 245.1 |  |   | $     | 131.1 | 
|                                          |                   |       |         |                        |  |      |         |         |  |      |         |         |  |   |       |       |  |   |       |       |  |   |       |      

Income from operations is revenue less related
direct and allocated expenses. Intercompany sales and transfers
between segments were not material for 2003, 2002 or 2001.

In 2003, the Company recorded a charge of
$18.1 million related to the step-up of Perbios
inventory to its acquired fair value. In 2002, the Company
recorded a restructuring credit of $2.2 million. The
scientific products and services, healthcare products and
services and laboratory workstations segments accounted for
$16.2 million, $11.4 million and $0.1 million,
respectively, of the 2001 restructuring and other charges
(credits). In addition, the Company accelerated the vesting of
common stock options and recorded a primarily non-cash
compensation charge of $33.5 million in 2001 which is not
allocated by segment.

Total assets, capital expenditures and
depreciation and amortization by segment for the years ended
December 31, 2003, 2002 and 2001 are as follows (in
millions):

|                                 |       |        |         |                      |  |                  |         |         |  |      |         |         |  |      |      |      |  |      |      |      |  |   |      |      |  |   |      |      |  |   |      |      |  |   |      |      | 
|-------------------------------- | ----- | ------ | ------- | -------------------- |  | ---------------- | ------- | ------- |  | ---- | ------- | ------- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | - | ---- | ---- |  | - | ---- | ---- |  | - | ---- | ---- |  | - | ---- | ---- | 
|                                 |       |        |         |                      |  |                  |         |         |  |      |         |         |  |     
|                                 |       |        |         |                      |  | Depreciation and
|                                 |       | Assets |         | Capital Expenditures |  | Amortization    
|                                 |       |        |         |                      |  |                 
|                                 |       | 2003   |         | 2002                 |  | 2001             |         | 2003    |  | 2002 |         | 2001    |  | 2003 |      | 2002 |  | 2001
|                                 |       |        |         |                      |  |                  |         |         |  |      |         |         |  |      |      |      |  |     
|Scientific products and services |       | $      | 2,387.8 |                      |  | $                | 1,336.0 |         |  | $    | 1,261.5 |         |  | $    | 63.1 |      |  | $    | 32.3 |      |  | $ | 28.9 |      |  | $ | 67.2 |      |  | $ | 57.6 |      |  | $ | 56.3 |     
|Healthcare products and services |       |        | 365.3   |                      |  |                  | 411.5   |         |  |      | 410.9   |         |  |      | 11.6 |      |  |      | 6.8  |      |  |   | 6.5  |      |  |   | 11.6 |      |  |   | 12.3 |      |  |   | 16.4 |     
|Laboratory workstations          |       |        | 106.3   |                      |  |                  | 123.9   |         |  |      | 166.8   |         |  |      | 5.5  |      |  |      | 4.8  |      |  |   | 4.7  |      |  |   | 4.0  |      |  |   | 5.0  |      |  |   | 9.3  |     
|                                 |       |        |         |                      |  |                  |         |         |  |      |         |         |  |      |      |      |  |      |      |      |  |   |      |      |  |   |      |      |  |   |      |      |  |   |      |     
|                                 | Total |        | $       | 2,859.4              |  |                  | $       | 1,871.4 |  |      | $       | 1,839.2 |  |      | $    | 80.2 |  |      | $    | 43.9 |  |   | $    | 40.1 |  |   | $    | 82.8 |  |   | $    | 74.9 |  |   | $    | 82.0 | 
|                                 |       |        |         |                      |  |                  |         |         |  |      |         |         |  |      |      |      |  |      |      |      |  |   |      |      |  |   |      |      |  |   |      |      |  |   |      |     

64



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Sales outside the United States were
approximately 20%, 18% and 19% of total sales in 2003, 2002 and
2001, respectively. No single foreign country accounted for more
than 10% of sales during any of the three years ended
December 31, 2003.

Long lived assets and revenue by geographical
area for the years ended December 31, 2003, 2002 and 2001
is as follows (in millions):

|                                          |       |                   |         |         |  |   |       |       | 
|----------------------------------------- | ----- | ----------------- | ------- | ------- |  | - | ----- | ----- | 
|                                          |       |                  
|                                          |       | Long-Lived Assets
|                                          |       |                  
|                                          |       | 2003              |         | 2002   
|                                          |       |                   |         |        
|Long-lived assets by geographic
    area: |       |                   |         |         |  |   |       |      
|Domestic                                  |       | $                 | 1,273.9 |         |  | $ | 617.8 |      
|International                             |       |                   | 414.9   |         |  |   | 334.7 |      
|                                          |       |                   |         |         |  |   |       |      
|                                          | Total |                   | $       | 1,688.8 |  |   | $     | 952.5 | 
|                                          |       |                   |         |         |  |   |       |      

|                            |       |         |         |         |  |      |         |         |  |   |         |         | 
|--------------------------- | ----- | ------- | ------- | ------- |  | ---- | ------- | ------- |  | - | ------- | ------- | 
|                            |       |        
|                            |       | Revenue
|                            |       |        
|                            |       | 2003    |         | 2002    |  | 2001
|                            |       |         |         |         |  |     
|Revenue by geographic area: |       |         |         |         |  |      |         |         |  |   |         |        
|Domestic                    |       | $       | 2,917.4 |         |  | $    | 2,689.5 |         |  | $ | 2,363.0 |        
|International               |       |         | 696.3   |         |  |      | 584.6   |         |  |   | 532.0   |        
|Eliminations                |       |         | (49.3   | )       |  |      | (35.7   | )       |  |   | (15.0   | )      
|                            |       |         |         |         |  |      |         |         |  |   |         |        
|                            | Total |         | $       | 3,564.4 |  |      | $       | 3,238.4 |  |   | $       | 2,880.0 | 
|                            |       |         |         |         |  |      |         |         |  |   |         |        

Note 20  Related Parties

In 2003, the Company recorded a charge of
$1.5 million to terminate the management agreement between
the Company and Thomas H. Lee Company (THL) pursuant
to which THL and certain of its affiliates provided consulting
and management advisory services. This agreement was originally
set to expire in 2005 and would have resulted in fees totaling
$1.8 million being paid to THL for the period from the
termination date through the end of the original term of the
agreement.

The Company is a party to a rental and service
agreement with Latona Associates Inc. (which is controlled by a
stockholder of the Company) under which the Company provides
office space and certain building administrative services. The
Company received $250,000 under the agreement for each of the
three years ended December 31, 2003, 2002 and 2001. The
Company made contributions of $0.8 million,
$1.7 million and $0.7 million to the Winthrop
Foundation (the Foundation) in 2003, 2002 and 2001,
respectively. The Foundation is a charitable private foundation
that makes charitable contributions on behalf of the Company and
its employees and has common board members with the Company. The
Company is not obligated to make future contributions to the
Foundation.

Note 21  Subsequent
Events

On February 11, 2004, the Company signed a
definitive agreements to acquire Dharmacon, Inc.
(Dharmacon) for $80 million in cash. Dharmacon
focuses on RNA technology, including RNA interference (RNAi) and
small interfering RNA (siRNA). RNA is a tool for life-science
research that increases the efficiency of the drug discovery
process.

On March 1, 2004, the Company acquired Oxoid
Group Holdings Limited (Oxoid) for
$330 million. Oxoid is a United Kingdom-based manufacturer
of microbiological culture media and other diagnostic products
that test for bacterial contamination.

65



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

On February 12, 2004, the Company amended
its existing $225 million receivables securitization
facility extending the facilitys maturity date to February
2005. All other material terms and conditions remained unchanged.

In March 2004, the Company issued and sold
$300 million principal amount of 3.25% convertible senior
subordinated notes due March 1, 2024. These notes were
issued under a shelf registration statement dated
September 3, 2003.

Note 22  Recent Accounting
Pronouncements

In January 2003, the FASB issued Interpretation
No. 46, Consolidation of Variable Interest
Entities, (FIN 46) which provides
guidance on when to consolidate variable interest entities. In
December 2003, the FASB revised FIN 46 with FIN 46R.
In addition to conforming to previously issued FASB Staff
Positions, FIN 46R deferred the implementation date for
certain variable interest entities. The Company will adopt the
provisions of FIN 46R immediately for entities created
after December 31, 2003. For entities created prior to
December 31, 2003, the Company will adopt FIN 46R in
the first quarter of 2004, as required.

In December 2003, the FASB issued Statement of
Financial Accounting Standards No. 132 (Revised 2003),
Employers Disclosures about Pensions and Other
Postretirement Benefits, (SFAS 132(R)).
SFAS 132(R) increases the existing disclosure requirements
by requiring more details about pension plan assets, benefit
obligations, cash flows, benefit costs and related information.
Companies will be required to segregate plan assets by category,
such as debt, equity and real estate, and to provide certain
expected rates of return and other informational disclosures.
The new disclosure requirements required by SFAS 132(R) are
effective for fiscal years ending after June 15, 2003.

In December 2003, the FASB issued Staff Position
No. 106-1, Accounting and Disclosure Requirements
Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003, (the Act)
(FSP 106-1). FSP 106-1 permits a sponsor
of a postretirement health care plan that provides a
prescription drug benefit to make a one-time election to defer
accounting for the Act. The election to defer accounting for the
Act must be made before net periodic postretirement benefit
costs for the period that includes that Acts enactment are
first included in reported financial information. The decision
to defer the accounting for the Act is effective for the Company
for the quarter ending March 31, 2004. The adoption of FSP
No. FAS 106-1 is not expected to have a material
effect on the Companys financial position, results of
operations, or cash flows.

66



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Note 23  Unaudited Quarterly
Financial Information

The Companys common stock is listed on the
New York Stock Exchange (NYSE) under the trading
symbol FSH. The following is a summary of quarterly financial
information for 2003 and 2002 including the high and low closing
sales prices of the stock as reported by the NYSE for each of
the quarterly periods listed (in millions, except per share
data):

|                                    |         |       |       |        |   |       |       |        |  |      |       |       |  |   |       |       |  |   |         |       | 
|----------------------------------- | ------- | ----- | ----- | ------ | - | ----- | ----- | ------ |  | ---- | ----- | ----- |  | - | ----- | ----- |  | - | ------- | ----- | 
|                                    |         |      
|                                    |         | 2003 
|                                    |         |      
|                                    |         | First |       | Second |   | Third |       | Fourth |  | Year
|                                    |         |       |       |        |   |       |       |        |  |     
|Sales                               |         | $     | 833.4 |        |   | $     | 864.5 |        |  | $    | 890.0 |       |  | $ | 976.5 |       |  | $ | 3,564.4 |      
|Gross Profit(a)                     |         |       | 218.5 |        |   |       | 227.8 |        |  |      | 239.0 |       |  |   | 254.2 |       |  |   | 939.5   |      
|Net income (loss)(b)                |         | $     | (0.9  | )      |   | $     | 33.0  |        |  | $    | 27.7  |       |  | $ | 18.6  |       |  | $ | 78.4    |      
|Net income (loss) per common share: |         |       |       |        |   |       |       |        |  |      |       |       |  |   |       |       |  |   |         |      
|                                    | Basic   |       | $     | (0.02  | ) |       | $     | 0.60   |  |      | $     | 0.50  |  |   | $     | 0.30  |  |   | $       | 1.38  | 
|                                    | Diluted |       | $     | (0.02  | ) |       | $     | 0.57   |  |      | $     | 0.47  |  |   | $     | 0.28  |  |   | $       | 1.29  | 
|Market price:                       |         |       |       |        |   |       |       |        |  |      |       |       |  |   |       |       |  |   |         |      
|                                    | High    |       | $     | 32.30  |   |       | $     | 35.47  |  |      | $     | 40.83 |  |   | $     | 42.24 |  |   | $       | 42.24 | 
|                                    | Low     |       | $     | 27.70  |   |       | $     | 26.19  |  |      | $     | 35.04 |  |   | $     | 38.48 |  |   | $       | 26.19 | 

|                                                                                  |                                        |       |       |        |   |       |       |        |  |      |       |       |  |   |       |       |  |   |         |       |  
|--------------------------------------------------------------------------------- | -------------------------------------- | ----- | ----- | ------ | - | ----- | ----- | ------ |  | ---- | ----- | ----- |  | - | ----- | ----- |  | - | ------- | ----- | -
|                                                                                  |                                        |      
|                                                                                  |                                        | 2002 
|                                                                                  |                                        |      
|                                                                                  |                                        | First |       | Second |   | Third |       | Fourth |  | Year
|                                                                                  |                                        |       |       |        |   |       |       |        |  |     
|Sales                                                                             |                                        | $     | 775.5 |        |   | $     | 809.9 |        |  | $    | 830.9 |       |  | $ | 822.1 |       |  | $ | 3,238.4 |      
|Gross profit                                                                      |                                        |       | 205.1 |        |   |       | 213.5 |        |  |      | 218.1 |       |  |   | 218.4 |       |  |   | 855.1   |      
|Income before cumulative effect of accounting
    change                          |                                        |       | 19.8  |        |   |       | 20.1  |        |  |      | 29.9  |       |  |   | 26.9  |       |  |   | 96.7    |      
|Cumulative effect of accounting change, net of tax                                |                                        |       | (46.1 | )      |   |       |      |        |  |      |      |       |  |   |      |       |  |   | (46.1   | )    
|Net income (loss)                                                                 |                                        | $     | (26.3 | )      |   | $     | 20.1  |        |  | $    | 29.9  |       |  | $ | 26.9  |       |  | $ | 50.6    |      
|Basic income per common share before cumulative
    effect of accounting change   |                                        | $     | 0.37  |        |   | $     | 0.37  |        |  | $    | 0.55  |       |  | $ | 0.49  |       |  | $ | 1.77    |      
|                                                                                  | Cumulative effect of accounting change |       |       | (0.84  | ) |       |       |       |  |      |       |      |  |   |       |      |  |   |         | (0.84 | )
|                                                                                  |                                        |       |       |        |   |       |       |        |  |      |       |       |  |   |       |       |  |   |         |      
|Basic net income per common share                                                 |                                        | $     | (0.47 | )      |   | $     | 0.37  |        |  | $    | 0.55  |       |  | $ | 0.49  |       |  | $ | 0.93    |      
|                                                                                  |                                        |       |       |        |   |       |       |        |  |      |       |       |  |   |       |       |  |   |         |      
|Diluted income per common share before cumulative
    effect of accounting change |                                        | $     | 0.34  |        |   | $     | 0.35  |        |  | $    | 0.52  |       |  | $ | 0.46  |       |  | $ | 1.67    |      
|                                                                                  | Cumulative effect of accounting change |       |       | (0.80  | ) |       |       |       |  |      |       |      |  |   |       |      |  |   |         | (0.80 | )
|                                                                                  |                                        |       |       |        |   |       |       |        |  |      |       |       |  |   |       |       |  |   |         |      
|Diluted net income per common share                                               |                                        | $     | (0.46 | )      |   | $     | 0.35  |        |  | $    | 0.52  |       |  | $ | 0.46  |       |  | $ | 0.87    |      
|                                                                                  |                                        |       |       |        |   |       |       |        |  |      |       |       |  |   |       |       |  |   |         |      
|Market price:                                                                     |                                        |       |       |        |   |       |       |        |  |      |       |       |  |   |       |       |  |   |         |      
|                                                                                  | High                                   |       | $     | 31.00  |   |       | $     | 32.95  |  |      | $     | 31.00 |  |   | $     | 31.72 |  |   | $       | 32.95 |  
|                                                                                  | Low                                    |       | $     | 25.76  |   |       | $     | 26.48  |  |      | $     | 23.25 |  |   | $     | 27.20 |  |   | $       | 23.25 |  



---



|    |                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | During 2003, the Company recorded a charge of
    $18.1 million related to the step-up of Perbios
    inventory to its acquired fair value.                                                                                                                                                                                  
|   
|(b) | During 2003, the Company recorded charges
    totaling $81.6 million, consisting of $15.7 million
    for options to hedge the foreign currency exposure related to
    the acquisition of Perbio and $65.9 million in call
    premiums and the write-off of financing fees costs associated
    with the retirement of debt.

67



---



##### Table of Contents








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

None.






|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

As of the end of the period covered by this
Annual Report on Form 10-K, an evaluation of the
effectiveness of the Companys disclosure controls and
procedures (pursuant to Rule 13a-15(e) under the Securities
Exchange Act of 1934, as amended) was carried out under the
supervision of the Companys Chief Executive Officer and
Chief Financial Officer, with the participation of the
Companys management. Based on that evaluation, the Chief
Executive Officer and the Chief Financial Officer concluded that
the design and operation of the Companys disclosure
controls and procedures are effective in timely alerting them to
material information relating to the Company that is required to
be included in the Companys period SEC filings. There has
been no change in the Companys internal control over
financial reporting that occurred during the fiscal quarter that
has materially affected, or is reasonably likely to materially
affect, the Companys internal control over financial
reporting.




PART III






|         |                                                       
|-------- | ------------------------------------------------------
|Item 10. | Directors and Executive Officers of the
    Registrant

Directors.The
information appearing in Fishers Proxy Statement for its
Annual Meeting of Stockholders to be held on May 7, 2004
(the Proxy Statement) under the caption
Nomination and Election of Directors is incorporated
herein by reference.

Executive Officers.Information in answer to this Item
appears under the caption Executive Officers and
Directors in Item 1 of this Annual Report.

Compliance with Section 16(a) of the
Exchange Act.The information
appearing in the Proxy Statement under the caption
Section 16(a) Beneficial Ownership Reporting
Compliance is incorporated herein by reference.

Code of Ethics.The
information set forth under the caption Board of
Directors, Committee Meetings and Executive Sessions in
the Proxy Statement for its Annual Meeting of Shareholders is
hereby incorporated by reference.






|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation

The information appearing in the Proxy Statement
under the caption Compensation of Executive Officers
is incorporated herein by reference.






|         |                                                                                                       
|-------- | ------------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder
    Matters

The information appearing in the Proxy Statement
under the caption Security Ownership of Certain Beneficial
Owners and Management is incorporated herein by reference.






|         |                                                   
|-------- | --------------------------------------------------
|Item 13. | Certain Relationships and Related
    Transactions

The information appearing in the Proxy Statement
under the caption Certain Relationships and Related
Transactions is incorporated herein by reference.






|         |                                           
|-------- | ------------------------------------------
|Item 14. | Principal Accountant Fees and
    Services

The information set forth under the caption
Audit Fees in the Proxy Statement for its Annual
Meeting of Shareholders is hereby incorporated by reference.

68



---



##### Table of Contents






PART IV






|         |                                                                     
|-------- | --------------------------------------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules,
    and Reports on Form 8-K

(a) (1) Financial Statements.See Index to Financial Statements at Item 8 herein.



| |                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) Schedules.Financial statement
    schedules are listed under Item 15(d) in this Annual Report.                                                                                                            
|
| | (3) Exhibits.Exhibits 10.1
    through 10.19 constitute all of the management contracts and
    compensation plans and arrangements of the Company required to
    be filed as exhibits to this Annual Report.

|        |      |             |  |                                                                                                                                                                                                                                                                                                                                                                   
|------- | ---- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |            
|No.     |      | Description
|        |      |            
|        | 3.01 |             |  | Amended and Restated Certificate of Incorporation
    of the registrant, as amended. Incorporated by reference to
    Exhibit 3.1 to the registrants Quarterly Report on
    Form 10-Q filed on May 15, 2002.                                                                                                                                                    
|        | 3.02 |             |  | Certificate of Designation of Non-Voting Stock of
    the registrant. Incorporated by reference to Exhibit 3.3 to
    the registrants Annual Report on Form 10-K filed on
    March 31, 1999.                                                                                                                                                                    
|        | 3.03 |             |  | Certificate of Designation of Series B
    Non-Voting Common Stock. Incorporated by reference to
    Exhibit 3.4 to the registrants Annual Report on
    Form 10-K filed on March 31, 1999.                                                                                                                                                                      
|        | 3.04 |             |  | Bylaws of the registrant. Incorporated by
    reference to Exhibit 3.2 to the registrants
    Registration Statement on Form S-4 (Registration
    no. 333-44400) filed on August 24, 2000.                                                                                                                                                                      
|        | 3.05 |             |  | Certificate of Correction to the Restated
    Certificate of Incorporation of Fisher Scientific International
    Inc. Incorporated by reference to Exhibit 3.6 to the
    registrants Annual Report on Form 10-K filed on
    March 28, 2002.                                                                                                                   
|        | 3.06 |             |  | Certificate of Amendment of Restated Certificate
    of Incorporation of Fisher Scientific International Inc.
    Included in an exhibit to the Companys Registration
    Statement on Form S-3 (Registration no. 333-108448),
    dated September 3, 2003, and incorporated herein by
    reference.                                                            
|        | 4.01 |             |  | Form of Senior Indenture. Included in an exhibit
    to the Companys Registration Statement on Form S-3
    (Registration no. 333-108448), dated September 3, 2003, and
    incorporated herein by reference.                                                                                                                                                    
|        | 4.02 |             |  | Form of Subordinated Indenture. Included in an
    exhibit to the Companys Registration Statement on
    Form S-3 (Registration no. 333-108448), dated
    September 3, 2003, and incorporated herein by reference.                                                                                                                                              
|        | 4.03 |             |  | Form of Junior Subordinated Indenture. Included
    in an exhibit to the Companys Registration Statement on
    Form S-3 (Registration no. 333-108448), dated
    September 3, 2003, and incorporated herein by reference.                                                                                                                                       
|        | 4.04 |             |  | Specimen Certificate of Common Stock, $.01 par
    value per share, of the Company. Incorporated by reference to
    Exhibit 4.1 to the registrants Annual Report on
    Form 10-K filed on March 28, 2002.                                                                                                                                                      
|        | 4.05 |             |  | Certificate of Designation of Non-Voting Stock
    (see Exhibit 3.02).                                                                                                                                                                                                                                                                                            
|        | 4.06 |             |  | Certificate of Designation of Series B
    Non-Voting Common Stock (see Exhibit 3.03).                                                                                                                                                                                                                                                                            
|        | 4.07 |             |  | Senior Debt Securities Indenture dated as of
    December 18, 1995 between the Company and Mellon Bank,
    N.A., as Trustee. Included as an exhibit to the Companys
    Registration Statement on Form S-3 (Registration
    no. 333-99884) filed with the Securities and Exchange
    Commission on November 30, 1995 and incorporated herein by
    reference.
|        | 4.08 |             |  | Indenture dated as of April 24, 2002 between
    Fisher and J.P. Morgan Trust Company, National Association,
    as Trustee, relating to the 8 1/8 percent Senior
    Subordinated Notes due 2012. Incorporated by reference to
    Exhibit 4.1 to the registrants Registration Statement
    on Form S-4 (Registration no. 333-88362) filed on
    May 15, 2002.

69



---



##### Table of Contents



|        |       |             |  |                                                                                                                                                                                                                                                                                                                                                                                                             
|------- | ----- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|No.     |       | Description
|        |       |            
|        | 4.09  |             |  | Supplemental Indenture No. 1 dated as of
    March 7, 2003 between the registrant and J.P. Morgan
    Trust Company, National Association. Incorporated by reference
    to Exhibit 4.7 to the registrants Registration
    Statement on Form S-4 (Registration no. 333-104361)
    filed on April 7, 2003.                                                                                                
|        | 4.10  |             |  | Form of 8 1/8% Senior Subordinated Notes due
    2012 (included in Exhibit 4.08).                                                                                                                                                                                                                                                                                                                           
|        | 4.11  |             |  | Indenture, dated as of July 7, 2003, by and
    between Fisher Scientific International Inc. and J.P. Morgan
    Trust Company, National Association, as Trustee. Incorporated by
    reference to Exhibit 4.11 to the registrants Registration
    Statement on Form S-4 (Registration no. 333-104361) filed on
    July 10, 2003.                                                                        
|        | 4.12  |             |  | Form of 2.50% senior convertible note due 2023
    (included in Exhibit 4.11).                                                                                                                                                                                                                                                                                                                              
|        | 4.13  |             |  | Supplemental Indenture No. 1, dated as of March
    3, 2004, by and between Fisher Scientific International Inc. and
    J.P. Morgan Trust Company, National Association, as Trustee.
    Incorporated by reference to the registrants Form 8-K
    filed on March 5, 2004.                                                                                                                                
|        | 4.14  |             |  | Form of 3.25% convertible senior subordinated
    note due 2024 (included in Exhibit 4.13).                                                                                                                                                                                                                                                                                                                 
|        | 4.15  |             |  | Registration Rights Agreement, dated as of
    July 7, 2003, among Fisher Scientific International Inc.
    and Goldman, Sachs & Co. Incorporated by reference to
    Exhibit 4.12 to the registrants Registration
    Statement on Form S-4 (Registration no. 333-104361)
    filed on July 10, 2003.                                                                                                     
|        | 4.16  |             |  | Indenture, dated as of August 20, 2003,
    between Fisher Scientific International Inc. and
    J.P. Morgan Trust Company, National Association, as Trustee
    relating to the 8% Senior Subordinated Notes due 2013. Included
    in an exhibit to the Companys Registration Statement on
    Form S-3 (Registration no. 333-108448), dated
    September 3, 2003, and incorporated herein by reference.
|        | 4.17  |             |  | Form of 8% Senior Subordinated Note due 2013
    (included in Exhibit 4.16).                                                                                                                                                                                                                                                                                                                                
|        | 4.18  |             |  | Form of Global Security (Senior Debt) (included
    in Exhibit 4.01).                                                                                                                                                                                                                                                                                                                                       
|        | 4.19  |             |  | Form of Global Security (Subordinated Debt)
    (included in Exhibit 4.02).                                                                                                                                                                                                                                                                                                                                 
|        | 4.20  |             |  | Form of Global Security (Junior Subordinated
    Debt) (included in Exhibit 4.03).                                                                                                                                                                                                                                                                                                                          
|        | 10.01 |             |  | Amended and Restated Employment Agreement, dated
    as of December 31, 2003, between the Company and Paul M.
    Montrone. Incorporated by reference to Exhibit 10.01 to the
    Companys Registration Statement on Form S-3
    (Registration no. 333-110038) filed on January 6, 2004.                                                                                                                  
|        | 10.02 |             |  | Amended and Restated Employment Agreement, dated
    as of December 31, 2003, between the Company and Paul M.
    Meister. Incorporated by reference to Exhibit 10.02 to the
    Companys Registration Statement on Form S-3
    (Registration no. 333-110038) filed on January 6, 2004.                                                                                                                   
|        | 10.03 |             |  | Amendment to Employment Agreement, dated as of
    December 31, 2003, between the Company and David T. Della
    Penta. Incorporated by reference to Exhibit 10.03 to the
    Companys Registration Statement on Form S-3
    (Registration no. 333-110038) filed on January 6, 2004.                                                                                                                      
|        | 10.04 |             |  | Fisher Scientific International Inc. Retirement
    Plan. Included in an exhibit to the Companys Annual Report
    on Form 10-K for the year ended December 31, 1992,
    filed with the Securities and Exchange Commission on
    March 24, 1993 and incorporated herein by reference.                                                                                                                    
|        | 10.05 |             |  | Fisher Scientific International Inc. Savings and
    Profit Sharing Plan. Included in an exhibit to the
    Companys Annual Report on Form 10-K for the year
    ended December 31, 1992, filed with the Securities and
    Exchange Commission on March 24, 1993 and incorporated
    herein by reference.                                                                                                
|        | 10.06 |             |  | Fisher Scientific International Inc. Incentive
    Compensation Plan, as amended and restated effective as of
    January 1, 2002. Included as an exhibit to the
    Companys Annual Report on Form 10-K for the year
    ended December 31, 2002.                                                                                                                                                         

70



---



##### Table of Contents



|        |       |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------- | ----- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|No.     |       | Description
|        |       |            
|        | 10.07 |             |  | Restricted Unit Plan for Non-Employee Directors
    of Fisher Scientific International Inc. Included in an exhibit
    to the Companys Annual Report on Form 10-K for the
    year ended December 31, 1992, filed with the Securities and
    Exchange Commission on March 24, 1993 and incorporated
    herein by reference.                                                                                                                                                                                                                                                                                                                                                             
|        | 10.08 |             |  | Fisher Scientific International Inc. Deferred
    Compensation Plan for Non-Employee Directors. Included in an
    exhibit to the Companys Annual Report on Form 10-K
    for the year ended December 31, 1992, filed with the
    Securities and Exchange Commission on March 24, 1993 and
    incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                         
|        | 10.09 |             |  | Retirement Plan for Non-Employee Directors of
    Fisher Scientific International Inc. Included in an exhibit to
    the Companys Annual Report on Form 10-K for the year
    ended December 31, 1992, filed with the Securities and
    Exchange Commission on March 24, 1993 and incorporated
    herein by reference.                                                                                                                                                                                                                                                                                                                                                                  
|        | 10.10 |             |  | Fisher Scientific International Inc. Long-Term
    Incentive Plan. Included in an exhibit to the Companys
    Annual Report on Form 10-K for the year ended
    December 31, 1992, filed with the Securities and Exchange
    Commission on March 24, 1993 and incorporated herein by
    reference.                                                                                                                                                                                                                                                                                                                                                                                      
|        | 10.11 |             |  | Fisher Scientific International Inc. 1998 Equity
    and Incentive Plan. Included as an exhibit to Post-Effective
    Amendment No. 1 to the Companys Registration
    Statement on Form S-4 (Registration No. 333-42777)
    filed with the Securities and Exchange Commission on
    February 2, 1998 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                             
|        | 10.12 |             |  | Amended and Restated Credit Agreement, dated as
    of September 10, 2003, among Fisher Scientific International
    Inc., Fisher Scientific Company L.L.C., The Lenders Party
    thereto and JPMorgan Chase Bank, as Administrative Agent.
    Included as an exhibit to the Companys Form 8-K, filed
    with the Securities and Exchange Commission on September 18,
    2003, incorporated herein by reference.                                                                                                                                                                                                                                                                      
|        | 10.13 |             |  | First Amendment to Amended and Restated Credit
    Agreement, dated December 3, 2003, among Fisher Scientific
    International Inc., Fisher Scientific Company L.L.C., the
    lenders party thereto, JP Morgan Chase Bank, as resigning
    administrative agent, and Deutsche Bank AG, as successor
    administrative agent. Included as an exhibit to the
    Companys Form 8-K, filed with the Securities and
    Exchange Commission on December 3, 2003 and incorporated
    herein by reference.                                                                                                                                                                                 
|        | 10.14 |             |  | Second Amendment to Amended and Restated Credit
    Agreement, dated as of February 25, 2004, among Fisher
    Scientific International Inc., Fisher Scientific Company L.L.C.,
    the financial institutions listed on the signature page thereof,
    Deutsche Bank AG, New York Branch, as administrative agent,
    Deutsche Bank Securities Inc., as Joint Lead-Arranger and Credit
    Suisse First Boston, and Bank of America N.A., as Syndication
    agents. Included as an exhibit to the Registration Statement on
    Form S-4 (Registration No. 333-113225) filed with the Securities
    and Exchange Commission on March 2, 2004 and incorporated
    herein by reference.
|        | 10.15 |             |  | Guarantee and Collateral Agreement dated as of
    February 14, 2003, among Fisher Scientific International
    Inc., Fisher Scientific Company L.L.C., certain other
    subsidiaries of Fisher Scientific International Inc. and
    JPMorgan Chase Bank, as Collateral Agent. Incorporated by
    reference to Exhibit 10.16 to the registrants
    Registration Statement on Form S-4 (Registration
    no. 333-104361) filed on April 7, 2003.                                                                                                                                                                                                                                       
|        | 10.16 |             |  | Collateral Sharing Agreement, dated as of
    February 14, 2003, among Fisher Scientific International
    Inc., Fisher Scientific Company L.L.C., certain other
    Subsidiaries of the Company party hereto and JPMorgan Chase
    Bank, as Collateral Agent. Incorporated by reference to
    Exhibit 10.17 to the registrants Registration
    Statement on Form S-4 (Registration no. 333-104361)
    filed on April 7, 2003.                                                                                                                                                                                                                                                        

71



---



##### Table of Contents



|        |       |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- | ----- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|No.     |       | Description
|        |       |            
|        | 10.17 |             |  | Receivables Transfer Agreement dated as of
    February 14, 2003 among FSI Receivables Company LLC, as
    Transferor, Fisher Scientific International Inc., as Servicer,
    Blue Ridge Asset Funding Corporation, Wachovia Bank, National
    Association, Liberty Street Funding Corp., The Bank of Nova
    Scotia, and Wachovia Bank, National Association, as
    Administrative Agent. Included as an exhibit to the
    Companys Registration Statement on Form S-4 (Registration
    no. 333-104361) filed on April 7, 2003.                                                                                                    
|        | 10.18 |             |  | First Amendment to Receivables Transfer
    Agreement, dated as of February 12, 2004, among FSI
    Receivables Company LLC, as Transferor, Fisher Scientific
    International Inc., as Servicer, Blue Ridge Asset Funding
    Corporation, Liberty Street Funding Corp., Wachovia Bank,
    National Association, The Bank of Nova Scotia, and Wachovia
    Bank, National Association, as Administrative Agent. Included as
    an exhibit to the Registration Statement on Form S-4
    (Registration No. 333-113225) filed with the Securities and
    Exchange Commission on March 2, 2004 and incorporated
    herein by reference.
|        | 10.19 |             |  | Amended and Restated Receivables Purchase
    Agreement dated as of February 14, 2003 among Cole-Parmer
    Instrument Company, Fisher Clinical Services Inc., Fisher
    Hamilton L.L.C, and Fisher Scientific Company L.L.C., as
    Originators, Fisher Scientific International Inc., as Originator
    Agent and FSI Receivables Company LLC, as Buyer. Incorporated by
    reference to Exhibit 10.19 to the registrants
    Registration Statement on Form S-4 (Registration
    no. 333-104361) filed on April 7, 2003.                                                                                                          
|        | 12.01 |             |  | Statement re computation of Ratios of Earnings to
    Fixed Charges and Earnings to Fixed Charges. Incorporated by
    reference to Exhibit 12.1 to the Companys
    Registration Statement on Form S-3 (Registration
    no. 333-110038) filed on January 6, 2004.                                                                                                                                                                                                                                                                                                                                                                      
|        | 21.01 |             |  | List of Subsidiaries of the registrant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 23.01 |             |  | Consent of Deloitte & Touche LLP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 31.01 |             |  | Certification of Chief Executive Officer pursuant
    to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of
    1934, as amended, as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 31.02 |             |  | Certification of Chief Financial Officer pursuant
    to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of
    1934, as amended, as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 32.01 |             |  | Certification of Chief Executive Officer pursuant
    to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 32.02 |             |  | Certification of Chief Financial Officer pursuant
    to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

(b) Reports on Form 8-K:The
Company filed the following Current Reports on Form 8-K
during the last quarter of the period covered by this report.



| |   |                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------
| |  | Our current report on Form 8-K, filed with
    the SEC on October 1, 2003;                                                  
|
| |  | Our current report on Form 8-K, filed with
    the SEC on October 3, 2003;                                                  
|
| |  | Two current reports on Form 8-K, disclosing
    information under items 5 and 7, filed with the SEC on
    October 21, 2003;
|
| |  | Our current report on Form 8-K, disclosing
    information under items 9 and 12, filed with the SEC on
    October 30, 2003;
|
| |  | Our current report on Form 8-K/ A, filed
    with the SEC on November 14, 2003; and                                         
|
| |  | Our current report on Form 8-K, filed with
    the SEC on December 9, 2003.                                                 

72



---



##### Table of Contents



(c) Exhibits.The following exhibits
are filed with this annual report:

| |       |  |  |   |  |                                                                                                                                                                                                                      
| | ----- |  |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 21.01 |  |  |  |  | List of Subsidiaries of the Registrant.                                                                                                                                                                              
| | 23.01 |  |  |  |  | Consent of Deloitte & Touche LLP.                                                                                                                                                                                    
| | 31.01 |  |  |  |  | Certification of Chief Executive Officer pursuant
    to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange
    Act of 1934, as amended, as adopted pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.
| | 31.02 |  |  |  |  | Certification of Chief Financial Officer pursuant
    to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange
    Act of 1934, as amended, as adopted pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.
| | 32.01 |  |  |  |  | Certification of Chief Executive Officer pursuant
    to 18 U.S.C. 1350, as adopted pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.                                                                   
| | 32.02 |  |  |  |  | Certification of Chief Financial Officer pursuant
    to 18 U.S.C. 1350, as adopted pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.                                                                   

(d) Financial Statement Schedule.

73



---



##### Table of Contents



SCHEDULE II

Valuation and Qualifying Accounts and
Reserves

for the Three Years Ended December 31,
2003 (in millions):


|                                |                   |            |   |            |  |            |   |            |  |           |   |     |  |  |   |      |   |  |   |      | 
|------------------------------- | ----------------- | ---------- | - | ---------- |  | ---------- | - | ---------- |  | --------- | - | --- |  |  | - | ---- | - |  | - | ---- | 
|                                |                   | Balance at |   | Charged to |  | Charged to |   | Deduction  |  | Balance  
|                                |                   | Beginning  |   | Costs and  |  | Other      |   | and        |  | at End   
|                                |                   | of Period  |   | Expenses   |  | Accounts   |   | Write-offs |  | of Period
|                                |                   |            |   |            |  |            |   |            |  |          
|Allowance for doubtful accounts |                   |            |   |            |  |            |   |            |  |           |   |     |  |  |   |      |   |  |   |     
|                                | December 31, 2001 |            | $ | 35.0       |  |            | $ | 2.9        |  |           | $ | 1.4 |  |  | $ | (4.5 | ) |  | $ | 34.8 | 
|                                | December 31, 2002 |            |   | 34.8       |  |            |   | 5.6        |  |           |   |    |  |  |   | (4.8 | ) |  |   | 35.6 | 
|                                | December 31, 2003 |            |   | 35.6       |  |            |   | 4.9        |  |           |   | 0.6 |  |  |   | (4.5 | ) |  |   | 36.6 | 

74



---



##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the Registrant
has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



| |                                     
| | ------------------------------------
| | FISHER SCIENTIFIC INTERNATIONAL INC.



| |     |                    
| | --- | -------------------
| | By: | /s/ TODD M. DUCHENE

| |                                                  
| | -------------------------------------------------
| |                                                  
| | Todd M. DuChene                                  
| | Vice President, General Counsel and
    Secretary

Date: March 11, 2004

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the
capacities and on the date indicated.

|                                               |  |                                                                                             |  | 
|---------------------------------------------- |  | ------------------------------------------------------------------------------------------- |  | 
|                                               |  |                                                                                            
|Signature                                      |  | Title                                                                                      
|                                               |  |                                                                                            
|                                              
|/s/ PAUL M. MONTRONEPaul M. Montrone           |  | Chief Executive Officer and Director
    (Principal Executive Officer)                     
|                                              
|/s/ PAUL M. MEISTERPaul M. Meister             |  | Director                                                                                   
|                                              
|/s/ KEVIN P. CLARKKevin P. Clark               |  | Vice President and Chief Financial Officer
    (Principal Financial and Accounting Officer)
|                                              
|/s/ ANTHONY J. DINOVIAnthony J. DiNovi         |  | Director                                                                                   
|                                              
|/s/ MICHAEL D. DINGMANMichael D. Dingman       |  | Director                                                                                   
|                                              
|/s/ CHARLES A. SANDERSCharles A. Sanders, M.D. |  | Director                                                                                   
|                                              
|/s/ SCOTT M. SPERLINGScott M. Sperling         |  | Director                                                                                   
|                                              
|/s/ W. CLAYTON STEPHENSW. Clayton Stephens     |  | Director                                                                                   

75