##### 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,
    2002                                                                   
|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 check mark 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 and
non-voting common equity held by non-affiliates of the
registrant as of March 3, 2003 was approximately
$1,235,227,879.

The number of shares of Common Stock outstanding,
including 1,279,789 shares of non-voting Common Stock, as of
March 3, 2003 was 54,663,356.

Documents Incorporated by Reference:The registrants Proxy Statement
for the Annual Meeting of Stockholders to be held May 2,
2003 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 Results of Operations and Financial Condition
|                                            | 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 
|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                      
|                                            | Item 13. Certain Relationships and Related Transactions                                      
|                                            | Item 14. Controls and Procedures                                                             
|PART IV                                    
|                                            | Item 15. Exhibits, Financial Statement Schedule and Reports on Form 8-K                      
|SIGNATURES                                 
|EX-10.6 Incentive Compensation Plan        
|EX-21.1 List of Subsidiaries of the Company
|EX-23.1 Consent of Deloitte and Touche LLP 



---



##### Table of Contents






PART I




Item 1.     Business

Overview

Fisher Scientific International Inc.
(Fisher, the Company or we)
is a world leader in serving science. We offer more than 600,000
products and services to more than 350,000 customers located in
approximately 145 countries. As a result of our broad
product offering, electronic commerce capabilities and
integrated global logistics network, we serve as a one-stop
source of products, services and global solutions for our
customers. Fisher was founded in 1902 by Chester G. Fisher
in Pittsburgh, Pennsylvania, and was incorporated as a Delaware
Corporation in 1991.

We offer an array of products and services to the
scientific research, clinical laboratory and industrial safety
markets. Our products include scientific instruments and
equipment, clinical consumables, diagnostic reagents, organic
and inorganic chemicals, safety and clean-room supplies,
laboratory equipment and workstations. We offer both proprietary
products and products that we source from more than 6,000
vendors. We generate approximately 80 percent of our
revenues from the sale of consumable products. Our proprietary
products consist of self-manufactured products, Fisher branded
products and products for which we serve as the exclusive
distributor. Approximately 40 percent of our revenues are
generated from the sale of proprietary products. We also offer a
range of services that include pharmaceutical services for
phase III and phase IV clinical trials, contract
manufacturing, custom chemical synthesis and
laboratory-instrument calibration and repair.

Our Business

We report financial results on the basis of three
business segments: domestic distribution, international
distribution and laboratory workstations.

Domestic
Distribution

The domestic distribution segment manufactures,
sells and distributes products to three primary customer
markets: scientific research (pharmaceutical, biotechnology,
industrial customers and colleges and universities), clinical
laboratory (group purchasing organizations, reference
laboratories and independent hospital and physician office
laboratories) and industrial safety (industrial companies,
public safety organizations and controlled environments).
Additionally, this segment provides contract manufacturing,
chemical manufacturing and custom synthesis, and pharmaceutical
services for phase III and phase IV clinical trials.

The scientific research market and the industrial
safety market revenues, in aggregate, were approximately
70 percent of our domestic distribution revenues in 2002.
Scientific research revenues are driven by our customers
spending for research and development, quality control and
process control testing. Our product offerings for the
scientific research market include organic and inorganic
chemicals, scientific instruments and equipment, and other
consumable supplies. Industrial safety revenues are driven
primarily by manufacturing and research and development
spending. Industrial safety products and services include
personal protection equipment, respiratory protection systems,
environmental monitoring and sampling equipment, and other
safety and clean-room supplies.

Clinical laboratory market revenues were
approximately 30 percent of our domestic distribution
revenues in 2002 and were driven by the administration and
evaluation of diagnostic tests. We provide clinical laboratory
customers with a broad selection of scientific instruments,
equipment, clinical consumables, diagnostic stains and reagents
and other supplies.

The domestic distribution segment sells products
procured from vendors as well as proprietary products, which
consist of self-manufactured products, Fisher branded products
and products for which we serve as the exclusive distributor.
Arrangements with our suppliers are based on a number of factors
including product quality, vendor reputation and price.

1



---



##### Table of Contents



Our domestic distribution segment provides
contract manufacturing services worldwide to pharmaceutical and
biotechnology customers. These services include the
manufacturing of chemicals and diagnostics according to
customers specifications. By leveraging our presence and
brand recognition in the pharmaceutical and biotechnology
industries, we have expanded our service offerings to include
specialized packaging, labeling, distribution and supply-chain
management services for companies conducting phase III and
phase IV clinical trials for new medicines and disease
therapies and custom chemical synthesis. Our proprietary
products are sold under brand names including ACROS Organics,
Fisher Chemicals, Masterflex and Accumet, among others. Our
proprietary product portfolio also includes exclusive and Fisher
branded products along with various offerings provided by Fisher
Clinical Services.

We market and sell our products and services
through various Fisher catalogs, a direct sales force, customer
service professionals and electronic commerce. 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. We
have approximately 2,000 domestic distribution sales and
customer service professionals, including life-science, chemical
and technical specialists, that respond to end-user product and
application questions. We also provide customers with an
efficient ordering system, product standardization and other
supply-chain management services to reduce procurement costs.
Most of our customer service professionals are located at three
call centers in Texas, Georgia and Illinois. Our e-commerce
capabilities are specifically designed for the scientific
research, clinical laboratory and safety supply markets.
Fishers Web site, www.fishersci.com, is a leading
e-commerce tool supporting the scientific community. We
introduced our first electronic order-entry system in 1967 and
will continue to invest in our technology infrastructure to
remain an industry leader.

Our domestic distribution logistics network
consists of 25 distribution facilities, including a
national distribution center in Somerville, New Jersey; regional
distribution centers located in Massachusetts, California,
Illinois and Georgia; and 20 local distribution facilities
throughout the United States. To better serve our customers, we
continually develop and enhance our logistics network by
investing in new technology and streamlining our distribution
operations. We understand that timeliness is critical to our
customers, and therefore, in the United States, we ship
approximately 95 percent of all orders within 24 hours
of order placement. We distribute our products through third
party carriers and our own fleet of delivery vehicles. United
Parcel Service handles approximately 65 percent of our
domestic distribution segment product deliveries. Our agreement
with United Parcel Service expires in January 2005.

The domestic distribution segment operates in a
highly competitive market. We compete with other distributors
and manufacturers, including some of our own suppliers that sell
their products directly to end-users. We believe we compete on
product breadth, product value and service, including our
e-commerce capabilities. We believe we compete favorably in each
of the markets we serve.

International
Distribution

The international distribution segment consists
of distribution businesses located in Europe, Canada, Asia and
Latin America, as well as sales to dealers located in countries
where we do not have operations. The international distribution
segment sells and distributes products primarily to the
scientific research market. Our customers include
internationally recognized colleges and universities,
pharmaceutical, biotechnology and other industrial companies.

We market, sell and distribute our products and
services through local catalogs, direct sales and customer
service professionals, and local warehouse facilities in the
countries in which we operate. Fisher catalogs are published in
eight different languages and are tailored to include the
product and service offering that is most relevant to the
particular market we serve. We support e-commerce capabilities
in each of the countries we serve through our primary Web site,
www.fishersci.com.

Our international distribution logistics network
consists of 19 facilities in 10 countries. We augment
this network with sales offices in 22 countries and independent
dealers in more than 100 countries worldwide. We

2



---



##### Table of Contents



use our own fleet of delivery vehicles as well as
a vast network of local carriers to ship our products. No single
carrier delivered more than 10 percent of our international
distribution revenues for each of the three years ended
December 31, 2002.


The international distribution segment sells
products sourced from various vendors as well as proprietary
products, which consist of self-manufactured products from our
domestic distribution segment, Fisher branded products and
products for which we serve as the exclusive distributor.

We believe the international distribution segment
competes favorably in each of the countries we serve based on
product breadth, quality, price and service.

Laboratory
Workstations

The laboratory workstations segment engages in
the manufacture and sale of laboratory furniture and fume hoods
to the scientific research laboratory market (pharmaceutical,
biotechnology, industrial customers, colleges, universities and
secondary schools) and the manufacture and sale of consoles and
enclosures to the technology, communication and financial
markets. Ninety percent of laboratory workstations segment
revenues result from sales to the scientific research laboratory
market. We sell our laboratory workstations primarily through a
network of exclusive dealers. We market and sell our consoles
and enclosures through a network of dealers and a direct sales
force. Our customers are primarily domestic, although we also
sell to international markets.

Sales of laboratory furniture and fume hoods are
driven primarily by the construction of new laboratories and the
expansion of existing laboratories of our customers. Our
laboratory workstations business is project-based, and as such
this segment maintains a backlog of work. Our backlog as of
December 31, 2002, was approximately $108 million,
compared with $110 million in the previous year. We
manufacture both wood and steel workstations for the scientific
research market. Our manufacturing facilities are located in
Wisconsin, Arkansas, New York, and Mexico. We believe we have
suitable sources available for the raw materials used in
manufacturing our products.

We compete in a highly competitive market subject
to capital spending limitations. Laboratory workstations is a
project-based business selling project-specific products and
services through a competitive bidding basis. We believe we
compete favorably on price and quality in each of the markets we
serve.

Acquisitions

We continually evaluate strategic acquisitions to
increase the breadth of our product and service offerings,
enhance our market position and strengthen our international
capabilities. We intend to continue pursuing acquisitions of new
and complementary businesses that will enhance our growth and
profitability. The following is a brief description of some of
the larger strategic acquisitions we have completed during the
past five years.

In November 2001, we acquired Cole-Parmer
Instrument Company and its affiliated companies
(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 results of Cole-Parmer have been included in our
domestic distribution segment from the date of acquisition.

In February 2001, we acquired the pharmaceutical
packaging 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 results of FCS have been
included in the domestic distribution segment from the date of
acquisition.

In December 1998, we acquired 90 percent of
Bioblock Scientific S.A. (Bioblock) and the
remaining 10 percent interest in January 1999 for an
aggregate net purchase price of approximately $136 million.

3



---



##### Table of Contents



Bioblock is a distributor of scientific and
laboratory instrumentation in France. The results of Bioblock
have been included in our international distribution segment
from the respective date of acquisition.


Environmental Matters

A number of our domestic and international
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
managing company-wide environmental protection compliance
programs, complying with environmental regulations and
permitting requirements and installing, operating and
maintaining groundwater treatment systems and other remedial
activities related to environmental contamination. These
expenses were approximately $1.0 million in 2002, and
$1.2 million in both 2001 and 2000. We estimate that our
expenses for 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
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 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 $31.0 million and
$29.8 million at December 31, 2002 and 2001,
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 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, 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.

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 21  Segment
and Geographical Financial Information, which is
incorporated herein by reference.

4



---



##### Table of Contents



Employees

As of December 31, 2002, we had
approximately 9,100 full-time employees. 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, and
certain of our domestic distribution chemical manufacturing
employees located in the United States and Mexico.

Management

Our executive officers and directors, and their
ages and positions as of December 31, 2002 are:

|                                 |  |     |    |          |  |                                                  
|-------------------------------- |  | --- | -- | -------- |  | -------------------------------------------------
|Executive Officers and Directors |  | Age |    | Position
|                                 |  |     |    |         
|Paul M. Montrone(3)              |  |     | 61 |          |  | Chairman of the Board and Chief Executive Officer
|Paul M. Meister(3)               |  |     | 50 |          |  | Vice Chairman of the Board                       
|David T. Della Penta             |  |     | 55 |          |  | President and Chief Operating Officer            
|Kevin P. Clark                   |  |     | 40 |          |  | Vice President and Chief Financial Officer       
|Todd M. DuChene                  |  |     | 39 |          |  | Vice President, General Counsel and Secretary    
|Robert A. Day(1)(2)              |  |     | 59 |          |  | Director                                         
|Michael D. Dingman(2)            |  |     | 71 |          |  | Director                                         
|Anthony J. DiNovi(3)             |  |     | 40 |          |  | Director                                         
|David V. Harkins                 |  |     | 61 |          |  | Director                                         
|Scott M. Sperling(2)(3)          |  |     | 45 |          |  | Director                                         
|W. Clayton Stephens(1)(2)        |  |     | 60 |          |  | Director                                         
|Kent R. Weldon(1)                |  |     | 35 |          |  | Director                                         



---



|    |                                   
|--- | ----------------------------------
|(1) | Member of the Audit Committee.    
|   
|(2) | Member of Compensation Committee. 
|   
|(3) | Member of the Executive Committee.

Paul M. Montronehas
served Fisher as an executive officer and director since 1991.
Mr. Montrone has been Chairman of the Board since March
1998 and our Chief Executive Officer since prior to 1998. He
served as our President from prior to 1996 to 1998 and served as
an executive officer and director since 1991. Mr. Montrone
is also a director and chairman of The General Chemical Group
Inc. (producer of soda ash and calcium chloride), and GenTek
Inc. (manufacturer of telecommunications, automotive and
performance products), companies which are majority owned and
controlled by Mr. Montrone.

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. He served as Vice Chairman of the Board,
Executive Vice President and Chief Financial Officer from March
1998 to February 2001. He served as our Senior Vice President
and Chief Financial Officer from prior to 1998. Mr. Meister
is also a director and vice chairman of The General Chemical
Group Inc. and GenTek Inc., and a director of M&F Worldwide
Corp., and Minerals Technologies, Inc. and National Waterworks,
Inc.

David T. Della Pentahas 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 medical laboratory
device manufacturer.

Kevin P. Clarkhas
served Fisher as an officer or 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 prior to 1996 to 1997.

Todd M. DuChenehas
been Vice President, General Counsel and Secretary since
November 1996.

5



---



##### Table of Contents



Robert A. Dayhas
been Chairman of the Board and Chief Executive Officer of Trust
Company of the West (investments) since prior to 1996 and
Chairman and President of W.M. Keck Foundation
(philanthropic organization) since 1996. Mr. Day is also a
director of Freeport-McMoran Inc.

Michael D. Dingmanhas been President of Shipston Group
Ltd. (international investments) since prior to 1996.

Anthony J. DiNovihas been employed by Thomas H.
Lee Partners, L.P., and its predecessor Thomas H. Lee
Company since prior to 1996 and currently serves as a managing
director. Mr. DiNovi serves as a director of Eye Care
Centers of America, Inc., Fairpoint Communications, Inc., USLEC
Corp. and Vertis, Inc.

David V. Harkinshas
been employed by Thomas H. Lee Partners, L.P., and its
predecessor Thomas H. Lee Company since prior to 1996 and
currently serves as a senior managing director and President of
Thomas H. Lee Partners, L.P. Mr. Harkins serves as a
director of Conseco Inc., Cott Corporation, Metris Companies,
National Dentex (Chairman), Stanley Furniture Company, Inc. and
Syratech Corporation.

Scott M. Sperlinghas been employed by Thomas H.
Lee Partners, L.P., and its predecessor Thomas H. Lee
Company since prior to 1996 and currently serves as a managing
director. Mr. Sperling serves as a director of
CTC Communications, GenTek Inc., Vertis, Inc. and Wyndham
International.

W. Clayton Stephenswas elected to the Fisher Board on
November 1, 2002. Prior to joining Fisher,
Mr. Stephens founded Warren Capital Corporation in 1984 and
has served as the Director and President of the firm since that
time. Mr. Stephens is a member of the advisory board of
Sonoma National Bank.

Kent R. Weldonhas
been employed by Thomas H. Lee Partners, L.P., and its
predecessor Thomas H. Lee Company since prior to 1996 and
currently serves as a managing director. Mr. Weldon serves
as a director of Fairpoint Communications, Inc. and Syratech
Corporation.

Available Information

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




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 financial statements.

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

|                           |  |                                     
|-------------------------- |  | ------------------------------------
|Domestic Distribution      |  |                                     
|Agawam, Massachusetts      |  | Logistics                           
|Allentown, Pennsylvania(b) |  | Offices, Logistics and Manufacturing
|Barrington, Illinois(b)    |  | Manufacturing                       
|Basel, Switzerland(b)      |  | Offices, Logistics and Manufacturing
|Camarillo, California(a)   |  | Offices and Manufacturing           
|Delmar (Newark), Delaware  |  | Logistics                           
|Denver, Colorado(a)        |  | Logistics                           

6



---



##### Table of Contents



|                             |  |                                     
|---------------------------- |  | ------------------------------------
|Fair Lawn, New Jersey        |  | Manufacturing                       
|Florence, Kentucky           |  | Logistics                           
|Geel, Belgium                |  | Offices, Logistics and Manufacturing
|Hanover Park, Illinois       |  | Logistics                           
|Horsham, United Kingdom(b)   |  | Offices, Logistics and Manufacturing
|Houston, Texas               |  | Offices and Logistics               
|Indiana, Pennsylvania        |  | Manufacturing                       
|Melbourne, Australia(b)      |  | Manufacturing                       
|Middletown, Virginia         |  | Manufacturing                       
|Morris Plains, New Jersey(a) |  | Offices and Logistics               
|Pittsburgh, Pennsylvania(a)  |  | Offices and Data Center             
|Santa Clara, California(a)   |  | Logistics                           
|Somerville, New Jersey       |  | Logistics and Manufacturing         
|Suwanee, Georgia(a)          |  | Offices and Logistics               
|Trevillett, United Kingdom   |  | Offices and Manufacturing           
|Vernon Hills, Illinois(a)    |  | Offices and Logistics               
|Yorba Linda, California(a)   |  | Logistics                           
|International Distribution   |  |                                     
|Shah Alam, Malaysia(b)       |  | Offices and Logistics               
|Loughborough, United Kingdom |  | Offices, Logistics and Manufacturing
|Elancourt, France            |  | Offices and Logistics               
|Schwerte, Germany(b)         |  | Offices and Logistics               
|Strasbourg, France           |  | Offices and Logistics               
|Whitby, Ontario, Canada      |  | Logistics                           
|Wohlen, Switzerland          |  | Offices and Logistics               
|Landsmeer, Netherlands(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




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 allegedly distributed. We
believe that the costs incurred in defending and ultimately
disposing of most of these claims for personal injury and other
matters may be covered by insurance policies previously
maintained by several insurance carriers 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. Refer to Item 1 
Business  Environmental 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

7



---



##### Table of Contents



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 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 condition, 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 2002.




PART II






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

Market Information

For information regarding the high and low
closing sale prices of our common stock, refer to
Item 8  Financial Data and Supplementary
Information  Note 25  Unaudited Quarterly
Financial Information, which is incorporated herein by
reference.

The last reported sale price of common stock on
the New York Stock Exchange on March 3, 2003 was
$28.60 per share. As of March 3, 2003 we had
approximately 143 holders of record of our common stock.

Dividends

We have not paid a cash dividend on common stock
during the past five years. In addition, we do not anticipate
paying cash dividends on common stock at any time in the
foreseeable future.

Equity Compensation Plans

Following is a summary of equity compensation
plan information as of December 31, 2002:

|                                                       |  |                         |           |                     |  |                       |       |  |  |  |           | 
|------------------------------------------------------ |  | ----------------------- | --------- | ------------------- |  | --------------------- | ----- |  |  |  | --------- | 
|                                                       |  |                         |           |                     |  | Number of Securities 
|                                                       |  | Number of Securities to |           | Weighted-Average    |  | Remaining for Future 
|                                                       |  | be Issued Upon Exercise |           | Exercise Price of   |  | Issuance Under Equity
|Equity Compensation Plans Approved by Security Holders |  | of Outstanding Options  |           | Outstanding Options |  | Compensation Plans   
|                                                       |  |                         |           |                     |  |                      
|Equity and Incentive Plans                             |  |                         | 7,740,356 |                     |  | $                     | 19.73 |  |  |  | 4,045,131 | 

As of December 31, 2002, there were no
equity compensation plans not approved by security holders.






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

This summary of selected financial data for the
five years in the period ended December 31, 2002 should be
read in conjunction with Managements Discussion and
Analysis of Results of Operations and Financial Condition and
the Financial Statements presented elsewhere herein. See
Item 8  Financial Statements and
Supplementary Data  Note 1  Formation
and Background and Note 2  Summary of
Significant Accounting Policies for a further discussion
of the basis of presentation, principles of consolidation and
defined terms.

8



---



##### Table of Contents



|                                                         |                                                                                   |                                         |         |       |   |      |         |      |  |      |         |      |  |   |         |      |  |   |         |       |  
|-------------------------------------------------------- | --------------------------------------------------------------------------------- | --------------------------------------- | ------- | ----- | - | ---- | ------- | ---- |  | ---- | ------- | ---- |  | - | ------- | ---- |  | - | ------- | ----- | -
|                                                         |                                                                                   |                                        
|                                                         |                                                                                   | Year Ended December 31,                
|                                                         |                                                                                   |                                        
|                                                         |                                                                                   | 2002                                    |         | 2001  |   | 2000 |         | 1999 |  | 1998
|                                                         |                                                                                   |                                         |         |       |   |      |         |      |  |     
|                                                         |                                                                                   |                                        
|                                                         |                                                                                   | (In millions, except per share amounts)
|Statement of Operations Data:                            |                                                                                   |                                         |         |       |   |      |         |      |  |      |         |      |  |   |         |      |  |   |         |      
|Sales                                                    |                                                                                   | $                                       | 3,238.4 |       |   | $    | 2,880.0 |      |  | $    | 2,622.3 |      |  | $ | 2,514.5 |      |  | $ | 2,294.4 |      
|Income from operations(a)                                |                                                                                   |                                         | 245.1   |       |   |      | 131.1   |      |  |      | 156.3   |      |  |   | 146.8   |      |  |   | 22.8    |      
|Income before cumulative effect of accounting
    change |                                                                                   |                                         | 96.7    |       |   |      | 16.4    |      |  |      | 22.7    |      |  |   | 23.4    |      |  |   | (49.5   | )    
|Net income (loss)(b)                                     |                                                                                   |                                         | 50.6    |       |   |      | 16.4    |      |  |      | 22.7    |      |  |   | 23.4    |      |  |   | (49.5   | )    
|Share Data:                                              |                                                                                   |                                         |         |       |   |      |         |      |  |      |         |      |  |   |         |      |  |   |         |      
|Net income (loss) per common share:                      |                                                                                   |                                         |         |       |   |      |         |      |  |      |         |      |  |   |         |      |  |   |         |      
|                                                         | Basic income per common share before cumulative
    effect of accounting change   |                                         | $       | 1.77  |   |      | $       | 0.33 |  |      | $       | 0.57 |  |   | $       | 0.59 |  |   | $       | (1.24 | )
|                                                         | Cumulative effect of accounting change                                            |                                         |         | (0.84 | ) |      |         |     |  |      |         |     |  |   |         |     |  |   |         |      |  
|                                                         |                                                                                   |                                         |         |       |   |      |         |      |  |      |         |      |  |   |         |      |  |   |         |      
|                                                         | Basic net income per common share                                                 |                                         | $       | 0.93  |   |      | $       | 0.33 |  |      | $       | 0.57 |  |   | $       | 0.59 |  |   | $       | (1.24 | )
|                                                         |                                                                                   |                                         |         |       |   |      |         |      |  |      |         |      |  |   |         |      |  |   |         |      
|                                                         | Diluted income per common share before cumulative
    effect of accounting change |                                         | $       | 1.67  |   |      | $       | 0.31 |  |      | $       | 0.51 |  |   | $       | 0.55 |  |   | $       | (1.24 | )
|                                                         | Cumulative effect of accounting change                                            |                                         |         | (0.80 | ) |      |         |     |  |      |         |     |  |   |         |     |  |   |         |      |  
|                                                         |                                                                                   |                                         |         |       |   |      |         |      |  |      |         |      |  |   |         |      |  |   |         |      
|                                                         | Diluted net income per common share                                               |                                         | $       | 0.87  |   |      | $       | 0.31 |  |      | $       | 0.51 |  |   | $       | 0.55 |  |   | $       | (1.24 | )
|                                                         |                                                                                   |                                         |         |       |   |      |         |      |  |      |         |      |  |   |         |      |  |   |         |      
|Weighted average common shares outstanding:              |                                                                                   |                                         |         |       |   |      |         |      |  |      |         |      |  |   |         |      |  |   |         |      
|                                                         | Basic                                                                             |                                         |         | 54.5  |   |      |         | 49.4 |  |      |         | 40.1 |  |   |         | 40.0 |  |   |         | 40.0  |  
|                                                         | Diluted                                                                           |                                         |         | 57.9  |   |      |         | 53.0 |  |      |         | 44.4 |  |   |         | 42.8 |  |   |         | 40.0  |  
|Balance Sheet Data (at end of year):                     |                                                                                   |                                         |         |       |   |      |         |      |  |      |         |      |  |   |         |      |  |   |         |      
|Working capital                                          |                                                                                   | $                                       | 186.1   |       |   | $    | 120.1   |      |  | $    | 142.8   |      |  | $ | 115.3   |      |  | $ | 107.9   |      
|Total assets                                             |                                                                                   |                                         | 1,871.4 |       |   |      | 1,839.2 |      |  |      | 1,385.7 |      |  |   | 1,402.6 |      |  |   | 1,357.6 |      
|Long-term debt                                           |                                                                                   |                                         | 921.8   |       |   |      | 956.1   |      |  |      | 991.1   |      |  |   | 1,011.1 |      |  |   | 1,022.0 |      



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Includes a $2.2 million ($1.4 million,
    net of tax) restructuring credit 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,
    $11.2 million ($8.6 million, net of tax) of
    restructuring and other charges in 1999 and $108.4 million
    ($68.9 million, net of tax) of recapitalization-related
    costs, restructuring and other charges in 1998. Refer to
    Item 7  Managements Discussion and
    Analysis of Results of Operations and Financial Condition.
|   
|(b) | Net income (loss) includes the amounts
    described in (a) above and in 2002 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 term debt and in 2000 includes 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 Results of Operations and Financial Condition

Overview

We report financial results on the basis of three
business segments: domestic distribution, international
distribution and laboratory workstations. The domestic
distribution segment manufactures, sells and distributes
products to three primary customer markets: scientific research,
clinical laboratory and industrial safety. Additionally, this
segment provides contract manufacturing, chemical manufacturing
and custom chemical synthesis, and pharmaceutical services for
phase III and phase IV clinical trials. The international
distribution segment sells and distributes products primarily to
the scientific research market. The laboratory workstations
segment engages in the manufacture and sale of laboratory
furniture and fume hoods to the scientific research

9



---



##### Table of Contents



market and the manufacture and sale of consoles
and enclosures in the technology, communication and financial
industries.


In January 2003, we issued and sold
$200 million of 8 1/8 percent senior subordinated
notes due May 2012 pursuant to Rule 144A and
Regulation S of the Securities Act of 1933. The notes were
issued as a tack on to our existing 8 1/8 percent
indenture and sold at a premium, resulting in a yield of
7.4 percent. In February 2003, we entered into a new credit
agreement that includes a five-year revolving facility that
provides for initial available borrowings of $175 million
and a seven-year, $400 million term loan. The proceeds from
the term loan, together with proceeds from the senior
subordinated notes, were used to refinance our outstanding
$600 million 9 percent senior subordinated notes due
in 2008. As a result of this refinancing, the Company expects to
incur a charge of approximately $45 million consisting of
$27 million of call premiums to be paid in cash and
$18 million of non-cash deferred financing fees and other
costs. In February 2003, we also entered into a new receivables
securitization facility that provides for the sale, on a
revolving basis, of certain accounts receivable of up to
$225 million.

In November 2002, we 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 aggregate net purchase price of
$53.2 million and were funded with cash on hand. The
results of Maybridge and Mimotopes have been included in our
domestic distribution segment from their respective dates of
acquisition.

In July 2002, we acquired a Netherlands-based
distributor operating under the names Retsch and Emergo, further
enhancing our position in northern Europe. 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 using cash on hand. The
results of Retsch and Emergo have been included in the
international distribution segment from the date of acquisition.
We are currently in the process of consolidating our existing
Netherlands-based operations with the acquired Retsch and Emergo
operations. This consolidation will be focused on the
elimination of operational inefficiencies created by
redundancies in headcount, systems and office and warehouse
facilities.

In April 2002, we issued and sold
$150.0 million of 8 1/8 percent 10-year senior
subordinated notes pursuant to Rule 144A and
Regulation S of the Securities Act of 1933. We used the net
proceeds from this offering, together with proceeds from the
sale of accounts receivable through our receivables
securitization facility and cash on hand, to repay bank term
debt totaling $211.3 million. As a result of this
refinancing, we recorded an $11.2 million charge consisting
of $7.1 million of fixed-swap unwind costs and $4.1 million
of deferred financing and other costs associated with the term
debt. In July 2002, we exchanged these securities through an
Exchange Offering with SEC registered securities.

In November 2001, we acquired Cole-Parmer, a
leading worldwide manufacturer and distributor of specialty
technical instruments, appliances, equipment and supplies. The
purchase price for this acquisition was $208.5 million in
cash. The results of Cole-Parmer have been included in the
domestic distribution segment from the date of acquisition.

In February 2001, we acquired the pharmaceutical
packaging services business of Covance, which we renamed Fisher
Clinical Services Inc. (FCS). FCS enables
pharmaceutical and biotechnology companies and other customers
to outsource the packaging, labeling and distribution of
prescription drugs used in phase III and IV clinical
trials. We paid an adjusted purchase price of approximately
$133 million in a cash transaction. The results of FCS have
been included in the domestic distribution segment from the date
of acquisition.

10



---



##### Table of Contents



Results of Operations

The following table sets forth our sales and
income from operations by segment for the years ended
December 31 (in millions):

|                                          |                   |       |         |                        |  |      |         |         |  |      |         |         |  |   |       |       |  |   |       |       |  |   |       |       | 
|----------------------------------------- | ----------------- | ----- | ------- | ---------------------- |  | ---- | ------- | ------- |  | ---- | ------- | ------- |  | - | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- | 
|                                          |                   |       |         |                       
|                                          |                   | Sales |         | Income from Operations
|                                          |                   |       |         |                       
|                                          |                   | 2002  |         | 2001                   |  | 2000 |         | 2002    |  | 2001 |         | 2000   
|                                          |                   |       |         |                        |  |      |         |         |  |      |         |        
|Domestic distribution                     |                   | $     | 2,776.0 |                        |  | $    | 2,439.9 |         |  | $    | 2,187.3 |         |  | $ | 210.8 |       |  | $ | 181.3 |       |  | $ | 154.2 |      
|International distribution                |                   |       | 448.4   |                        |  |      | 425.4   |         |  |      | 418.5   |         |  |   | 21.4  |       |  |   | 18.6  |       |  |   | 16.6  |      
|Laboratory workstations                   |                   |       | 193.9   |                        |  |      | 178.6   |         |  |      | 165.2   |         |  |   | 11.7  |       |  |   | 8.7   |       |  |   | 7.3   |      
|Eliminations                              |                   |       | (179.9  | )                      |  |      | (163.9  | )       |  |      | (148.7  | )       |  |   | (1.0  | )     |  |   | 0.4   |       |  |   | (0.1  | )    
|                                          |                   |       |         |                        |  |      |         |         |  |      |         |         |  |   |       |       |  |   |       |       |  |   |       |      
|                                          | Segment sub-total |       |         | 3,238.4                |  |      |         | 2,880.0 |  |      |         | 2,622.3 |  |   |       | 242.9 |  |   |       | 209.0 |  |   |       | 178.0 | 
|Restructuring and other charges (credits) |                   |       |        |                        |  |      |        |         |  |      |        |         |  |   | (2.2  | )     |  |   | 59.7  |       |  |   | (2.0  | )    
|Nonrecurring charges                      |                   |       |        |                        |  |      |        |         |  |      |        |         |  |   |      |       |  |   | 1.5   |       |  |   | 10.4  |      
|Goodwill amortization                     |                   |       |        |                        |  |      |        |         |  |      |        |         |  |   |      |       |  |   | 16.7  |       |  |   | 13.3  |      
|                                          |                   |       |         |                        |  |      |         |         |  |      |         |         |  |   |       |       |  |   |       |       |  |   |       |      
|                                          | Total             |       | $       | 3,238.4                |  |      | $       | 2,880.0 |  |      | $       | 2,622.3 |  |   | $     | 245.1 |  |   | $     | 131.1 |  |   | $     | 156.3 | 
|                                          |                   |       |         |                        |  |      |         |         |  |      |         |         |  |   |       |       |  |   |       |       |  |   |       |      

Sales

Sales increased 12.4 percent to
$3,238.4 million in 2002 from $2,880.0 million in
2001. Excluding the effect of foreign exchange, sales increased
11.9 percent in 2002 compared with 2001. Sales increased
9.8 percent to $2,880.0 million in 2001 from
$2,622.3 million in 2000. Excluding the effect of foreign
exchange, sales increased 10.5 percent in 2001 compared
with 2000. The increase in the growth rate in 2002 compared with
2001 was attributable to sales from our Cole-Parmer acquisition
and an increase in our base business. The increase in the 2001
growth rate was primarily attributable to the four acquisitions
completed during 2001. Excluding the effect of foreign exchange,
we are forecasting sales growth to range between 5 percent
and 6 percent for 2003.

Sales in the domestic distribution segment
increased 13.8 percent to $2,776.0 million in 2002
from $2,439.9 million in 2001. Domestic distribution sales
increased 11.6 percent to $2,439.9 million in 2001
from $2,187.3 million in 2000. The 2002 sales growth in our
domestic distribution segment is attributable to the effect of
the Cole-Parmer acquisition completed in November 2001 and an
increase in our base business growth rate to approximately
6 percent for 2002 from approximately 5 percent in
2001. Excluding the effect of foreign exchange, we are
forecasting domestic distribution sales growth to range between
5.5 percent and 6.5 percent for 2003, primarily
reflecting growth in our base business.

Sales in the international distribution segment
increased 5.4 percent to $448.4 million in 2002 from
$425.4 million in 2001. Excluding the effect of foreign
exchange, sales increased 2.4 percent in 2002.
International distribution sales increased 1.6 percent to
$425.4 million in 2001 from $418.5 million in 2000.
Excluding the effect of foreign exchange, sales increased
5.5 percent in 2001. The decrease in the 2002 growth rate,
excluding the effect of foreign exchange, was primarily due to
our strategy to focus on higher-margin sales in our
international distribution segment. Excluding the effect of
foreign exchange, the increase in the 2001 growth rate from
1.6 percent in 2000 was attributable to increased volume in
Europe and Asia-Pacific. We are forecasting international
distribution growth to range between 4 percent and
5 percent for 2003, excluding the effect of foreign
exchange, reflecting a focus on profitable sales growth in 2003.

Sales in the laboratory workstations segment
increased 8.6 percent to $193.9 million in 2002 from
$178.6 million in 2001. Included in the 2002 sales was
$12.3 million related to a homeland security order awarded
to us in the fourth quarter that we do not anticipate to repeat
in 2003. Laboratory workstations sales increased
8.1 percent to $178.6 million in 2001 from
$165.2 million in 2000. Backlog in this segment remained
relatively stable at $108 million compared with
$110.1 million a year ago. We are forecasting sales growth
in

11



---



##### Table of Contents



our laboratory workstation segment to slow to
1 percent in 2003, primarily due to the effect of the
homeland security order in 2002.


Gross Profit

Gross profit increased 16.0 percent to
$855.1 million, or 26.4 percent of sales in 2002 from
$737.2 million, or 25.6 percent of sales, in 2001.
Gross profit increased 13.7 percent to $737.2 million
in 2001 from $648.3 million, or 24.7 percent of sales,
in 2000. The increase in 2002 gross profit as a percent of sales
was primarily attributable to the impact of the Cole-Parmer
acquisition completed in 2001. The increase in gross profit as a
percent of sales from 2000 to 2001 was attributable to
acquisitions completed in 2001. We are forecasting a small
increase in gross profit as a percentage of sales in 2003 due to
our acquisitions completed in 2002 and our continued strategy to
increase sales of our higher margin proprietary products.

Selling, General and Administrative
Expense

Selling, general and administrative expense
increased 12.0 percent to $612.2 million, or
18.9 percent of sales, in 2002, from $546.4 million,
or 19.0 percent of sales, in 2001. Selling, general and
administrative expense increased 10.6 percent in 2001 from
$494.0 million, or 18.8 percent of sales, in 2000.
Reflecting the non-amortization of goodwill of
$16.7 million, selling, general and administrative expense
was $529.7 million, or 18.4 percent of sales, in 2001.
In 2000, selling, general and administrative expense included
$5.5 million of costs for business combinations not
consummated, $3.7 million of non-cash compensation expense
related to a change in the terms of certain common stock
options, and $1.2 million of expense related to targeted
workforce reductions. Excluding those charges and reflecting the
non-amortization of goodwill of $13.3 million, selling,
general and administrative expense was $470.3 million, or
17.9 percent of sales, in 2000. The increase in selling,
general and administrative expense as a percentage of sales for
2002 was attributable to the acquisitions completed in 2001,
primarily Cole-Parmer, and certain integration costs related to
our acquisition of Retsch and Emergo, as well as strategic
investments in sales and marketing systems, offset by
improvements in our base business as a result of both fixed-cost
leverage and savings from our 2001 restructuring plan. The
increase in selling, general and administrative expense as a
percentage of sales in 2001 was primarily due to acquisitions
completed in 2001. We are forecasting some improvement in
selling, general and administrative expense as a percentage of
sales in 2003, representing fixed-cost leverage partially offset
by continued strategic investments.

Restructuring and Other Charges
(Credits)

During 2001, we implemented restructuring plans
focused on integration of certain international operations and a
streamlining of domestic operations, including the consolidation
of office, warehouse and manufacturing facilities and the
discontinuance of certain product lines (collectively the
2001 Restructuring Plan). As a result of these
actions, we recorded a restructuring charge of
$27.0 million. The restructuring charge reflects
$18.3 million related to estimated employee separation
costs and $8.7 million of exit costs. The charge for
employee separation arrangements relates to termination and
other severance costs associated with 780 salaried and
hourly employees severed as part of this plan. The exit costs
represent primarily lease-cancellation costs and costs
associated with the discontinuance of certain product lines. The
domestic distribution, international distribution and laboratory
workstations segments accounted for $20.3 million,
$6.6 million and $0.1 million, respectively, of this
charge.

During 2002, the Company recorded an aggregate
net restructuring credit of $2.2 million for the reversal
of certain costs accrued in the 2001 Restructuring Plan. The
restructuring credits are primarily related to a reduction in
estimated severance costs due to the election of certain
employees to voluntarily separate from the Company. In addition,
cash payments under the 2001 Restructuring Plan during 2002 were
$7.6 million, and the related accrual balance was
$3.6 million as of December 31, 2002.

In connection with the May 2001 stock offering,
we accelerated the vesting of options to purchase approximately
2.3 million shares of common stock, with 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

12



---



##### Table of Contents



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


During 2001 we also reversed $0.8 million of
accruals from restructuring charges recorded in years prior to
2001 due to actual costs being lower than originally estimated.
The domestic distribution and international distribution segment
accounted for $0.7 million and $0.1 million of the
restructuring credit, respectively.

In 2000, we recorded a restructuring credit of
$2.0 million, consisting of $0.7 million related to
revisions in estimated separation costs and $1.3 million
related to revised estimates in total costs for restructuring
charges prior to 2000. The restructuring credit related to our
domestic distribution and international distribution segments
equally.

Income from Operations

Income from operations increased
87.0 percent to $245.1 million in 2002 from
$131.1 million in 2001. Income from operations decreased
16.1 percent to $131.1 million in 2001 from
$156.3 million in 2000. Excluding restructuring credits of
$2.2 million in 2002, and net restructuring and other
charges of $61.2 million plus goodwill amortization of
$16.7 million in 2001, each as discussed above, income from
operations increased 16.2 percent to $242.9 million,
or 7.5 percent of sales, in 2002 from $209.0 million,
or 7.3 percent of sales, in 2001. The increase in income
from operations as a percentage of sales, as adjusted for 2002,
was attributable to our acquisition of Cole-Parmer, completed in
2001, as well as improvements in our base business, partially
offset by strategic investments. Excluding net restructuring
credits and other charges of $8.4 million plus goodwill
amortization of $13.3 million, as discussed above, income
from operations in 2000 was $178.0 million, or 6.8 percent
of sales. The increase in income from operations as a percentage
of sales, as adjusted, for 2001 was primarily due to
acquisitions completed in 2001. We are forecasting income from
operations as a percentage of sales to range between
7.7 percent and 7.9 percent for 2003.

Income from operations in the domestic
distribution segment increased 16.3 percent to
$210.8 million, or 7.6 percent of segment sales, for
2002 from $181.3 million, or 7.4 percent of segment
sales, in 2001. Domestic distribution income from operations
increased 17.6 percent to $181.3 million in 2001 from
$154.2 million, or 7.0 percent of segment sales, in
2000. The increase in domestic distribution income from
operations as a percentage of sales for 2002 was attributable to
the Cole-Parmer acquisition completed in 2001 as well as
improvements in our base business, partially offset by strategic
investments. The increase in domestic distribution income from
operations as a percentage of sales for 2001 was primarily
related to the acquisitions we completed in 2001. We are
forecasting income from operations as a percentage of segment
sales to range between 7.6 percent and 7.8 percent for
2003.

Income from operations in the international
distribution segment increased 15.1 percent to
$21.4 million, or 4.8 percent of segment sales, in
2002, from $18.6 million, or 4.4 percent of segment
sales, in 2001. International distribution income from
operations increased to $18.6 million in 2001 from
$16.6 million, or 4.0 percent of segment sales, in
2000. The increase in international distribution income from
operations as a percentage of sales in 2002 was due to our
strategy to focus on improving operating margin through
increased gross margins and reduced selling, general and
administrative expense. We are forecasting international
distribution income from operations as a percentage of segment
sales to range between 5.5 percent and 6.5 percent for
2003.

Income from operations in the laboratory
workstations segment increased 34.5 percent to
$11.7 million, or 6.0 percent of segment sales in 2002
from $8.7 million, or 4.9 percent of segment sales, in
2001. Laboratory workstations income from operations increased
to $8.7 million in 2001 from $7.3 million, or
4.4 percent of segment sales, in 2000. The increase in
laboratory workstations income from operations in 2001 was due
to an increase in sales volume. We are forecasting laboratory
workstations income from operations as a percentage of segment
sales to range between 5.5 percent and 6.0 percent for
2003.

13



---



##### Table of Contents



Interest Expense

Interest expense for 2002, 2001 and 2000 was
$91.3 million, $99.5 million and $99.1 million,
respectively. The decrease from 2001 to 2002 was attributable to
a reduction in the average outstanding debt balance coupled with
a decrease in the weighted average interest rate incurred on
short-term borrowings. We are forecasting a decrease in interest
expense for 2003 of between $12 million and
$14 million related to the refinancing of our debt.

Other Expense, Net

Other expense, net increased to
$12.3 million in 2002 from $1.3 million in 2001. Other
expense, net decreased to $1.3 million in 2001 from
$19.4 million in 2000. In connection with our offering of
8 1/8 percent notes in 2002, we recorded a charge in
other expense, net 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 retirement of bank term debt resulting
in an increase in other expense, net in 2002. Other expense, net
in 2001 consists of $6.0 million in equity losses offset by
interest income earned from proceeds on the May 2001 public
offering. Other expense, net in 2000 included a $23.6 million
write-down to fair market value of investments in certain
Internet-related ventures, primarily ProcureNet, which was spun
off in 1999. We expect to record a charge of approximately
$45 million in the first quarter of 2003 consisting of
$27 million of call-premiums to be paid in cash and
$18 million of non-cash deferred financing and other costs
associated with the redemption of the 9 percent senior
subordinated notes.

Income Tax Provision

The income tax provision for 2002 increased to
$44.8 million from $13.9 million in 2001. The income
tax provision for 2001 decreased to $13.9 million from
$15.1 million in 2000. The effective tax rate was
31.7 percent for 2002 compared with 45.9 percent for
2001 and 40.0 percent for 2000. The increase in the
effective tax rate for 2001 compared with the effective tax rate
for 2000 was a result of restructuring and stock compensation
charges. Excluding the effect of the restructuring and stock
compensation charges, the adjusted 2001 effective tax rate would
have been 40 percent. Approximately five percentage points
of the improvement in the 2002 effective tax rate as compared
with the 2001 effective tax rate, as adjusted, are due to the
implementation of tax-planning strategies and the remaining
three percentage points are due to the elimination of
non-deductible goodwill amortization. We are forecasting an
effective tax rate of 30 percent for 2003.

Cumulative Effect of Accounting
Change

In June 2001, the Financial Accounting Standards
Board (FASB) issued Statement of Financial
Accounting Standards 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. Under the nonamortization approach, goodwill and
indefinite-lived intangible assets will not be amortized but
instead will be reviewed for impairment and written down with a
resulting charge to operations in the period in which the
recorded value of goodwill and indefinite-lived intangible
assets exceeds its fair value. The adoption of SFAS 142 required
us to reassess the useful lives and residual values of all
intangible assets and make any necessary amortization
adjustments. Based on that assessment, no adjustments were made
to the amortization period or residual values of our intangible
assets. Additionally, SFAS 142 required us to perform an
evaluation of whether goodwill and indefinite-lived intangible
assets were impaired as of January 1, 2002, the effective
date of the statement for the Company.

SFAS 142 provided a six-month transitional
period from the effective date of adoption to perform our
initial assessment of whether an indication of goodwill
impairment exists. This initial assessment compares the fair
value of the reporting unit to its carrying value, including
goodwill. Fair value was determined using a combination of
discounted cash flow and multiple of earnings valuation
techniques. To the extent that the fair value is less than the
carrying value, we are required to perform a second test to
measure the amount of the goodwill impairment, if any.

14



---



##### Table of Contents



During 2002, we completed our transitional
assessment in accordance with 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 international
distribution segment and laboratory workstations segment
accounted for $19.7 million and $44.1 million of the
charge, respectively.

The impairment charge in the international
distribution segment related to certain of our smaller-market
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 of each year. As of
October 31, 2002, there were no additional impairments of
goodwill. Future impairments of goodwill, if any, will be
recorded to operating income in our statement of operations.

Liquidity and Capital Resources

For the year ended December 31, 2002, cash
generated from operating activities was $159.3 million
compared with $158.6 million in 2001. The increase in cash
from operations is due to an increase in net income offset
primarily by $20 million in cash pension contributions and
$7.6 million of spending related to our 2001 restructuring
plans. We expect cash flow from operations to be between
$180 million and $190 million in 2003.

During 2002, we used $105.4 million of cash
for investing activities compared with $419.6 million in
2001. The change in cash used for investing activities is
primarily attributable to a decrease in acquisition spending.
Capital expenditures totaled $43.9 million in 2002 compared
with $40.1 million in 2001. We expect to invest
approximately $60 million in capital expenditures in 2003,
reflecting continued facility consolidation and increased
investment in our chemical manufacturing and pharmaceutical
services. In July 2002, we acquired a Netherlands-based
distributor operating under the names Retsch and Emergo for a
purchase price of $7.9 million and in November 2002 we
acquired two companies named Maybridge and 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 aggregate purchase price of
$53.2 million. Investing activities in 2001 consisted of
$371.2 million for strategic acquisitions, primarily FCS
and Cole-Parmer. Although we intend to continue pursuing
acquisitions of complementary businesses that will enhance our
growth and profitability, we currently have no commitment,
understanding or arrangement relating to any additional
acquisitions.

During 2002, financing activities used
$94.6 million versus cash provided by financing activities
of $270.0 million in 2001. The use of cash was primarily
related to the repayment of debt. In April 2002, we issued
$150.0 million of 8 1/8 percent 10-year senior
subordinated notes. We used the net proceeds from the
$150.0 million 8 1/8 percent senior subordinated
notes, together with proceeds from the sale of accounts
receivables through our receivables securitization facility and
cash on hand, to retire bank term debt totaling
$211.3 million. 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 that
were used to fund acquisitions during 2001.

On January 14, 2003, the Company issued and
sold $200 million of 8 1/8 percent senior
subordinated notes due in May 2012 at a premium resulting in a
yield of 7.4 percent. On February 14, 2003, the
Company entered into a new credit facility (the Credit
Facility) with a group of financial institutions,
consisting of (i) a $400 million term loan facility
(the Term Facility), which contains a provision
that, upon the Companys future request, and subject to the
fulfillment of certain conditions, an additional
$250 million incremental term

15



---



##### Table of Contents



facility may be drawn (the Incremental Term
Facility) and (ii) a $175 million revolving
credit facility (the Revolving Facility). The
Revolving Facility includes a sub-limit for the issuance of
letters of credit. Commitments under the Revolving Facility
expire on March 31, 2008. The Term Facility requires the
Company to make quarterly repayments of principal equal to
$1 million through March 31, 2009, and quarterly
repayments of principal equal to $94 million beginning
June 30, 2009 through the maturity of the Term Facility on
March 31, 2010. The Credit Facility replaces the previous
credit facility entered into in January 1998.


In addition, on February 14, 2003, the
Company, through its subsidiary Fisher Scientific Company
L.L.C., borrowed $71.5 million of the $175 million
available under the Revolving Facility to refinance amounts
outstanding under the revolving credit portion of the previous
credit facility entered into in 1998.

Proceeds from the 8 1/8 percent senior
subordinated notes and the Term Facility were used to refinance
the Companys 9 percent senior subordinated notes due
in 2008. In conjunction with the refinancing of the
9 percent senior subordinated notes, the Company expects to
incur a charge of approximately $45 million consisting of
$27 million of call premiums to be paid in cash and
$18 million of non-cash deferred financing fees and other
costs. The Company is anticipating that this refinancing will
reduce interest expense in 2003 by approximately
$12 million to $14 million.

On February 14, 2003, the Company entered
into a new $225 million receivables security facility
(Receivables Securitization), 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, formerly named FSI
Receivables Corp. (FSI), a special purpose,
bankruptcy remote indirect wholly owned subsidiary of the
Company.

The following table summarizes maturities for the
Companys significant financial obligations as of
December 31, 2002 (in millions):

|                                   |                               |                        |       |           |  |           |      |           |  |         |       |       |  |   |      |      |  |   |       |       | 
|---------------------------------- | ----------------------------- | ---------------------- | ----- | --------- |  | --------- | ---- | --------- |  | ------- | ----- | ----- |  | - | ---- | ---- |  | - | ----- | ----- | 
|                                   |                               |                       
|                                   |                               | Payments Due by Period
|                                   |                               |                       
|                                   |                               |                        |       | Less Than |  |           |      | More Than
|Contractual Obligations            |                               | Total                  |       | 1 year    |  | 1-3 Years |      | 3-5 Years |  | 5 Years
|                                   |                               |                        |       |           |  |           |      |           |  |        
|Long-Term Debt                     |                               | $                      | 921.8 |           |  | $         |     |           |  | $       | 157.0 |       |  | $ | 4.7  |      |  | $ | 760.1 |      
|Operating Leases                   |                               |                        | 132.9 |           |  |           | 22.7 |           |  |         | 33.1  |       |  |   | 23.9 |      |  |   | 53.2  |      
|Unconditional Purchase Obligations |                               |                        | 0.1   |           |  |           | 0.1  |           |  |         |      |       |  |   |     |      |  |   |      |      
|                                   |                               |                        |       |           |  |           |      |           |  |         |       |       |  |   |      |      |  |   |       |      
|                                   | Total Contractual Obligations |                        | $     | 1,054.8   |  |           | $    | 22.8      |  |         | $     | 190.1 |  |   | $    | 28.6 |  |   | $     | 813.3 | 
|                                   |                               |                        |       |           |  |           |      |           |  |         |       |       |  |   |      |      |  |   |       |      

In addition to the contractual obligations noted
above, the Company has outstanding standby letters of credit
totaling $27.2 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 the new 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 23 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.

16



---



##### Table of Contents



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, including
among others, those related to product returns, bad debts,
inventory obsolescence, investments, intangible assets, income
taxes, warranty obligations, restructuring costs, retirement and
insurance costs, and contingencies and litigation. 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.

We record reductions to revenue for estimated
returns. Should a greater amount 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.

We maintain an allowance for doubtful accounts
for estimated losses resulting from the inability of our
customers to make required payments. We provide for the
allowance for doubtful accounts when it becomes likely and known
that the financial condition of our customer deteriorated,
resulting in the customers inability to make payments. If
those conditions change, changes to the allowance for doubtful
accounts may be necessary. Historically, our annual provision
for doubtful accounts has approximated the related write-offs.

We write down our inventory for estimated
obsolescence to the difference between the cost of inventory and
the estimated market value based upon assumptions about current
and future demand and market conditions. For our inventories of
distributed products, current demand is generally the last
twelve-months sales and future demand is generally forecasted
for a twelve-month period. If actual future demand or market
conditions are less favorable than those projected by
management, additional inventory write-downs may be required.

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 reports prepared by environmental
specialists and managements knowledge and experiences with
these environmental matters. 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.

We annually perform an evaluation of whether
goodwill and indefinite-lived intangible assets are impaired 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 experiences, and overall
economic factors. To the extent those factors may change and
impact the fair value of a reporting unit, measurement and
write-downs, if any, of goodwill and indefinite-lived intangible
assets may be required.

The Company has defined benefit pension plans
covering a significant number of domestic and international
employees. Accounting for these plans requires the use of
actuarial assumptions including estimates on the expected
long-term rate of return on assets and discount rates. In order
to make informed

17



---



##### Table of Contents



assumptions, management relies on outside
actuarial experts as well as 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. A majority of our plans benefit obligations and
plan assets relate to our U.S.-based plan which returned an
approximate 7 percent loss on plan assets for 2002 and a
ten-year return on plan assets of approximately 9 percent.
As of December 31, 2002, we assumed a long-term rate of
return on plan assets of 8.75 percent. A 50 basis point
change in our long-term rate of return on plan assets assumption
would result in a change in our pension cost of approximately
$1.0 million. We continually assess these assumptions based
on market conditions, and if those conditions change, pension
cost may be adjusted accordingly. At December 31, 2002 our
pension programs were underfunded by approximately
$24 million, the result of underfunded international plans.
Our U.S.-based plan was fully-funded at December 31, 2002.
In addition, our underfunded status includes an additional
$20 million for an executive retirement program which has
assets approximating this obligation included in other assets on
our balance sheet. Each of our plans are in compliance with
minimum funding requirements.


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 the expected dividends on
it, 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.

Although we consider these policies to require
managements more complex estimates and assumptions, you
may refer to Item 8  Financial Statements
and Supplementary Data  Note 2 
Summary of Significant Accounting Policies for a
description of our accounting policies necessary for a complete
understanding of our financial statements.

Recent Accounting Pronouncements

In January 2003, the FASB issued Interpretation
No. 46, Consolidation of Variable Interest
Entities. This interpretation defines when a business
enterprise must consolidate a variable interest entity. This
interpretation applies immediately to variable interest entities
created after January 31, 2003. It applies in the first
fiscal year or interim period beginning after June 15,
2003, to entities in which an enterprise holds a variable
interest that it acquired before February 1, 2003. It is
not deemed reasonably possible that the adoption of this
statement will have a material effect on the Companys
financial position or results of operations.

In December 2002, the FASB issued Statement of
Financial Accounting Standards No. 148, Accounting
for Stock-Based Compensation  Transition and
Disclosure (SFAS 148) which amends FASB
Statement No. 123. This statement provides alternative
methods of transition for a voluntary change to the fair
value-based method of accounting for stock-based employee
compensation and amends the disclosure requirements of FASB
Statement No. 123. The transition guidance and annual
disclosure provisions are effective for fiscal years ending
after December 15, 2003. The interim disclosure provisions
are effective for financial reports containing financial
statements for interim periods beginning after December 15,
2002. The Company will include the required interim disclosure
provisions in its financial statements for the quarter ending
March 31, 2003. The adoption of this statement will not have a
material effect on the Companys financial position or
results of operations.

In November 2002, the FASB issued Interpretation
No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others. This interpretation requires a
guarantor to recognize, at the inception of the guarantee, a
liability for the fair value of the obligation undertaken in
issuing the guarantee. It also enhances guarantors
disclosure requirements to be

18



---



##### Table of Contents



made in its interim and annual financial
statements about its obligations under certain guarantees it has
issued. The initial recognition and initial measurement
provisions of this interpretation are applicable on a
prospective basis to guarantees issued or modified after
December 31, 2002. The disclosure requirements are
effective for financial statements of interim or annual periods
ending after December 15, 2002. The Company adopted the
enhanced disclosure requirements in the current quarter. In the
normal course of business, the Company does not issue guarantees
to third-parties; accordingly, this interpretation will not have
an effect on the Companys financial position or results of
operations.


In November 2002, the Emerging Issues Task Force
issued EITF Issue No. 00-21 Accounting for Revenue
Arrangements with Multiple Deliverables,
(EITF 00-21) effective for arrangements entered
into after June 15, 2003. EITF 00-21 defines units of
accounting for arrangements with multiple deliverables resulting
in revenue being allocated over the units of accounting for
revenue recognition purposes. The adoption of this consensus is
not anticipated to have a material effect on the Companys
financial position or results of operations.

In July 2002, the FASB issued Statement of
Financial Accounting Standards No. 146, Accounting
for Exit or Disposal Activities
(SFAS 146). SFAS 146 requires the
recognition of a liability for costs associated with an exit
plan or disposal activity when incurred and nullifies Emerging
Issues Task Force (EITF) Issue 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring), which allowed recognition at the date of
an entitys commitment to an exit plan. The provisions of
this statement are effective for exit or disposal activities
that are initiated by the Company after December 31, 2002. The
adoption of this statement is not anticipated to have a material
effect on the Companys financial position or results of
operations.

In June 2001, the FASB issued Statement of
Financial Accounting Standards No. 143, Accounting
for Asset Retirement Obligations, effective for fiscal
years beginning after June 15, 2002. This statement
addresses the diverse accounting practices for obligations
associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. The adoption of this
statement will not have a material effect on the Companys
financial position or results of operations.

Control of the Company

As of February 25, 2003, certain affiliates
of Thomas H. Lee Company (THL) (THL
Entities), JP Morgan Partners (JP
Morgan), Merrill Lynch & Co. (Merrill
Lynch) and Credit Suisse First Boston (USA), Inc.
(CSFB and, together with the THL Entities, JP Morgan
and Merrill Lynch, the Equity Investors) owned (on a
diluted basis) 19.5 percent of our issued and outstanding
common stock, with the THL Entities owning 12.7 percent of
such outstanding stock. These Equity Investors and certain
members of management entered into an Investors Agreement
dated January 21, 1998, as amended (the
Investors Agreement). The Investors
Agreement provides that our Board of Directors will compromise
at least nine, but not more than ten directors, four of whom
will be appointed by the THL Entities, one of whom will be
appointed by DLJ Merchant Banking Partners II, L.P., one
whom will be Paul M. Montrone and one whom will be
Paul M. Meister. Accordingly, the Equity Investors have
significant control over us and have the power to elect a
majority of our directors. The directors elected pursuant to the
Investors Agreement will have the authority to make
decisions affecting our capital structure, including the
issuance of additional capital stock, the implementation of
stock repurchase programs and the declaration of dividends,
appoint new management and approve any action requiring the
approval of the holders of our common stock, including adopting
amendments to our certificate of incorporation and approving
mergers or sales of substantially all of our assets. There can
be no assurance that the interests of the Equity Investors will
not conflict with the interests of our other shareholders. Sales
or other dispositions of our common stock by the Equity
Investors as well as new requirements of the New York Stock
Exchange and under the Sarbanes-Oxley Act of 2002, may affect or
change the composition of our board of directors.

19



---



##### Table of Contents



Cautionary Factors Regarding Forward-Looking
Statements

This Annual Report on Form 10-K includes
forward-looking statements. All statements other than statements
of historical facts included in this Annual Report on
Form 10-K may constitute forward-looking statements. We
have based these forward-looking statements on our current
expectations and projections about future events. Although we
believe that our 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. These forward-looking statements are subject
to various risks, uncertainties and assumptions including, among
other things:



| |    |                                                                                                                                                                                                         
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | our outstanding indebtedness and leverage, and
    the restrictions imposed by our indebtedness;                                                                                                        
|
| | 2. | the effects of domestic and international
    economic, political and business conditions on our businesses;                                                                                            
|
| | 3. | the high degree of competition of certain of our
    businesses, and the potential for new competitors to enter into
    these businesses;                                                              
|
| | 4. | 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;  
|
| | 5. | future modifications to existing environmental
    laws and regulations and governmental orders or decrees
    respecting remediation or clean up;                                                      
|
| | 6. | discovery of unknown contingent liabilities,
    including environmental contamination at or emanating from our
    facilities and liability with respect to products we distribute
    and manufacture;
|
| | 7. | fluctuations in interest rates and in foreign
    currency exchange rates;                                                                                                                              
|
| | 8. | availability, or increases in the cost, of raw
    materials and other inputs used to make our products;                                                                                                
|
| | 9. | the loss of major customers or suppliers
    including any provider of shipping services; and                                                                                                           



| |     |                                                                                                                                           
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------
| | 10. | our ability to generate free cash flow or to
    obtain sufficient resources to finance working capital and
    capital expenditure needs.

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. All forward-looking statements reflect our present
expectations of future events and are subject to a number of
important factors and uncertainties that could cause actual
results to differ materially from those described in the
forward-looking statements.

You are cautioned not to place undue reliance on
the forward-looking statements, which speak only as of the date
of this Annual Report on Form 10-K or the document
incorporated by reference in this Annual Report. 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.

For these statements, the Company claims the
protection of the safe harbor for forward-looking statements
contained in Section 27A of the Securities Act.






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

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.

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

20



---



##### Table of Contents



to manage market risks. Additional information
regarding our financial instruments is contained in
Item 8  Financial Statements and
Supplementary Data  Note 5  Fair
Value of Financial Instruments and Note 13 
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
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 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 percent 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 percent 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 percent change in
rates. A hypothetical 10 percent change in interest rates
would not have had a material impact on our fair values, cash
flows or earnings for either 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 percent 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 percent change in
currency exchange rates. A hypothetical 10 percent change in the
currency exchange rates would not have had a material impact on
the fair values, cash flows or earnings for either 2002 or 2001.

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

21



---



##### Table of Contents








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

FISHER SCIENTIFIC INTERNATIONAL INC.

INDEX TO FINANCIAL STATEMENTS

|                                                                                                                                                           |  |       |    | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- | -- | 
|                                                                                                                                                           |  | Pages
|                                                                                                                                                           |  |      
|Independent Auditors Report                                                                                                                               |  |       | 23 | 
|Statement of Operations for the years ended
    December 31, 2002, 2001, and 2000                                                                          |  |       | 24 | 
|Balance Sheet at December 31, 2002 and 2001                                                                                                                |  |       | 25 | 
|Statement of Cash Flows for the years ended
    December 31, 2002, 2001, and 2000                                                                          |  |       | 26 | 
|Statement of Changes in Stockholders Equity
    (Deficit) and Other Comprehensive Income (Loss) for the years
    ended December 31, 2002, 2001, and 2000 |  |       | 27 | 
|Notes to Financial Statements                                                                                                                              |  |       | 28 | 

22



---



##### 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, 2002 and 2001, 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, 2002. 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, 2002 and 2001, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 2002 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 3 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

January 28, 2003 (February 14, 2003 as
to Note 23)


23



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.

STATEMENT OF OPERATIONS

|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |      | 
|--------------------------------------------------------------------------------- | ------- | ------------------------------------ | ------- | ---- |  | ---- | ------- | ---- |  | - | ------- | ---- | 
|                                                                                  |         |                                     
|                                                                                  |         | Year Ended December 31,             
|                                                                                  |         |                                     
|                                                                                  |         | 2002                                 |         | 2001 |  | 2000
|                                                                                  |         |                                      |         |      |  |     
|                                                                                  |         |                                     
|                                                                                  |         | (In millions, except per share data)
|Sales                                                                             |         | $                                    | 3,238.4 |      |  | $    | 2,880.0 |      |  | $ | 2,622.3 |     
|Cost of sales                                                                     |         |                                      | 2,383.3 |      |  |      | 2,142.8 |      |  |   | 1,974.0 |     
|Selling, general and administrative expense                                       |         |                                      | 612.2   |      |  |      | 546.4   |      |  |   | 494.0   |     
|Restructuring and other charges (credits)                                         |         |                                      | (2.2    | )    |  |      | 59.7    |      |  |   | (2.0    | )   
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Income from operations                                                            |         |                                      | 245.1   |      |  |      | 131.1   |      |  |   | 156.3   |     
|Interest expense                                                                  |         |                                      | 91.3    |      |  |      | 99.5    |      |  |   | 99.1    |     
|Other expense, net                                                                |         |                                      | 12.3    |      |  |      | 1.3     |      |  |   | 19.4    |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Income before income taxes and cumulative effect
    of accounting change         |         |                                      | 141.5   |      |  |      | 30.3    |      |  |   | 37.8    |     
|Income tax provision                                                              |         |                                      | 44.8    |      |  |      | 13.9    |      |  |   | 15.1    |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Income before cumulative effect of accounting
    change                          |         |                                      | 96.7    |      |  |      | 16.4    |      |  |   | 22.7    |     
|Cumulative effect of accounting change, net of tax                                |         |                                      | (46.1   | )    |  |      |        |      |  |   |        |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Net income                                                                        |         | $                                    | 50.6    |      |  | $    | 16.4    |      |  | $ | 22.7    |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Basic income per common share before cumulative
    effect of accounting change   |         | $                                    | 1.77    |      |  | $    | 0.33    |      |  | $ | 0.57    |     
|Cumulative effect of accounting change, net of tax                                |         |                                      | (0.84   | )    |  |      |        |      |  |   |        |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Basic net income per common share                                                 |         | $                                    | 0.93    |      |  | $    | 0.33    |      |  | $ | 0.57    |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Diluted income per common share before cumulative
    effect of accounting change |         | $                                    | 1.67    |      |  | $    | 0.31    |      |  | $ | 0.51    |     
|Cumulative effect of accounting change, net of tax                                |         |                                      | (0.80   | )    |  |      |        |      |  |   |        |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Diluted net income per common share                                               |         | $                                    | 0.87    |      |  | $    | 0.31    |      |  | $ | 0.51    |     
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|Weighted average common shares outstanding:                                       |         |                                      |         |      |  |      |         |      |  |   |         |     
|                                                                                  | Basic   |                                      |         | 54.5 |  |      |         | 49.4 |  |   |         | 40.1 | 
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     
|                                                                                  | Diluted |                                      |         | 57.9 |  |      |         | 53.0 |  |   |         | 44.4 | 
|                                                                                  |         |                                      |         |      |  |      |         |      |  |   |         |     

See the accompanying notes to financial
statements.

24



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.

BALANCE SHEET

|                                         |                                                                                                                                                                                                                       |                            |                                            |        |         |         |       |        |         |         | 
|---------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | ------ | ------- | ------- | ----- | ------ | ------- | ------- | 
|                                         |                                                                                                                                                                                                                       |                           
|                                         |                                                                                                                                                                                                                       | December 31,              
|                                         |                                                                                                                                                                                                                       |                           
|                                         |                                                                                                                                                                                                                       | 2002                       |                                            | 2001  
|                                         |                                                                                                                                                                                                                       |                            |                                            |       
|                                         |                                                                                                                                                                                                                       |                           
|                                         |                                                                                                                                                                                                                       | (In millions, except      
|                                         |                                                                                                                                                                                                                       | share data)               
|ASSETS                                  
|Current assets:                          |                                                                                                                                                                                                                       |                            |                                            |        |         |         |       |       
|                                         | Cash and cash equivalents                                                                                                                                                                                             |                            | $                                          | 38.8   |         |         | $     | 75.1   |        
|                                         | Accounts receivable, net                                                                                                                                                                                              |                            |                                            | 358.0  |         |         |       | 332.0  |        
|                                         | Inventories                                                                                                                                                                                                           |                            |                                            | 267.8  |         |         |       | 261.4  |        
|                                         | Other current assets                                                                                                                                                                                                  |                            |                                            | 104.8  |         |         |       | 89.3   |        
|                                         |                                                                                                                                                                                                                       |                            |                                            |        |         |         |       |       
|                                         |                                                                                                                                                                                                                       | Total current assets       |                                            |        | 769.4   |         |       |        | 757.8   |        
|Property, plant and equipment            |                                                                                                                                                                                                                       |                            | 332.7                                      |        |         |         | 322.1 |       
|Goodwill                                 |                                                                                                                                                                                                                       |                            | 508.1                                      |        |         |         | 507.4 |       
|Other assets                             |                                                                                                                                                                                                                       |                            | 261.2                                      |        |         |         | 251.9 |       
|                                         |                                                                                                                                                                                                                       |                            |                                            |        |         |         |       |       
|                                         |                                                                                                                                                                                                                       | Total assets               |                                            | $      | 1,871.4 |         |       | $      | 1,839.2 |        
|                                         |                                                                                                                                                                                                                       |                            |                                            |        |         |         |       |       
|LIABILITIES AND STOCKHOLDERS
    EQUITY
|Current liabilities:                     |                                                                                                                                                                                                                       |                            |                                            |        |         |         |       |       
|                                         | Short-term debt                                                                                                                                                                                                       |                            | $                                          | 23.9   |         |         | $     | 75.7   |        
|                                         | Accounts payable                                                                                                                                                                                                      |                            |                                            | 347.9  |         |         |       | 336.1  |        
|                                         | Accrued and other current liabilities                                                                                                                                                                                 |                            |                                            | 211.5  |         |         |       | 225.9  |        
|                                         |                                                                                                                                                                                                                       |                            |                                            |        |         |         |       |       
|                                         |                                                                                                                                                                                                                       | Total current liabilities  |                                            |        | 583.3   |         |       |        | 637.7   |        
|Long-term debt                           |                                                                                                                                                                                                                       |                            | 921.8                                      |        |         |         | 956.1 |       
|Other liabilities                        |                                                                                                                                                                                                                       |                            | 232.8                                      |        |         |         | 222.1 |       
|                                         |                                                                                                                                                                                                                       |                            |                                            |        |         |         |       |       
|                                         |                                                                                                                                                                                                                       | Total liabilities          |                                            |        | 1,737.9 |         |       |        | 1,815.9 |        
|                                         |                                                                                                                                                                                                                       |                            |                                            |        |         |         |       |       
|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; 54,675,513 and
    54,194,484 shares issued; and 54,638,907 and
    54,157,878 shares outstanding, at December 31, 2002
    and 2001, respectively) |                            |                                            | 0.5    |         |         |       | 0.5    |        
|                                         | Capital in excess of par value                                                                                                                                                                                        |                            |                                            | 676.4  |         |         |       | 661.1  |        
|                                         | Accumulated deficit                                                                                                                                                                                                   |                            |                                            | (504.9 | )       |         |       | (555.5 | )      
|                                         | Accumulated other comprehensive loss                                                                                                                                                                                  |                            |                                            | (37.5  | )       |         |       | (81.8  | )      
|                                         | Treasury stock, at cost (36,606 shares at
    December 31, 2002 and 2001)                                                                                                                                             |                            |                                            | (1.0   | )       |         |       | (1.0   | )      
|                                         |                                                                                                                                                                                                                       |                            |                                            |        |         |         |       |       
|                                         |                                                                                                                                                                                                                       | Total stockholders equity |                                            |        | 133.5   |         |       |        | 23.3    |        
|                                         |                                                                                                                                                                                                                       |                            |                                            |        |         |         |       |       
|                                         |                                                                                                                                                                                                                       |                            | Total liabilities and stockholders equity |        | $       | 1,871.4 |       |        | $       | 1,839.2 | 
|                                         |                                                                                                                                                                                                                       |                            |                                            |        |         |         |       |       

See the accompanying notes to financial
statements.

25



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.

STATEMENT OF CASH FLOWS

|                                                  |                                                                                   |                                                                         |                              |        |        |       |      |        |        |       |      |       |       |       |  
|------------------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | ---------------------------- | ------ | ------ | ----- | ---- | ------ | ------ | ----- | ---- | ----- | ----- | ----- | -
|                                                  |                                                                                   |                                                                        
|                                                  |                                                                                   | Year Ended December 31,                                                
|                                                  |                                                                                   |                                                                        
|                                                  |                                                                                   | 2002                                                                    |                              | 2001   |        | 2000 
|                                                  |                                                                                   |                                                                         |                              |        |        |      
|                                                  |                                                                                   |                                                                        
|                                                  |                                                                                   | (In millions)                                                          
|Cash flows from operating activities:             |                                                                                   |                                                                         |                              |        |        |       |      |        |        |       |      |      
|                                                  | Net income                                                                        |                                                                         | $                            | 50.6   |        |       | $    | 16.4   |        |       | $    | 22.7  |      
|                                                  | Adjustments to reconcile net income to cash
    provided by operating activities: |                                                                         |                              |        |        |       |      |        |        |       |      |       |      
|                                                  |                                                                                   | Restructuring and other charges (credits), net of
    cash expended     |                              |        | (2.2   | )     |      |        | 46.1   |       |      |       | (2.0  | )    
|                                                  |                                                                                   | Debt refinancing                                                        |                              |        | 11.2   |       |      |        |       |       |      |       |      |      
|                                                  |                                                                                   | Goodwill write-off                                                      |                              |        | 46.1   |       |      |        |       |       |      |       |      |      
|                                                  |                                                                                   | Depreciation and amortization                                           |                              |        | 74.9   |       |      |        | 82.0   |       |      |       | 63.6  |      
|                                                  |                                                                                   | Write down of investments                                               |                              |        |       |       |      |        |       |       |      |       | 23.6  |      
|                                                  |                                                                                   | Other noncash expenses                                                  |                              |        | 1.2    |       |      |        | 6.0    |       |      |       | 6.3   |      
|                                                  |                                                                                   | (Gain) loss on sale of property, plant and
    equipment and write-offs |                              |        | 1.0    |       |      |        | (0.6   | )     |      |       | 0.6   |      
|                                                  |                                                                                   | Deferred income taxes                                                   |                              |        | 36.1   |       |      |        | (0.3   | )     |      |       | 2.3   |      
|                                                  |                                                                                   | Changes in working capital:                                             |                              |        |        |       |      |        |        |       |      |       |       |      
|                                                  |                                                                                   |                                                                         | Accounts receivables, net    |        |        | (11.6 | )    |        |        | 8.9   |      |       |       | 6.8   |  
|                                                  |                                                                                   |                                                                         | Inventories                  |        |        | 5.5   |      |        |        | 10.0  |      |       |       | 5.9   |  
|                                                  |                                                                                   |                                                                         | Accounts payable             |        |        | 6.0   |      |        |        | 13.8  |      |       |       | 2.8   |  
|                                                  |                                                                                   |                                                                         | Other working capital        |        |        | (16.8 | )    |        |        | 4.5   |      |       |       | 1.4   |  
|                                                  |                                                                                   |                                                                         | Other assets and liabilities |        |        | (42.7 | )    |        |        | (28.2 | )    |       |       | (26.8 | )
|                                                  |                                                                                   |                                                                         |                              |        |        |       |      |        |        |       |      |      
|                                                  |                                                                                   | Cash provided by operating activities                                   |                              |        | 159.3  |       |      |        | 158.6  |       |      |       | 107.2 |      
|                                                  |                                                                                   |                                                                         |                              |        |        |       |      |        |        |       |      |      
|Cash flows from investing activities:             |                                                                                   |                                                                         |                              |        |        |       |      |        |        |       |      |      
|                                                  | Acquisitions, net of cash acquired                                                |                                                                         |                              | (61.1  | )      |       |      | (371.2 | )      |       |      | (23.1 | )    
|                                                  | Capital expenditures                                                              |                                                                         |                              | (43.9  | )      |       |      | (40.1  | )      |       |      | (29.4 | )    
|                                                  | Proceeds from sale of property, plant and
    equipment                           |                                                                         |                              | 0.2    |        |       |      | 2.4    |        |       |      | 1.7   |      
|                                                  | Other investments                                                                 |                                                                         |                              | (0.6   | )      |       |      | (10.7  | )      |       |      | (6.3  | )    
|                                                  |                                                                                   |                                                                         |                              |        |        |       |      |        |        |       |      |      
|                                                  |                                                                                   | Cash used in investing activities                                       |                              |        | (105.4 | )     |      |        | (419.6 | )     |      |       | (57.1 | )    
|                                                  |                                                                                   |                                                                         |                              |        |        |       |      |        |        |       |      |      
|Cash flows from financing activities:             |                                                                                   |                                                                         |                              |        |        |       |      |        |        |       |      |      
|                                                  | Proceeds from sale of common stock                                                |                                                                         |                              |       |        |       |      | 289.9  |        |       |      |      |      
|                                                  | Long-term debt proceeds                                                           |                                                                         |                              | 163.3  |        |       |      |       |        |       |      | 8.1   |      
|                                                  | Long-term debt payments                                                           |                                                                         |                              | (228.1 | )      |       |      | (29.5  | )      |       |      | (20.9 | )    
|                                                  | Change in short-term debt, net                                                    |                                                                         |                              | (26.4  | )      |       |      | 7.2    |        |       |      | 1.3   |      
|                                                  | Proceeds from stock options exercised                                             |                                                                         |                              | 6.4    |        |       |      | 3.1    |        |       |      | 0.4   |      
|                                                  | Acquisition of treasury stock                                                     |                                                                         |                              |       |        |       |      | (0.7   | )      |       |      |      |      
|                                                  | Debt refinancing costs                                                            |                                                                         |                              | (9.8   | )      |       |      |       |        |       |      |      |      
|                                                  | Changes in amounts sold under the accounts
    receivable securitization, net     |                                                                         |                              |       |        |       |      |       |        |       |      | (21.7 | )    
|                                                  |                                                                                   |                                                                         |                              |        |        |       |      |        |        |       |      |      
|                                                  |                                                                                   | Cash provided by (used in) financing activities                         |                              |        | (94.6  | )     |      |        | 270.0  |       |      |       | (32.8 | )    
|                                                  |                                                                                   |                                                                         |                              |        |        |       |      |        |        |       |      |      
|Effect of exchange rate changes on cash           |                                                                                   |                                                                         | 4.4                          |        |        |       | 0.1  |        |        |       | (1.6 | )    
|                                                  |                                                                                   |                                                                         |                              |        |        |       |      |        |        |       |      |      
|Net change in cash and cash equivalents           |                                                                                   |                                                                         | (36.3                        | )      |        |       | 9.1  |        |        |       | 15.7 |      
|Cash and cash equivalents  beginning
    of year |                                                                                   |                                                                         | 75.1                         |        |        |       | 66.0 |        |        |       | 50.3 |      
|                                                  |                                                                                   |                                                                         |                              |        |        |       |      |        |        |       |      |      
|Cash and cash equivalents  end of year           |                                                                                   | $                                                                       | 38.8                         |        |        | $     | 75.1 |        |        | $     | 66.0 |      
|                                                  |                                                                                   |                                                                         |                              |        |        |       |      |        |        |       |      |      
|Supplemental Cash Flow Information:               |                                                                                   |                                                                         |                              |        |        |       |      |        |        |       |      |      
|                                                  | Cash paid during the year for:                                                    |                                                                         |                              |        |        |       |      |        |        |       |      |       |      
|                                                  |                                                                                   | Income taxes, net of refunds                                            |                              | $      | 15.6   |       |      | $      | 8.5    |       |      | $     | 1.8   |      
|                                                  |                                                                                   |                                                                         |                              |        |        |       |      |        |        |       |      |      
|                                                  |                                                                                   | Interest                                                                |                              | $      | 83.5   |       |      | $      | 92.2   |       |      | $     | 93.2  |      
|                                                  |                                                                                   |                                                                         |                              |        |        |       |      |        |        |       |      |      

See the accompanying notes to financial
statements.

26



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.

STATEMENT OF CHANGES IN STOCKHOLDERS
EQUITY (DEFICIT)

AND OTHER COMPREHENSIVE INCOME
(LOSS)


(In millions)


|                             |                                                          |                                       |     |            |  |           |       |             |  |             |       |               |   |          |      |       |   |               |        |      |  |   |       |       |   |   |      |      |   |   |        |       |   |  |   |       |      | 
|---------------------------- | -------------------------------------------------------- | ------------------------------------- | --- | ---------- |  | --------- | ----- | ----------- |  | ----------- | ----- | ------------- | - | -------- | ---- | ----- | - | ------------- | ------ | ---- |  | - | ----- | ----- | - | - | ---- | ---- | - | - | ------ | ----- | - |  | - | ----- | ---- | 
|                             |                                                          |                                       |     |            |  |           |       | Shares      |  |             |       | Accumulated   |   |          |      |       |   |              
|                             |                                                          |                                       |     | Capital in |  |           |       | To Be       |  |             |       | Other         |   |          |      |       |   | Other        
|                             |                                                          |                                       |     | Excess of  |  | Shares    |       | Distributed |  |             |       | Comprehensive |   |          |      |       |   | Comprehensive
|                             |                                                          | Common                                |     | Par        |  | Deposited |       | From        |  | Accumulated |       | Income        |   | Treasury |      |       |   | Income       
|                             |                                                          | Stock                                 |     | Value      |  | In Trust  |       | Trust       |  | Deficit     |       | (Loss)        |   | Stock    |      | Total |   | (Loss)       
|                             |                                                          |                                       |     |            |  |           |       |             |  |             |       |               |   |          |      |       |   |              
|Balance at January 1, 2000   |                                                          | $                                     | 0.4 |            |  | $         | 315.8 |             |  | $           | (29.9 | )             |   | $        | 29.9 |       |   | $             | (594.6 | )    |  | $ | (51.6 | )     |   | $ | (0.6 | )    |   | $ | (330.6 | )     |   |  |   |      
|                             | Net income                                               |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        | 22.7 |  |   |       |      |   |   |      |     |   |   |        | 22.7  |   |  | $ | 22.7  |     
|                             | Foreign currency translation adjustment                  |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       | (14.3 | ) |   |      |     |   |   |        | (14.3 | ) |  |   | (14.3 | )   
|                             | Unrealized investment gain                               |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       | 0.3   |   |   |      |     |   |   |        | 0.3   |   |  |   | 0.3   |     
|                             | Minimum pension liability                                |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       | (0.3  | ) |   |      |     |   |   |        | (0.3  | ) |  |   | (0.3  | )   
|                             |                                                          |                                       |     |            |  |           |       |             |  |             |       |               |   |          |      |       |   |               |        |      |  |   |       |       |   |   |      |      |   |   |        |       |   |  |   |      
|                             |                                                          | Subtotal  other comprehensive income |     |            |  |           |       |             |  |             |       |               |   |          |      |       |   |               |        |      |  |   |       |       |   |   |      |      |   |   |        |       |   |  |   | $     | 8.4  | 
|                             |                                                          |                                       |     |            |  |           |       |             |  |             |       |               |   |          |      |       |   |               |        |      |  |   |       |       |   |   |      |      |   |   |        |       |   |  |   |      
|                             | Proceeds from stock options                              |                                       |     |           |  |           |       | 0.4         |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       |      |   |   |      |     |   |   |        | 0.4   |   |  |   |       |     
|                             | Tax benefit from stock options                           |                                       |     |           |  |           |       | 0.3         |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       |      |   |   |      |     |   |   |        | 0.3   |   |  |   |       |     
|                             | Compensation related to the grant of stock options       |                                       |     |           |  |           |       | 5.0         |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       |      |   |   |      |     |   |   |        | 5.0   |   |  |   |       |     
|                             | Expiration of put                                        |                                       |     |           |  |           |       | 4.5         |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       |      |   |   |      |     |   |   |        | 4.5   |   |  |   |       |     
|                             | Trust activity                                           |                                       |     |           |  |           |       |            |  |             |       | (0.2          | ) |          |      | 0.2   |   |               |        |     |  |   |       |      |   |   |      |     |   |   |        |      |   |  |   |       |     
|                             | Issuance of treasury stock                               |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       |      |   |   |      | 0.3  |   |   |        | 0.3   |   |  |   |       |     
|                             |                                                          |                                       |     |            |  |           |       |             |  |             |       |               |   |          |      |       |   |               |        |      |  |   |       |       |   |   |      |      |   |   |        |       |   |  |   |      
|Balance at December 31, 2000 |                                                          |                                       | 0.4 |            |  |           | 326.0 |             |  |             | (30.1 | )             |   |          | 30.1 |       |   |               | (571.9 | )    |  |   | (65.9 | )     |   |   | (0.3 | )    |   |   | (311.7 | )     |   |  |   |      
|                             | Net income                                               |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        | 16.4 |  |   |       |      |   |   |      |     |   |   |        | 16.4  |   |  | $ | 16.4  |     
|                             | Foreign currency translation adjustment                  |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       | (10.1 | ) |   |      |     |   |   |        | (10.1 | ) |  |   | (10.1 | )   
|                             | Unrealized investment gain                               |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       | 0.5   |   |   |      |     |   |   |        | 0.5   |   |  |   | 0.5   |     
|                             | Unrealized loss on cash flow hedges                      |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       | (6.6  | ) |   |      |     |   |   |        | (6.6  | ) |  |   | (6.6  | )   
|                             | Minimum pension liability                                |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       | 0.3   |   |   |      |     |   |   |        | 0.3   |   |  |   | 0.3   |     
|                             |                                                          |                                       |     |            |  |           |       |             |  |             |       |               |   |          |      |       |   |               |        |      |  |   |       |       |   |   |      |      |   |   |        |       |   |  |   |      
|                             |                                                          | Subtotal  other comprehensive income |     |            |  |           |       |             |  |             |       |               |   |          |      |       |   |               |        |      |  |   |       |       |   |   |      |      |   |   |        |       |   |  |   | $     | 0.5  | 
|                             |                                                          |                                       |     |            |  |           |       |             |  |             |       |               |   |          |      |       |   |               |        |      |  |   |       |       |   |   |      |      |   |   |        |       |   |  |   |      
|                             | Proceeds from issuance of common stock, net              |                                       |     | 0.1        |  |           |       | 289.8       |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       |      |   |   |      |     |   |   |        | 289.9 |   |  |   |       |     
|                             | Proceeds from stock options                              |                                       |     |           |  |           |       | 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                            |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       |      |   |   |      | (0.7 | ) |   |        | (0.7  | ) |  |   |       |     
|                             | Trust activity                                           |                                       |     |           |  |           |       |            |  |             |       | (20.5         | ) |          |      | 20.5  |   |               |        |     |  |   |       |      |   |   |      |     |   |   |        |      |   |  |   |       |     
|                             |                                                          |                                       |     |            |  |           |       |             |  |             |       |               |   |          |      |       |   |               |        |      |  |   |       |       |   |   |      |      |   |   |        |       |   |  |   |      
|Balance at December 31, 2001 |                                                          |                                       | 0.5 |            |  |           | 661.1 |             |  |             | (50.6 | )             |   |          | 50.6 |       |   |               | (555.5 | )    |  |   | (81.8 | )     |   |   | (1.0 | )    |   |   | 23.3   |       |   |  |   |      
|                             | Net income                                               |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        | 50.6 |  |   |       |      |   |   |      |     |   |   |        | 50.6  |   |  | $ | 50.6  |     
|                             | Foreign currency translation adjustment                  |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       | 48.8  |   |   |      |     |   |   |        | 48.8  |   |  |   | 48.8  |     
|                             | Unrealized investment loss                               |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       | (1.3  | ) |   |      |     |   |   |        | (1.3  | ) |  |   | (1.3  | )   
|                             | Unrealized gain on cash flow hedges                      |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       | 1.3   |   |   |      |     |   |   |        | 1.3   |   |  |   | 1.3   |     
|                             | Realization of losses on cash flow hedges                |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       | 5.3   |   |   |      |     |   |   |        | 5.3   |   |  |   | 5.3   |     
|                             | Minimum pension liability                                |                                       |     |           |  |           |       |            |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       | (9.8  | ) |   |      |     |   |   |        | (9.8  | ) |  |   | (9.8  | )   
|                             |                                                          |                                       |     |            |  |           |       |             |  |             |       |               |   |          |      |       |   |               |        |      |  |   |       |       |   |   |      |      |   |   |        |       |   |  |   |      
|                             |                                                          | Subtotal  other comprehensive income |     |            |  |           |       |             |  |             |       |               |   |          |      |       |   |               |        |      |  |   |       |       |   |   |      |      |   |   |        |       |   |  |   | $     | 94.9 | 
|                             |                                                          |                                       |     |            |  |           |       |             |  |             |       |               |   |          |      |       |   |               |        |      |  |   |       |       |   |   |      |      |   |   |        |       |   |  |   |      
|                             | Proceeds from stock options                              |                                       |     |           |  |           |       | 6.4         |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       |      |   |   |      |     |   |   |        | 6.4   |   |  |   |       |     
|                             | Tax benefit from stock options                           |                                       |     |           |  |           |       | 8.9         |  |             |       |              |   |          |      |      |   |               |        |     |  |   |       |      |   |   |      |     |   |   |        | 8.9   |   |  |   |       |     
|                             | Trust activity                                           |                                       |     |           |  |           |       |            |  |             |       | 16.6          |   |          |      | (16.6 | ) |               |        |     |  |   |       |      |   |   |      |     |   |   |        |      |   |  |   |       |     
|                             |                                                          |                                       |     |            |  |           |       |             |  |             |       |               |   |          |      |       |   |               |        |      |  |   |       |       |   |   |      |      |   |   |        |       |   |  |   |      
|Balance at December 31, 2002 |                                                          | $                                     | 0.5 |            |  | $         | 676.4 |             |  | $           | (34.0 | )             |   | $        | 34.0 |       |   | $             | (504.9 | )    |  | $ | (37.5 | )     |   | $ | (1.0 | )    |   | $ | 133.5  |       |   |  |   |      
|                             |                                                          |                                       |     |            |  |           |       |             |  |             |       |               |   |          |      |       |   |               |        |      |  |   |       |       |   |   |      |      |   |   |        |       |   |  |   |      

See the accompanying notes to financial
statements.

27



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.

NOTES TO FINANCIAL STATEMENTS

Note 1  Formation and
Background

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, the Middle East and Africa
directly or through one or more subsidiaries, joint ventures,
agents, or dealers. The Company reports financial results on the
basis of three business segments: domestic distribution,
international distribution and laboratory workstations. The
domestic distribution segment manufactures, sells and
distributes products to three primary customer markets:
scientific research, clinical laboratory and industrial safety.
Additionally, this segment provides contract manufacturing,
chemical manufacturing and custom chemical synthesis and
pharmaceutical services for phase III and phase IV
clinical trials. The international distribution segment sells
and distributes products primarily to the scientific research
market. The laboratory workstations segment engages in the
manufacture and sale of laboratory furniture and fume hoods to
the scientific research laboratory market and the manufacture
and sale of consoles and enclosures to the technology,
communication and financial markets.

The Company serves scientists engaged in
biomedical, biotechnology, pharmaceutical, chemical and other
fields of research and development, and is a supplier to
reference laboratories, hospitals, healthcare alliances,
physicians offices, environmental testing centers,
remediation companies, quality-control laboratories and many
other customers.

Note 2  Summary of Significant
Accounting Policies

Principles of
Consolidation The
financial statements contain the accounts of the Company and all
majority-owned subsidiaries. Intercompany accounts and
transactions are 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.

Inventories
Inventories are valued at the lower of cost or market, cost
being determined principally by the last-in, first-out
(LIFO) method for the majority of the subsidiaries
included in the domestic distribution segment 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.

Property, Plant and
Equipment Property, plant
and equipment is 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 income. Depreciation is
generally based upon the following estimated useful lives:
buildings and improvements 5 to 33 years and machinery,
equipment and other 3 to 12 years. Depreciation is computed
using the straight-line method. Depreciation expense for 2002,
2001 and 2000 was $47.0 million, $43.5 million and
$33.3 million, respectively.

Goodwill
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. 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
operations in the period in which the recorded value of goodwill
and indefinite-lived intangible assets exceeds its fair value.
Prior to January 1, 2002, goodwill acquired in a business
combination completed prior to June 30, 2001 was amortized
on a straight-line basis over 5 to 40 years. Goodwill is
not being amortized as of January 1, 2002.

Intangible
Assets Intangible assets
with a finite useful life are being amortized on a straight-line
basis over their estimated useful lives, ranging up to
20 years. Intangible assets with an indefinite useful life
are not

28



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

being amortized. Net intangible assets of
$111.7 million and $106.9 million are included in
Other Assets and are stated net of accumulated amortization of
$37.2 million and $29.2 million at December 31,
2002 and 2001, respectively. During 2002, 2001, and 2000, the
Company recorded amortization expense of $8.1 million,
$6.8 million and $3.0 million, respectively.

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 anticipated undiscounted operating
cash flows generated by those assets are less than the
assets carrying value. An impairment charge is recorded
for the difference between the fair value and carrying value of
the asset.

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 that are amortized from the date
catalogs are mailed. Advertising expenses, including internal
employment costs for marketing personnel and amortization of
capitalized direct-response advertising, were
$37.5 million, $21.8 million and $20.1 million
for the three years ended December 31, 2002, 2001, and
2000, respectively.

Revenue
Recognition The Company
records distribution revenue and self-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 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
service revenues, which consist of specialized packaging,
warehousing and distribution of products, are recognized as each
of the service elements are performed. The Company recognizes
revenue for each element based on the fair value of the services
being provided, which has been determined by referencing
historical pricing policies when the services are 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.

Deferred Debt Issue
Costs Deferred debt issue
costs of $18.7 million and $23.5 million at
December 31, 2002 and 2001, respectively, relate to the
Companys 9 percent Notes, 7 1/8 percent
Notes, 8 1/8 percent Notes and Credit Facility debt.
Deferred debt issue costs are included in Other Assets and are
amortized using the effective interest rate method over the term
of the related debt. During 2002, 2001, and 2000, the Company
recorded amortization expense of $4.5 million,
$5.0 million, and $4.6 million, 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) that 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 temporary differences between the
carrying amounts and the tax basis of assets and liabilities.
The Company records a valuation allowance to reduce the deferred
tax assets to the amount that is more likely than not to be
realized.

Other Expense,
Net Other expense, net,
consists of interest income on cash and cash equivalents and
other non-operating income and expense items. In 2002, the
Company recorded a charge of $11.2 million consisting of
$7.1 million of fixed-swap unwind costs and
$4.1 million of deferred financing and other costs
associated with the retirement of bank term debt. The 2000
amount includes a $23.6 million write down of the
Companys Internet-related investments.

29



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Stock-Based
Compensation The Company
measures compensation expense for its stock-based employee
compensation plans using the intrinsic value method. Had
compensation cost for options been based upon fair value as
determined under Statement of Financial Accounting Standard
No. 123, Accounting for Stock Based
Compensation (SFAS 123), the
Companys 2002, 2001 and 2000 net income would have been
$41.5 million, $29.0 million and $20.4 million,
respectively, with basic earnings per share of $0.76, $0.59 and
$0.51 for 2002, 2001 and 2000, respectively, and diluted
earnings per share of $0.72, $0.55, and $0.46, for 2002,
2001,and 2000, respectively. In accordance with SFAS 123,
the following weighted average assumptions were used to
calculate compensation cost for option grants in 2002, 2001, and
2000: risk-free interest rates of approximately
3.8 percent, 4.5 percent, and 6.0 percent,
respectively, annual dividend of $0; expected lives of
5 years and expected volatility of 47 percent,
51 percent, and 55 percent, respectively.

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.

Financial
Instruments Effective
January 1, 2001, the Company adopted Statement of Financial
Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities
(SFAS 133), as amended, which established
accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other
contracts and for hedging activities. 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 earnings. 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
income statement when the hedged item affects earnings.
Ineffective portions of changes in the fair value of cash flow
hedges are recognized in earnings. For derivative instruments
not designated as hedging instruments, changes in fair value are
recognized in earnings in the current period. The adoption of
SFAS 133, as amended, did not have a material effect on the
Companys financial position or results of operations.

The nature of the Companys business
activities necessarily involves the management of various
financial and market risks, including those related to changes
in interest rates, foreign currency and commodity rates. As
discussed below, 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 hedge 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 enters into 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 2002, no
ineffectiveness was recognized in the statement 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 earnings once the forecasted transactions are
recognized. For forward currency contracts not designated as
hedges, changes in fair value are recognized in other expense,
net.

30



---



##### 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 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
earnings once the forecasted transactions are recognized. For
forward currency contracts not designated as hedges, changes in
fair value are recognized in other expense, net.

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 of America are included in other comprehensive
income (loss) but are excluded from net income
(loss) 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.

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  Change in
Accounting Principle

SFAS 142 requires the use of a nonamortization
approach to account for goodwill and indefinite-lived intangible
assets. Under the nonamortization approach, goodwill and
indefinite-lived intangible assets will not be amortized but
instead will be reviewed for impairment and written down with a
resulting charge to operations in the period in which the
recorded value of goodwill and indefinite-lived intangible
assets exceeds its fair value. The adoption of SFAS 142
required the Company to reassess the useful lives and residual
values of all intangible assets and make any necessary
amortization adjustments. Based on that assessment, no
adjustments were made to the amortization period or residual
values of our intangible assets. Additionally, SFAS 142
requires the Company to perform an evaluation of whether
goodwill and indefinite-lived intangible assets are impaired as
of January 1, 2002, the effective date of the statement for
the Company.

SFAS 142 provided a six-month transitional
period from the effective date of adoption to perform an initial
assessment of whether an indication of goodwill impairment
exists. This initial assessment compared the fair value of the
reporting unit to its carrying value, including goodwill. Fair
value was determined using a combination of discounted cash
flows and multiple of earnings valuation techniques. To the
extent that the fair value was less than the carrying value, the
Company was required to perform a second test to measure the
amount of the goodwill impairment, if any.

During the second quarter of 2002, the Company
completed its transitional assessment in accordance with these
tests 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 the Companys statement of operations,
reflecting the cumulative effect of the accounting change to
adjust goodwill to fair-value. The international distribution
segment and laboratory workstations segment accounted for
$19.7 million and $44.1 million of the charge,
respectively.

The impairment charge in the international
distribution segment related to certain of the Companys
smaller-market distribution businesses where current operating
performance was lower than the original forecast. The
Companys laboratory workstations segment is sensitive to
changes in capital spending and several of the markets the
laboratory workstations segment sells to, including the
technology industry, were

31



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

impacted by the significant economic slowdown
causing a reduction in spending in those markets. As a result,
sales growth was 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. The
Company has elected to perform its annual test for indications
of goodwill impairment as of October 31 of each year.

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 share for
the years ended December 31, 2002, 2001 and 2000, excluding
goodwill amortization (in millions, except per share amounts):

|                                            |                                                                   |                         |      |      |  |      |      |      |  |   |      |      | 
|------------------------------------------- | ----------------------------------------------------------------- | ----------------------- | ---- | ---- |  | ---- | ---- | ---- |  | - | ---- | ---- | 
|                                            |                                                                   |                        
|                                            |                                                                   | Year Ended December 31,
|                                            |                                                                   |                        
|                                            |                                                                   | 2002                    |      | 2001 |  | 2000
|                                            |                                                                   |                         |      |      |  |     
|Net income as reported                      |                                                                   | $                       | 50.6 |      |  | $    | 16.4 |      |  | $ | 22.7 |     
|Goodwill amortization, net of tax           |                                                                   |                         |     |      |  |      | 14.4 |      |  |   | 11.1 |     
|                                            |                                                                   |                         |      |      |  |      |      |      |  |   |      |     
|Net income, excluding goodwill amortization |                                                                   | $                       | 50.6 |      |  | $    | 30.8 |      |  | $ | 33.8 |     
|                                            |                                                                   |                         |      |      |  |      |      |      |  |   |      |     
|Basic earnings per share                    |                                                                   |                         |      |      |  |      |      |      |  |   |      |     
|                                            | Basic net income per share as reported                            |                         | $    | 0.93 |  |      | $    | 0.33 |  |   | $    | 0.57 | 
|                                            | Goodwill amortization                                             |                         |      |     |  |      |      | 0.29 |  |   |      | 0.28 | 
|                                            |                                                                   |                         |      |      |  |      |      |      |  |   |      |     
|                                            | Basic net income per share, excluding goodwill
    amortization   |                         | $    | 0.93 |  |      | $    | 0.62 |  |   | $    | 0.84 | 
|                                            |                                                                   |                         |      |      |  |      |      |      |  |   |      |     
|Diluted earnings per share                  |                                                                   |                         |      |      |  |      |      |      |  |   |      |     
|                                            | Diluted net income per share as reported                          |                         | $    | 0.87 |  |      | $    | 0.31 |  |   | $    | 0.51 | 
|                                            | Goodwill amortization                                             |                         |      |     |  |      |      | 0.27 |  |   |      | 0.25 | 
|                                            |                                                                   |                         |      |      |  |      |      |      |  |   |      |     
|                                            | Diluted net income per share, excluding goodwill
    amortization |                         | $    | 0.87 |  |      | $    | 0.58 |  |   | $    | 0.76 | 
|                                            |                                                                   |                         |      |      |  |      |      |      |  |   |      |     

Note 4  Acquisitions

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 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
domestic distribution segment from their respective dates of
acquisition.

In July 2002, the Company acquired a
Netherlands-based distributor operating under the names Retsch
and Emergo, further enhancing the Companys position in
northern Europe. 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 using cash on hand. The results of
Retsch and Emergo have been included in the international
distribution 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 percent. On September 18,
2002, the Company caused MAS to merge with and into a wholly
owned merger subsidiary of the Company. In July 2001, the
Company acquired Safety Equipment Company (SEC), a
distributor of safety supplies and personal protection
equipment. These acquisitions had an aggregate purchase price of

32



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

approximately $30 million. The results of
MAS and SEC have been included in the domestic distribution
segment from their respective dates of acquisition.

In November 2001, the Company acquired
Cole-Parmer Instrument Company and its affiliated companies
(Cole-Parmer). Cole-Parmer is a manufacturer and
distributor of specialty technical instruments, appliances,
equipment and supplies. The purchase price was
$208.5 million in cash. In September 2002, the Company
finalized its third-party valuation of Cole-Parmer. As a result,
the Company adjusted the purchase price allocation to reflect
revisions to the fair values of certain assets acquired and
liabilities assumed at the date of acquisition, resulting in a
net increase to goodwill in the amount of $6.9 million. The
results of Cole-Parmer have been included in the domestic
distribution segment from the date of acquisition.

In February 2001, the Company acquired the
pharmaceutical packaging services business of Covance, which the
Company renamed Fisher Clinical Services Inc. (FCS).
FCS enables pharmaceutical and biotechnology customers to
outsource the packaging, labeling and distribution for new
medicines undergoing phase III and IV clinical trials.
The Company paid in cash an adjusted purchase price of
approximately $133 million. The results of FCS have been
included in the domestic distribution segment from the date of
acquisition.

The following table summarizes the fair values of
the assets acquired and liabilities assumed at the date of the
acquisitions for the acquisitions completed in 2001. The
acquisitions completed during 2002 were not material to the
financial position or results of operations of the Company, and
accordingly, are not presented. The allocation of purchase price
has been made based upon management estimates and third-party
valuations.

|                              |                           |               |       |       | 
|----------------------------- | ------------------------- | ------------- | ----- | ----- | 
|                              |                           | (in millions)
|Current assets                |                           | $             | 105.1 |      
|Property, plant and equipment |                           |               | 74.2  |      
|Intangible assets             |                           |               | 89.0  |      
|Goodwill                      |                           |               | 199.2 |      
|Other assets                  |                           |               | 9.6   |      
|                              |                           |               |       |      
|                              | Total assets acquired     |               |       | 477.1 | 
|                              |                           |               |       |      
|Current liabilities           |                           |               | 86.2  |      
|Long-term debt                |                           |               | 9.8   |      
|Other liabilities             |                           |               | 9.9   |      
|                              |                           |               |       |      
|                              | Total liabilities assumed |               |       | 105.9 | 
|                              |                           |               |       |      
|                              | Net assets acquired       |               | $     | 371.2 | 
|                              |                           |               |       |      

The following unaudited pro forma financial
information presents the consolidated results of operations as
if the 2001 acquisitions described above had occurred at the
beginning of 2001. No pro forma information is required for 2002
as the results of operations already reflect the activity of the
acquisitions. The unaudited pro forma amounts include a finance
charge to reflect estimated borrowing costs that would have been
incurred had the acquisitions occurred at the beginning of 2001.
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 acquisitions been completed for the
periods presented, or that may be achieved in the future (in
millions, except per share amounts).

33



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

|                             |         |      |         |      | 
|---------------------------- | ------- | ---- | ------- | ---- | 
|                             |         | 2001
|                             |         |     
|Sales                        |         | $    | 3,063.5 |     
|Net income                   |         |      | 7.7     |     
|Net income per common share: |         |      |         |     
|                             | Basic   |      | $       | 0.15 | 
|                             | Diluted |      | $       | 0.14 | 

Note 5  Fair Value of
Financial Instruments

The Companys financial instruments consist
primarily of cash held at financial institutions, accounts
receivables, debt, interest rate swaps and forward foreign
currency contracts.

The carrying amounts for cash and cash
equivalents, accounts receivables, and short-term debt
approximate fair value due to the short-term nature of these
instruments. The carrying and fair values of long-term debt were
$921.8 million and $959.5 million, respectively, at
December 31, 2002 and $956.1 million and
$978.6 million, respectively, at December 31, 2001.
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 debt with variable rates
approximates the net carrying value. As of December 31,
2002, the Company had approximately $12.2 million of
outstanding foreign currency forward and option contracts. There
were no outstanding forward foreign currency contracts as of
December 31, 2001. The fair value of these contracts was
insignificant at December 31, 2002. The Company also had
off-balance-sheet standby letters of credit with notional
amounts of $27.2 million and $54.2 million with no
unrealized gain or loss at December 31, 2002 and 2001,
respectively.

As of December 31, 2001, the Company was a
party to five interest-rate swap agreements in which the Company
exchanged its floating-rate obligation on
(a) $40.0 million denominated in U.S. dollars for
a fixed-rate payment obligation of 5.669 percent per annum
through January 21, 2004, (b) $141.9 million
denominated in U.S. dollars for a fixed rate obligation of
5.669 percent per annum through December 31, 2003,
(c) $22.0 million denominated in British pounds for a
fixed-rate payment obligation of 5.850 percent per annum
through January 21, 2004, and (d) $7.9 million
denominated in Canadian dollars for a fixed-rate payment
obligation of 5.6675 percent per annum through
January 21, 2004. The notional amount of each interest-rate
swap agreement matched the repayment schedule of the Term
Facility through the maturity date of the respective interest
rate swap agreements (see
Note 13  Debt). 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 fair value of outstanding
interest-rate swap agreements as of December 31, 2001,
based upon quoted market prices, reflected an unrealized loss of
$9.6 million. In April 2002, the Term Facility was repaid
in full and the Company recorded a charge in the amount of
$7.1 million for fixed-swap unwind costs.

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.

34



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Note 6  Accounts
Receivable

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

|                                |                          |      |       |       |  |   |       |       | 
|------------------------------- | ------------------------ | ---- | ----- | ----- |  | - | ----- | ----- | 
|                                |                          | 2002 |       | 2001 
|                                |                          |      |       |      
|Gross accounts receivable       |                          | $    | 393.6 |       |  | $ | 366.8 |      
|Allowance for doubtful accounts |                          |      | (35.6 | )     |  |   | (34.8 | )    
|                                |                          |      |       |       |  |   |       |      
|                                | Accounts receivable, net |      | $     | 358.0 |  |   | $     | 332.0 | 
|                                |                          |      |       |       |  |   |       |      

The Companys receivables securitization
facility (Receivables Securitization) in the amount
of $175 million provides for the sale, on a revolving
basis, of certain of the accounts receivable of Fisher
Scientific International Inc., a Delaware corporation
(FSII), to a special purpose, bankruptcy remote
subsidiary of FSII included in the Companys consolidated
financial statements. The parties have entered into an agreement
to transfer, on a revolving basis, an undivided percentage
ownership interest in a designated pool of accounts receivable
up to a maximum amount based on a defined calculated percentage
of the outstanding accounts receivable balance. As collections
reduce accounts receivable included in the pool, new receivables
are sold into the pool. During 2002 and 2001, the Company
collected and reinvested, on a revolving basis, approximately
$226 million and $812 million of receivables,
respectively. The special purpose subsidiary has the risk of
credit loss on the receivables and, accordingly, the full amount
of the allowance for doubtful accounts has been retained in the
Companys balance sheet. Under the terms of the Receivables
Securitization, FSII retains collection and administrative
responsibilities for the receivables in the pool. 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
interest rate is approximately one month LIBOR plus an annual
commitment fee of 50 basis points. The Company recorded
$1.8 million, $3.8 million and $3.9 million of
losses on the sale of receivables as interest expense during the
years ended December 31, 2002, 2001 and 2000, respectively.
The full amount of the Receivables Securitization facility was
available at December 31, 2002 and 2001 and was replaced in
January 2003 (see Note 23  Subsequent
Events).

Note 7  Inventories

The following is a summary of inventories by
major category at December 31 (in millions):

|                  |       |      |       |       |  |   |       |       | 
|----------------- | ----- | ---- | ----- | ----- |  | - | ----- | ----- | 
|                  |       | 2002 |       | 2001 
|                  |       |      |       |      
|Raw material      |       | $    | 46.6  |       |  | $ | 33.6  |      
|Work in process   |       |      | 10.6  |       |  |   | 11.0  |      
|Finished products |       |      | 210.6 |       |  |   | 216.8 |      
|                  |       |      |       |       |  |   |       |      
|                  | Total |      | $     | 267.8 |  |   | $     | 261.4 | 
|                  |       |      |       |       |  |   |       |      

The value of inventory maintained using the LIFO
method was $177.9 million and $150.9 million as of
December 31, 2002 and 2001, respectively, which was below
estimated replacement cost by approximately $33.6 million
and $30.8 million for the years ended December 31,
2002 and 2001, respectively. The value of inventory maintained
using the FIFO method was $89.9 million and
$110.5 million as of December 31, 2002 and 2001,
respectively.

35



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Note 8  Other Current
Assets

The following is a summary of other current
assets at December 31 (in millions):

|                      |       |      |      |       |  |   |      |      | 
|--------------------- | ----- | ---- | ---- | ----- |  | - | ---- | ---- | 
|                      |       | 2002 |      | 2001 
|                      |       |      |      |      
|Deferred income taxes |       | $    | 70.6 |       |  | $ | 60.8 |     
|Other                 |       |      | 34.2 |       |  |   | 28.5 |     
|                      |       |      |      |       |  |   |      |     
|                      | Total |      | $    | 104.8 |  |   | $    | 89.3 | 
|                      |       |      |      |       |  |   |      |     

Note 9  Property, Plant and
Equipment

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

|                                 |                                    |      |        |       |  |   |        |       | 
|-------------------------------- | ---------------------------------- | ---- | ------ | ----- |  | - | ------ | ----- | 
|                                 |                                    | 2002 |        | 2001 
|                                 |                                    |      |        |      
|Land, buildings and improvements |                                    | $    | 250.6  |       |  | $ | 239.8  |      
|Machinery, equipment and other   |                                    |      | 297.1  |       |  |   | 257.9  |      
|                                 |                                    |      |        |       |  |   |        |      
|                                 | Total                              |      |        | 547.7 |  |   |        | 497.7 | 
|Accumulated depreciation         |                                    |      | (215.0 | )     |  |   | (175.6 | )    
|                                 |                                    |      |        |       |  |   |        |      
|                                 | Property, plant and equipment, net |      | $      | 332.7 |  |   | $      | 322.1 | 
|                                 |                                    |      |        |       |  |   |        |      

Note 10  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, 2002 (in millions):

|                                |                                        |              |       |               |   |              |       |       |   |   |      |       |   |   |       |       |  
|------------------------------- | -------------------------------------- | ------------ | ----- | ------------- | - | ------------ | ----- | ----- | - | - | ---- | ----- | - | - | ----- | ----- | -
|                                |                                        | Domestic     |       | International |   | Laboratory   |       |      
|                                |                                        | Distribution |       | Distribution  |   | Workstations |       | Total
|                                |                                        |              |       |               |   |              |       |      
|Balance as of December 31, 2001 |                                        | $            | 299.3 |               |   | $            | 111.0 |       |   | $ | 97.1 |       |   | $ | 507.4 |      
|                                | Cumulative effect of accounting change |              |       |              |   |              |       | (19.7 | ) |   |      | (44.1 | ) |   |       | (63.8 | )
|                                | Purchase price allocation adjustment   |              |       | (1.9          | ) |              |       |      |   |   |      |      |   |   |       | (1.9  | )
|                                | Acquisitions                           |              |       | 39.0          |   |              |       | 2.2   |   |   |      |      |   |   |       | 41.2  |  
|                                | Effect of foreign currency change      |              |       | 9.2           |   |              |       | 16.0  |   |   |      |      |   |   |       | 25.2  |  
|                                |                                        |              |       |               |   |              |       |       |   |   |      |       |   |   |       |      
|Balance as of December 31, 2002 |                                        | $            | 345.6 |               |   | $            | 109.5 |       |   | $ | 53.0 |       |   | $ | 508.1 |      
|                                |                                        |              |       |               |   |              |       |       |   |   |      |       |   |   |       |      

In accordance with SFAS 142, the Company
completed its evaluation of whether goodwill was impaired as of
January 1, 2002, and recorded a non-cash charge for the
cumulative effect of the accounting change (see
Note 3  Change in Accounting
Principle). 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 test for indication of
goodwill impairment as of October 31 of each year. As of
October 31, 2002, there were no additional impairments of
goodwill.

In September 2002, the Company finalized its
third-party valuation of Cole-Parmer. As a result, the Company
adjusted the purchase price allocation to reflect revisions to
the fair values of certain assets acquired and liabilities
assumed at the date of acquisition, resulting in a net increase
to goodwill in the amount of $6.9 million.

As a result of the Companys ownership in
MAS exceeding 80 percent (see Note 4 
Acquisitions), MAS qualifies for inclusion in the
consolidated tax group of Fisher. As a result, the Company has
recorded an

36



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

adjustment to the purchase price allocation for
MAS reflecting a reduction in the acquired deferred tax asset
valuation allowance and an offsetting decrease to goodwill of
approximately $8.0 million.

The following is a summary of other intangible
assets that are subject to amortization at December 31 (in
millions):

|                                                                                                                                                               |  |      |      |      |  |   |      | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---- | ---- |  | - | ---- | 
|                                                                                                                                                               |  | 2002 |      | 2001
|                                                                                                                                                               |  |      |      |     
|Customer lists (net of accumulated amortization
    of $5.9 million and $4.4 million at December 31,
    2002 and 2001, respectively)                          |  | $    | 15.1 |      |  | $ | 15.1 | 
|Non-compete agreements (net of accumulated
    amortization of $15.4 million and $11.6 million at
    December 31, 2002 and 2001, respectively)                |  |      | 5.8  |      |  |   | 9.5  | 
|Patents and tradenames (net of accumulated
    amortization of $6.7 million and $5.5 million at
    December 31, 2002 and 2001, respectively)                  |  |      | 8.9  |      |  |   | 7.3  | 
|Other amortizable intangible assets (net of
    accumulated amortization of $9.2 million and
    $7.7 million at December 31, 2002 and 2001,
    respectively) |  |      | 20.4 |      |  |   | 13.6 | 
|                                                                                                                                                               |  |      |      |      |  |   |      | 
|Amortizable intangible assets, net of accumulated
    amortization                                                                                             |  | $    | 50.2 |      |  | $ | 45.5 | 
|                                                                                                                                                               |  |      |      |      |  |   |      | 

For the years ended December 31, 2002, 2001
and 2000, the Company recorded amortization expense of
$8.1 million, $6.8 million and $3.0 million,
respectively, related to amortizable other 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, |  |  
|                                |  |  
|2003                            |  | $ | 7.3  | 
|2004                            |  | $ | 6.4  | 
|2005                            |  | $ | 3.7  | 
|2006                            |  | $ | 3.4  | 
|2007                            |  | $ | 2.9  | 
|thereafter                      |  | $ | 26.5 | 

As of December 31, 2002 and 2001, the
Company had indefinite-lived intangible assets in the domestic
distribution segment of $61.5 million, which primarily
consists of tradenames.

Note 11  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, 2002 and 2001,
are approximately $99.9 million and $95.0 million of
checks that have not cleared, respectively.

Note 12  Accrued and Other
Current Liabilities

The following is a summary of accrued and other
current liabilities at December 31 (in millions):

|                   |       |      |       |       |  |   |       |       | 
|------------------ | ----- | ---- | ----- | ----- |  | - | ----- | ----- | 
|                   |       | 2002 |       | 2001 
|                   |       |      |       |      
|Wages and benefits |       | $    | 60.5  |       |  | $ | 61.0  |      
|Interest           |       |      | 28.1  |       |  |   | 25.7  |      
|Other              |       |      | 122.9 |       |  |   | 139.2 |      
|                   |       |      |       |       |  |   |       |      
|                   | Total |      | $     | 211.5 |  |   | $     | 225.9 | 
|                   |       |      |       |       |  |   |       |      

37



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Note 13  Debt

The following is a summary of debt obligations at
December 31 (in millions):

|                                                                                                                                             |                      |      |       |       |  |   |       |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | ---- | ----- | ----- |  | - | ----- | ------- | 
|                                                                                                                                             |                      | 2002 |       | 2001 
|                                                                                                                                             |                      |      |       |      
|8 1/8 percent Senior Subordinated Notes
    (at par)                                                                                         |                      | $    | 150.0 |       |  | $ |      |        
|9 percent Senior Subordinated Notes (net of
    a discount of $3.9 million and $4.6 million at
    December 31, 2002 and 2001, respectively) |                      |      | 596.1 |       |  |   | 595.4 |        
|7 1/8 percent Notes (net of a discount
    of $0.4 million and $0.6 million at December 31,
    2002 and 2001, respectively)                 |                      |      | 149.6 |       |  |   | 149.4 |        
|Other                                                                                                                                        |                      |      | 50.0  |       |  |   | 75.2  |        
|Term Facility                                                                                                                                |                      |      |      |       |  |   | 211.8 |        
|                                                                                                                                             |                      |      |       |       |  |   |       |        
|                                                                                                                                             | Total debt           |      |       | 945.7 |  |   |       | 1,031.8 | 
|Less short-term debt                                                                                                                         |                      |      | (23.9 | )     |  |   | (75.7 | )      
|                                                                                                                                             |                      |      |       |       |  |   |       |        
|                                                                                                                                             | Total long-term debt |      | $     | 921.8 |  |   | $     | 956.1   | 
|                                                                                                                                             |                      |      |       |       |  |   |       |        

In April 2002, the Company issued
$150 million of 8 1/8 percent senior subordinated
notes (8 1/8 percent Notes). The
8 1/8 percent Notes were issued at par, mature on
May 1, 2012 and pay interest semiannually in arrears on
May 1 and November 1 of each year. The
8 1/8 percent Notes are unsecured senior subordinated
obligations of the Company, subordinated in right of payment to
all existing and future senior indebtedness and rank pari
passuin light of payment with all other existing and future
senior subordinated indebtedness of the Company. The
8 1/8 percent Notes are redeemable at the option of
the Company at any time after May 1, 2007 at an initial
redemption price of 104.1 percent, declining ratably to par
on or after May 1, 2010. In addition, the Company may
redeem up to 40 percent of the aggregate principal of the
8 1/8 percent Notes at any time on or prior to
May 1, 2005 upon receipt of proceeds from an Equity
Offering (as defined in the Indenture under which the
8 1/8 percent Notes are issued) at a redemption
price of 108.1 percent, provided that at least
60 percent of the original principal amount of the
8 1/8 percent Notes remains outstanding after such
redemption. Upon a Change of Control Triggering Event (as
defined in the Indenture under which the 8 1/8 percent
Notes are issued), the Company will be required to make an offer
to purchase all outstanding 8 1/8 percent Notes at
101 percent of the outstanding principal amount, together
with accrued and unpaid interest, if any, to the date of
purchase.

The Indenture under which the
8 1/8 percent Notes are issued contains covenants that
restrict, among other things, the ability of the Company and its
subsidiaries to (i) incur additional indebtedness,
(ii) pay dividends or make certain other restricted
payments, (iii) merge or consolidate with any other person,
and (iv) make minority investments, and contains other
various covenants that are customary for transactions of this
type.

On January 21, and November 20, 1998,
the Company issued $400 million and $200 million,
respectively, of 9 percent senior subordinated notes
(9 percent Notes). The 9 percent Notes
issued in January were issued at par while the 9 percent
Notes issued in November were issued net of an approximate
$7 million discount. The 9 percent Notes will mature
on February 1, 2008, with interest payable semiannually in
arrears on February 1 and August 1 of each year. The
9 percent Notes are unsecured senior subordinated
obligations of the Company, subordinated in right of payment to
all existing and future senior indebtedness and rank pari
passuin light of payment with all other existing and future
senior subordinated indebtedness of the Company. The
9 percent Notes are redeemable at the option of the Company
at any time after February 1, 2003 at an initial redemption
price of 104.5 percent, declining ratably to par on or
after February 1, 2006. Upon a Change of Control Triggering
Event (as defined in the Indenture under which the
9 percent Notes are issued), the Company will be required
to make an offer to purchase all outstanding 9 percent
Notes at 101 percent of the outstanding principal amount,
together with accrued and unpaid interest, if any, to the date
of purchase.

38



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

The Indenture under which the 9 percent
Notes are issued contains covenants that restrict, among other
things, the ability of the Company and its subsidiaries to
(i) incur additional indebtedness, (ii) pay dividends
or make certain other restricted payments, (iii) merge or
consolidate with any other person, and (iv) make minority
investments, and contains other various covenants that are
customary for transactions of this type.

The Company also has outstanding
$150.0 million aggregate principal amount of
7 1/8 percent Notes due December 15, 2005, which
were sold on December 18, 1995 at a price to the public
equal to 99.184 percent of principal bringing the effective
interest rate to 7.5 percent.

Other debt outstanding at December 31, 2002
totaled $50.0 million, of which $26.1 million is
long-term in nature. This debt matures as follows:
$5.7 million in 2004, $1.8 million in 2005,
$3.9 million in 2006, $0.8 million in 2007, and
$13.9 million thereafter.

The Companys $175 million revolving
credit facility (the Credit Facility) contains
covenants of the Company and the subsidiary borrowers,
including, without limitation, certain financial covenants and
restrictions on (i) indebtedness, (ii) the sale of
assets, (iii) mergers, acquisitions and other business
combinations, (iv) minority investments, and (v) the
payment of cash dividends to shareholders. The financial
covenants include requirements to maintain certain levels of
interest coverage, debt to earnings before interest, taxes,
depreciation and amortization and a limit on capital
expenditures. The Company is in compliance with all covenants at
December 31, 2002.

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 Fisher.

Note 14  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, 2002 (in millions):

|                           |  |   |       | 
|-------------------------- |  | - | ----- | 
|2003                       |  | $ | 22.7  | 
|2004                       |  |   | 18.0  | 
|2005                       |  |   | 15.1  | 
|2006                       |  |   | 13.0  | 
|2007                       |  |   | 10.9  | 
|Thereafter                 |  |   | 53.2  | 
|                           |  |   |       | 
|Net minimum lease payments |  | $ | 132.9 | 
|                           |  |   |       | 

Rent expense included in the accompanying
statement of operations amounted to $23.1 million in 2002,
$20.5 million in 2001, and $17.6 million in 2000.

As of December 31, 2002, the Company had
letters of credit outstanding totaling $27.2 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, as well as
performance letters of credit issued in the normal course of
business.

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, based on managements
knowledge to date, management does not believe that the ultimate
liability, if any,

39



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

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 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 $31.0 million and $29.8 million at
December 31, 2002 and 2001, 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 15  Stockholders
Equity

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. As of December 31, 2002 and 2001,
the Companys outstanding common stock included 2,436,601
and 4,035,290 of nonvoting shares, respectively. As of
December 31, 2002 and 2001, there were warrants outstanding
to purchase 2,583,315 shares of common stock at an exercise
price of $9.65 per share.

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. As of December 31, 2002,
Thomas H. Lee Company (THL) and its affiliates
involved in the Companys recapitalization in 1998 own
approximately 36 percent of the Companys outstanding
common stock.

On May 16, 2001, the stockholders of the
Company approved an amendment to the Restated Certificate of
Incorporation of the Company increasing the authorized number of
shares of common stock that may be issued from 100,000,000 to
500,000,000.

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 were approximately $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.

40



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Note 16  Earnings Per
Share

Net income per share is computed under Statement
of Financial Accounting Standards No. 128, Earnings
Per Share (SFAS 128). Under
SFAS 128, 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. 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 conversion of stock
options and warrants using the treasury stock method, if
dilutive.

The following table sets forth basic and diluted
net income per share computational data for the periods
presented (in millions, except per share amounts):

|                                                                                              |  |                         |      |      |  |      |      |  |  |   |      | 
|--------------------------------------------------------------------------------------------- |  | ----------------------- | ---- | ---- |  | ---- | ---- |  |  | - | ---- | 
|                                                                                              |  |                        
|                                                                                              |  | Year Ended December 31,
|                                                                                              |  |                        
|                                                                                              |  | 2002                    |      | 2001 |  | 2000
|                                                                                              |  |                         |      |      |  |     
|Net income available to common shareholders                                                   |  | $                       | 50.6 |      |  | $    | 16.4 |  |  | $ | 22.7 | 
|                                                                                              |  |                         |      |      |  |      |      |  |  |   |      | 
|Weighted average common shares outstanding used
    in computing basic net income per share   |  |                         | 54.5 |      |  |      | 49.4 |  |  |   | 40.1 | 
|Common stock equivalents(a)                                                                   |  |                         | 3.4  |      |  |      | 3.6  |  |  |   | 4.3  | 
|                                                                                              |  |                         |      |      |  |      |      |  |  |   |      | 
|Weighted average common shares outstanding used
    in computing diluted net income per share |  |                         | 57.9 |      |  |      | 53.0 |  |  |   | 44.4 | 
|                                                                                              |  |                         |      |      |  |      |      |  |  |   |      | 
|Basic net income per share                                                                    |  | $                       | 0.93 |      |  | $    | 0.33 |  |  | $ | 0.57 | 
|                                                                                              |  |                         |      |      |  |      |      |  |  |   |      | 
|Diluted net income per share                                                                  |  | $                       | 0.87 |      |  | $    | 0.31 |  |  | $ | 0.51 | 
|                                                                                              |  |                         |      |      |  |      |      |  |  |   |      | 



---



|    |                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The weighted average amount of outstanding
    antidilutive common stock options and warrants excluded from the
    computation of diluted net income per share was
    1.3 million, 0.9 million and 0.2 million at
    December 31, 2002, 2001 and 2000, respectively.

Note 17  Income Taxes

The domestic and foreign components of income
before income taxes are as follows (in millions):

|         |                            |                         |      |       |  |      |      |      |  |   |      |      | 
|-------- | -------------------------- | ----------------------- | ---- | ----- |  | ---- | ---- | ---- |  | - | ---- | ---- | 
|         |                            |                        
|         |                            | Year Ended December 31,
|         |                            |                        
|         |                            | 2002                    |      | 2001  |  | 2000
|         |                            |                         |      |       |  |     
|Domestic |                            | $                       | 88.9 |       |  | $    | 0.6  |      |  | $ | 25.6 |     
|Foreign  |                            |                         | 52.6 |       |  |      | 29.7 |      |  |   | 12.2 |     
|         |                            |                         |      |       |  |      |      |      |  |   |      |     
|         | Income before income taxes |                         | $    | 141.5 |  |      | $    | 30.3 |  |   | $    | 37.8 | 
|         |                            |                         |      |       |  |      |      |      |  |   |      |     

41



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

The components of the income tax provision are as
follows (in millions):

|                                       |         |                         |      |      |      |      |      |      |      |   |      |     |      | 
|-------------------------------------- | ------- | ----------------------- | ---- | ---- | ---- | ---- | ---- | ---- | ---- | - | ---- | --- | ---- | 
|                                       |         |                        
|                                       |         | Year Ended December 31,
|                                       |         |                        
|                                       |         | 2002                    |      | 2001 |      | 2000
|                                       |         |                         |      |      |      |     
|Current income tax expense:            |         |                         |      |      |      |      |      |      |      |   |      |    
|                                       | Federal |                         | $    | 0.5  |      |      | $    |     |      |   | $    | 5.7 |     
|                                       | State   |                         |      | 1.8  |      |      |      | 1.5  |      |   |      | 0.4 |     
|                                       | Foreign |                         |      | 6.4  |      |      |      | 12.7 |      |   |      | 6.7 |     
|                                       |         |                         |      |      |      |      |      |      |      |   |      |    
|                                       |         | Total current           |      |      | 8.7  |      |      |      | 14.2 |   |      |     | 12.8 | 
|                                       |         |                         |      |      |      |      |      |      |      |   |      |    
|Deferred income tax expense (benefit): |         |                         |      |      |      |      |      |      |      |   |      |    
|                                       | Federal |                         |      | 29.4 |      |      |      | 0.6  |      |   |      | 1.5 |     
|                                       | State   |                         |      | 1.3  |      |      |      | (0.3 | )    |   |      | 0.1 |     
|                                       | Foreign |                         |      | 5.4  |      |      |      | (0.6 | )    |   |      | 0.7 |     
|                                       |         |                         |      |      |      |      |      |      |      |   |      |    
|                                       |         | Total deferred          |      |      | 36.1 |      |      |      | (0.3 | ) |      |     | 2.3  | 
|                                       |         |                         |      |      |      |      |      |      |      |   |      |    
|Total income tax provision             |         | $                       | 44.8 |      |      | $    | 13.9 |      |      | $ | 15.1 |    
|                                       |         |                         |      |      |      |      |      |      |      |   |      |    

The principal items accounting for the
differences in taxes on income computed at the applicable U.S.
statutory rate and as recorded are as follows (in millions):

|                                                                                     |                      |                         |      |      |  |      |      |      |  |   |      |      | 
|------------------------------------------------------------------------------------ | -------------------- | ----------------------- | ---- | ---- |  | ---- | ---- | ---- |  | - | ---- | ---- | 
|                                                                                     |                      |                        
|                                                                                     |                      | Year Ended December 31,
|                                                                                     |                      |                        
|                                                                                     |                      | 2002                    |      | 2001 |  | 2000
|                                                                                     |                      |                         |      |      |  |     
|Taxes computed at statutory rate                                                     |                      | $                       | 49.5 |      |  | $    | 10.6 |      |  | $ | 13.2 |     
|Foreign taxes over (under) U.S. rate and
    foreign losses not tax benefitted (net) |                      |                         | (7.0 | )    |  |      | (1.2 | )    |  |   | 0.4  |     
|State income taxes (net of federal benefit)                                          |                      |                         | 2.1  |      |  |      | 1.7  |      |  |   | 0.3  |     
|Nondeductible permanent items, net                                                   |                      |                         | 1.4  |      |  |      | 2.8  |      |  |   | 2.4  |     
|Other                                                                                |                      |                         | (1.2 | )    |  |      |     |      |  |   | (1.2 | )   
|                                                                                     |                      |                         |      |      |  |      |      |      |  |   |      |     
|                                                                                     | Income tax provision |                         | $    | 44.8 |  |      | $    | 13.9 |  |   | $    | 15.1 | 
|                                                                                     |                      |                         |      |      |  |      |      |      |  |   |      |     

42



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

The tax effects of temporary items that gave rise
to significant portions of the deferred tax accounts are as
follows at December 31 (in millions):

|                          |                                                 |                                |       |       |       |   |       |       |       | 
|------------------------- | ----------------------------------------------- | ------------------------------ | ----- | ----- | ----- | - | ----- | ----- | ----- | 
|                          |                                                 | 2002                           |       | 2001 
|                          |                                                 |                                |       |      
|Deferred tax assets:      |                                                 |                                |       |       |       |   |       |      
|                          | Postretirement benefit costs other than pension |                                | $     | 22.8  |       |   | $     | 24.4  |      
|                          | Environmental accruals                          |                                |       | 10.6  |       |   |       | 11.8  |      
|                          | Operating loss                                  |                                |       | 68.0  |       |   |       | 53.3  |      
|                          | Accrued employee benefits                       |                                |       | 23.8  |       |   |       | 35.3  |      
|                          | Restructuring accruals                          |                                |       | 3.6   |       |   |       | 7.2   |      
|                          | Other items not deductible until paid           |                                |       | 60.3  |       |   |       | 55.6  |      
|                          |                                                 |                                |       |       |       |   |       |      
|                          | Gross deferred tax assets                       |                                |       | 189.1 |       |   |       | 187.6 |      
|                          | Less valuation allowance                        |                                |       | (36.2 | )     |   |       | (35.7 | )    
|                          |                                                 |                                |       |       |       |   |       |      
|                          |                                                 | Total deferred tax assets      |       |       | 152.9 |   |       |       | 151.9 | 
|                          |                                                 |                                |       |       |       |   |       |      
|Deferred tax liabilities: |                                                 |                                |       |       |       |   |       |      
|                          | Goodwill                                        |                                |       | 18.7  |       |   |       | 22.4  |      
|                          | Property, plant and equipment                   |                                |       | 11.5  |       |   |       | 12.4  |      
|                          | Other                                           |                                |       | 13.8  |       |   |       | 9.6   |      
|                          |                                                 |                                |       |       |       |   |       |      
|                          |                                                 | Total deferred tax liabilities |       |       | 44.0  |   |       |       | 44.4  | 
|                          |                                                 |                                |       |       |       |   |       |      
|Net deferred tax assets   |                                                 | $                              | 108.9 |       |       | $ | 107.5 |      
|                          |                                                 |                                |       |       |       |   |       |      

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, 2002,

43



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

the Company had accumulated net operating loss
carryforwards for tax purposes expiring as follows (in millions):

|              |       |         |       |       |  |         |      |       |  |   |      |      | 
|------------- | ----- | ------- | ----- | ----- |  | ------- | ---- | ----- |  | - | ---- | ---- | 
|              |       | Foreign |       | State |  | Federal
|              |       |         |       |       |  |        
|2003          |       | $       | 1.3   |       |  | $       | 4.5  |       |  | $ |     |     
|2004          |       |         | 3.1   |       |  |         | 6.4  |       |  |   |     |     
|2005          |       |         | 2.6   |       |  |         | 7.4  |       |  |   |     |     
|2006          |       |         | 0.9   |       |  |         | 9.3  |       |  |   |     |     
|2007          |       |         | 1.7   |       |  |         | 8.1  |       |  |   |     |     
|2008          |       |         | 0.7   |       |  |         | 7.0  |       |  |   |     |     
|2009          |       |         | 1.3   |       |  |         | 7.0  |       |  |   |     |     
|2010          |       |         | 0.8   |       |  |         | 2.0  |       |  |   |     |     
|2011          |       |         | 1.2   |       |  |         | 2.0  |       |  |   |     |     
|2012          |       |         | 1.8   |       |  |         | 2.0  |       |  |   |     |     
|2013          |       |         |      |       |  |         | 4.0  |       |  |   |     |     
|2014          |       |         |      |       |  |         | 6.0  |       |  |   |     |     
|2015          |       |         |      |       |  |         | 4.8  |       |  |   |     |     
|2016          |       |         |      |       |  |         | 10.2 |       |  |   |     |     
|2017          |       |         |      |       |  |         | 8.1  |       |  |   |     |     
|2018          |       |         |      |       |  |         | 10.9 |       |  |   |     |     
|2019          |       |         |      |       |  |         | 18.0 |       |  |   | 17.8 |     
|2020          |       |         |      |       |  |         | 6.8  |       |  |   |     |     
|2021          |       |         |      |       |  |         | 16.0 |       |  |   | 26.8 |     
|2022          |       |         |      |       |  |         | 16.0 |       |  |   | 19.2 |     
|No Expiration |       |         | 104.5 |       |  |         |     |       |  |   |     |     
|              |       |         |       |       |  |         |      |       |  |   |      |     
|              | Total |         | $     | 119.9 |  |         | $    | 156.5 |  |   | $    | 63.8 | 
|              |       |         |       |       |  |         |      |       |  |   |      |     

SFAS 109 requires that deferred tax assets
be reduced by a valuation allowance if it is more likely than
not that some portion or all of the deferred tax asset will not
be realized. The valuation allowances at December 31, 2002
and 2001 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
$84.1 million at December 31, 2002. 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 does
not anticipate any additional U.S. tax liability above that
which has previously been recorded.

Note 18  Retirement
Benefits

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 percent of compensation and
interest. The

44



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Companys funding policy is to contribute
annually the statutorily required minimum amount as actuarially
determined.

The Company also maintains a supplemental
nonqualified executive retirement program for certain of its
executives. The benefit obligation related to this program is
included below and is approximately $20 million and
$18 million at December 31, 2002 and 2001,
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. At December 31, 2002
certain of our international plans were underfunded by
approximately $24 million and our U.S.-based plan was
fully-funded.

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, 2002, 2001, and
2000, made payments totaling $1.7 million, $1.8 million and
$2.1 million, respectively.

The changes in benefit obligations and plan
assets were as follows at December 31 (in millions):

|                                        |                                 |                  |       |                |   |       |       |       |   |   |      |      |   |   |      |      |  
|--------------------------------------- | ------------------------------- | ---------------- | ----- | -------------- | - | ----- | ----- | ----- | - | - | ---- | ---- | - | - | ---- | ---- | -
|                                        |                                 |                  |       |                |   |      
|                                        |                                 |                  |       |                |   | Other
|                                        |                                 |                  |       | Postretirement
|                                        |                                 | Pension Benefits |       | Benefits      
|                                        |                                 |                  |       |               
|Change in benefit obligation            |                                 | 2002             |       | 2001           |   | 2002  |       | 2001 
|                                        |                                 |                  |       |                |   |       |       |      
|Benefit obligation at beginning of year |                                 | $                | 260.6 |                |   | $     | 244.5 |       |   | $ | 23.2 |      |   | $ | 24.0 |     
|                                        | Service costs                   |                  |       | 10.9           |   |       |       | 10.7  |   |   |      | 0.4  |   |   |      | 0.4  |  
|                                        | Interest costs                  |                  |       | 17.7           |   |       |       | 17.0  |   |   |      | 1.6  |   |   |      | 1.6  |  
|                                        | Plan participants contribution |                  |       | 0.7            |   |       |       | 0.6   |   |   |      |     |   |   |      |     |  
|                                        | Actuarial (gain) loss           |                  |       | 14.9           |   |       |       | 6.5   |   |   |      | 1.5  |   |   |      | (0.9 | )
|                                        | Benefits paid                   |                  |       | (16.1          | ) |       |       | (17.1 | ) |   |      | (1.7 | ) |   |      | (1.8 | )
|                                        | Currency translation adjustment |                  |       | 5.1            |   |       |       | (1.6  | ) |   |      | 0.1  |   |   |      | (0.1 | )
|                                        |                                 |                  |       |                |   |       |       |       |   |   |      |      |   |   |      |     
|Benefit obligation at end of year       |                                 | $                | 293.8 |                |   | $     | 260.6 |       |   | $ | 25.1 |      |   | $ | 23.2 |     
|                                        |                                 |                  |       |                |   |       |       |       |   |   |      |      |   |   |      |     

|                                               |                                 |                  |       |       |   |   |       |       |   |  |  |  |  |  |  |  | 
|---------------------------------------------- | ------------------------------- | ---------------- | ----- | ----- | - | - | ----- | ----- | - |  |  |  |  |  |  |  | 
|                                               |                                 |                  |       |       |   |  
|                                               |                                 | Pension Benefits |       |       |   |  
|                                               |                                 |                  |       |       |   |  
|Change in plan assets                          |                                 | 2002             |       | 2001  |   |   |       |      
|                                               |                                 |                  |       |       |   |   |       |      
|Fair value of plan assets at beginning of year |                                 | $                | 260.0 |       |   | $ | 317.8 |       |   |  |  |  |  |  |  | 
|                                               | Actual return on plan assets    |                  |       | (21.1 | ) |   |       | (40.6 | ) |  |  |  |  |  |  |  | 
|                                               | Employer contribution           |                  |       | 22.3  |   |   |       | 1.6   |   |  |  |  |  |  |  |  | 
|                                               | Plan participants contribution |                  |       | 0.7   |   |   |       | 0.6   |   |  |  |  |  |  |  |  | 
|                                               | Benefits paid                   |                  |       | (16.1 | ) |   |       | (17.1 | ) |  |  |  |  |  |  |  | 
|                                               | Currency translation adjustment |                  |       | 3.9   |   |   |       | (2.3  | ) |  |  |  |  |  |  |  | 
|                                               |                                 |                  |       |       |   |   |       |       |   |  |  |  |  |  |  | 
|Fair value of plan assets at end of year       |                                 | $                | 249.7 |       |   | $ | 260.0 |       |   |  |  |  |  |  |  | 
|                                               |                                 |                  |       |       |   |   |       |       |   |  |  |  |  |  |  | 

45



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

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

|                                                   |  |                  |       |                |  |       |      |      |  |   |       |   |  |   |       |  
|-------------------------------------------------- |  | ---------------- | ----- | -------------- |  | ----- | ---- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                   |  |                  |       |                |  |      
|                                                   |  |                  |       |                |  | Other
|                                                   |  |                  |       | Postretirement
|                                                   |  | Pension Benefits |       | Benefits      
|                                                   |  |                  |       |               
|                                                   |  | 2002             |       | 2001           |  | 2002  |      | 2001
|                                                   |  |                  |       |                |  |       |      |     
|Funded status                                      |  | $                | (44.1 | )              |  | $     | (0.6 | )    |  | $ | (25.1 | ) |  | $ | (23.2 | )
|Unrecognized net actuarial (gain) loss             |  |                  | 69.8  |                |  |       | 9.3  |      |  |   | (24.8 | ) |  |   | (28.2 | )
|Unrecognized prior service costs                   |  |                  | (4.1  | )              |  |       | (4.6 | )    |  |   | (6.9  | ) |  |   | (9.2  | )
|Unrecognized net transition obligation             |  |                  | 0.3   |                |  |       | 0.2  |      |  |   |      |   |  |   |      |  
|Adjustment required to recognize minimum liability |  |                  | (15.3 | )              |  |       | (2.4 | )    |  |   |      |   |  |   |      |  
|                                                   |  |                  |       |                |  |       |      |      |  |   |       |   |  |   |       |  
|Accrued benefit asset (liability)                  |  | $                | 6.6   |                |  | $     | 1.9  |      |  | $ | (56.8 | ) |  | $ | (60.6 | )
|                                                   |  |                  |       |                |  |       |      |      |  |   |       |   |  |   |       |  

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

|                                                     |                                    |                  |       |                         |  |      |       |      |   |      |       |      |   |   |      |      |   |   |      |      |   |   |      |      |  
|---------------------------------------------------- | ---------------------------------- | ---------------- | ----- | ----------------------- |  | ---- | ----- | ---- | - | ---- | ----- | ---- | - | - | ---- | ---- | - | - | ---- | ---- | - | - | ---- | ---- | -
|                                                     |                                    |                  |       |                         |  |      |       |     
|                                                     |                                    |                  |       | Other                  
|                                                     |                                    | Pension Benefits |       | Postretirement Benefits
|                                                     |                                    |                  |       |                        
|                                                     |                                    | 2002             |       | 2001                    |  | 2000 |       | 2002 |   | 2001 |       | 2000
|                                                     |                                    |                  |       |                         |  |      |       |      |   |      |       |     
|Components of net periodic benefit (income)
    cost |                                    |                  |       |                         |  |      |       |      |   |      |       |      |   |   |      |      |   |   |      |      |   |   |      |     
|Service cost                                         |                                    | $                | 10.9  |                         |  | $    | 10.7  |      |   | $    | 9.0   |      |   | $ | 0.4  |      |   | $ | 0.4  |      |   | $ | 0.4  |     
|Interest cost                                        |                                    |                  | 17.7  |                         |  |      | 17.0  |      |   |      | 16.4  |      |   |   | 1.6  |      |   |   | 1.6  |      |   |   | 1.6  |     
|Expected return on plan assets                       |                                    |                  | (24.0 | )                       |  |      | (25.6 | )    |   |      | (23.2 | )    |   |   |     |      |   |   |     |      |   |   |     |     
|Amortization of unrecognized net (gain) loss         |                                    |                  | 0.3   |                         |  |      | 0.2   |      |   |      |      |      |   |   | (2.1 | )    |   |   | (2.2 | )    |   |   | (2.4 | )   
|Amortization of unrecognized prior service benefit   |                                    |                  | (0.5  | )                       |  |      | (0.5  | )    |   |      | (0.6  | )    |   |   | (2.2 | )    |   |   | (2.2 | )    |   |   | (2.2 | )   
|Amortization of unrecognized net transition asset    |                                    |                  | (0.1  | )                       |  |      | (0.1  | )    |   |      | (0.8  | )    |   |   |     |      |   |   |     |      |   |   |     |     
|Recognized net actuarial (gain) loss                 |                                    |                  | 0.1   |                         |  |      | (0.3  | )    |   |      |      |      |   |   | 0.1  |      |   |   | 0.6  |      |   |   |     |     
|Settlement/curtailment (gain) loss                   |                                    |                  | (0.1  | )                       |  |      | (1.8  | )    |   |      | (1.0  | )    |   |   |     |      |   |   |     |      |   |   |     |     
|                                                     |                                    |                  |       |                         |  |      |       |      |   |      |       |      |   |   |      |      |   |   |      |      |   |   |      |     
|                                                     | Net periodic benefit (income) cost |                  | $     | 4.3                     |  |      | $     | (0.4 | ) |      | $     | (0.2 | ) |   | $    | (2.2 | ) |   | $    | (1.8 | ) |   | $    | (2.6 | )
|                                                     |                                    |                  |       |                         |  |      |       |      |   |      |       |      |   |   |      |      |   |   |      |      |   |   |      |     

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 development of the net periodic pension
benefit cost (income) and the projected benefit obligation
were based upon the following assumptions for the years ended
December 31:

|                                                  |  |      |      |      |  |      |      |   |  |  |      |  
|------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                                  |  | 2002 |      | 2001 |  | 2000
|                                                  |  |      |      |      |  |     
|Discount rate                                     |  |      | 6.75 | %    |  |      | 7.25 | % |  |  | 7.50 | %
|Average rate of increase in employee compensation |  |      | 4.00 | %    |  |      | 4.00 | % |  |  | 4.00 | %
|Expected long-term rate of return on assets       |  |      | 8.75 | %    |  |      | 9.75 | % |  |  | 9.75 | %

The date used to measure plan assets and
liabilities was October 31 in each year. Plan assets are
invested primarily in stocks, bonds, short-term securities and
cash equivalents.

46



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

The weighted average discount rate used in
determining the accumulated postretirement healthcare benefit
obligation was 6.75 percent, 7.25 percent and
7.5 percent for the years ended December 31, 2002,
2001 and 2000, respectively. A 7.25 percent annual rate of
increase in per capita cost of covered healthcare benefits was
assumed for 2002 and beyond. Because of limitations on the
Companys contributions under the amended healthcare
program, changes in the healthcare trend rate assumption do not
have a significant effect on the amounts reported. To
illustrate, a change in the assumed healthcare cost trend rate
by 1 percentage point effective January 2002 would change
the accumulated postretirement benefit obligation as of
December 31, 2002 by approximately $0.6 million and
the aggregate of the service and interest cost components of net
periodic postretirement benefit cost (income) for the year
ended December 31, 2002 by approximately $0.1 million.

The Company also maintains a defined contribution
savings and profit sharing plan (the Plan). The Plan
allows eligible employees to participate after six months and
500 hours of service. Participants may elect to contribute
between 1 percent and 15 percent of their annual
compensation as defined in the Plan. The Company is obligated to
contribute an amount equal to 25 percent 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, 2002, 2001 and 2000, the
Companys contributions to the Plan were $4.4 million,
$3.8 million, and $4.1 million, respectively.

Note 19  Stock and Other
Plans



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

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 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, 2002,
4,045,131 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, 2002, there
were 3,819,472 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 $14.5 million
plus interest, of which $4.5 million expired during 2000 in
accordance with the terms of the option agreement and was
reclassified from other liabilities to equity. Options have been
granted at or at a premium to fair market value. During 2000,
the Company recorded a non-cash compensation expense of
$3.7 million included in selling, general and
administrative expense relating to a one-time change in the
terms of certain stock options.

47



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

A summary of the status of the Companys
stock option plans at December 31, 2002, 2001, and 2000 and
changes during the years then ended is presented in the
following table:

|                                               |  |            |       |          |  |            |       |          |  |            |        |          |  |   |       |  |  |  |       |   |  |   |       | 
|---------------------------------------------- |  | ---------- | ----- | -------- |  | ---------- | ----- | -------- |  | ---------- | ------ | -------- |  | - | ----- |  |  |  | ----- | - |  | - | ----- | 
|                                               |  |            |       |          |  |           
|                                               |  | 2002       |       | 2001     |  | 2000      
|                                               |  |            |       |          |  |           
|                                               |  |            |       | 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               |  |            | 7,587 |          |  | $          | 18.45 |          |  |            | 7,393  |          |  | $ | 15.68 |  |  |  | 6,950 |   |  | $ | 14.07 | 
|Granted                                        |  |            | 1,065 |          |  |            | 28.93 |          |  |            | 3,253  |          |  |   | 26.38 |  |  |  | 920   |   |  |   | 28.73 | 
|Exercised                                      |  |            | (481  | )        |  |            | 13.18 |          |  |            | (309   | )        |  |   | 10.71 |  |  |  | (36   | ) |  |   | 9.64  | 
|Canceled/Expired/Forfeited                     |  |            | (431  | )        |  |            | 27.26 |          |  |            | (2,750 | )        |  |   | 21.08 |  |  |  | (441  | ) |  |   | 16.46 | 
|                                               |  |            |       |          |  |            |       |          |  |            |        |          |  |   |       |  |  |  |       |   |  |   |       | 
|Outstanding at end of year                     |  |            | 7,740 |          |  | $          | 19.73 |          |  |            | 7,587  |          |  | $ | 18.45 |  |  |  | 7,393 |   |  | $ | 15.68 | 
|                                               |  |            |       |          |  |            |       |          |  |            |        |          |  |   |       |  |  |  |       |   |  |   |       | 
|Exercisable at end of year                     |  |            | 4,461 |          |  | $          | 14.26 |          |  |            | 4,034  |          |  | $ | 11.54 |  |  |  | 2,500 |   |  | $ | 10.73 | 
|Weighted average fair value of options granted |  |            |       |          |  | $          | 13.11 |          |  |            |        |          |  | $ | 13.16 |  |  |  |       |   |  | $ | 9.27  | 

The following table summarizes information about
stock options outstanding at December 31, 2002:

|                        |  |                     |       |                  |  |                |     |             |  |                |       |  |  |  |       |  |  |   |       | 
|----------------------- |  | ------------------- | ----- | ---------------- |  | -------------- | --- | ----------- |  | -------------- | ----- |  |  |  | ----- |  |  | - | ----- | 
|                        |  |                    
|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         |  |                     | 3,064 |                  |  |                | 5.1 |             |  | $              | 9.50  |  |  |  | 3,064 |  |  | $ | 9.50  | 
|11.01   15.00          |  |                     | 54    |                  |  |                | 5.6 |             |  |                | 12.82 |  |  |  | 54    |  |  |   | 12.82 | 
|15.01   18.00          |  |                     | 125   |                  |  |                | 6.3 |             |  |                | 17.42 |  |  |  | 125   |  |  |   | 17.42 | 
|18.01   22.00          |  |                     | 217   |                  |  |                | 7.1 |             |  |                | 20.64 |  |  |  | 133   |  |  |   | 20.80 | 
|22.01   26.00          |  |                     | 1,920 |                  |  |                | 8.3 |             |  |                | 24.04 |  |  |  | 666   |  |  |   | 24.06 | 
|26.01   30.00          |  |                     | 1,903 |                  |  |                | 8.3 |             |  |                | 28.77 |  |  |  | 338   |  |  |   | 29.95 | 
|30.01   34.00          |  |                     | 382   |                  |  |                | 9.1 |             |  |                | 33.10 |  |  |  | 59    |  |  |   | 32.48 | 
|34.01   38.00          |  |                     | 75    |                  |  |                | 8.8 |             |  |                | 35.81 |  |  |  | 22    |  |  |   | 36.84 | 
|                        |  |                     |       |                  |  |                |     |             |  |                |       |  |  |  |       |  |  |   |       | 
|                        |  |                     | 7,740 |                  |  |                |     |             |  |                |       |  |  |  | 4,461 |  |  |   |       | 
|                        |  |                     |       |                  |  |                |     |             |  |                |       |  |  |  |       |  |  |   |       | 



| |                     
| | --------------------
| | 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 percent 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.

Note 20  Restructuring and Other
Charges

During 2001, we 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, we recorded a
restructuring charge of $27.0 million.

48



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

The restructuring charge reflects
$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 severed as part of the 2001 Restructuring
Plan. The other exit costs represent primarily
lease-cancellation costs and costs associated with the
discontinuance of certain product lines. The domestic
distribution, international distribution and laboratory
workstations segments accounted for $20.3 million,
$6.6 million and $0.1 million, respectively, of this
charge.

During 2002, the Company recorded net
restructuring credits of $2.2 million for the reversal for
certain costs accrued for the 2001 Restructuring Plan. 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 domestic distribution
and international distribution segments accounted for
$1.0 million and $1.2 million of the restructuring
credit, respectively.

The following table summarizes the recorded
accruals and activity related to the 2001 Plan (in millions):

|                                |  |             |       |            |  |       |      |   |  |   |       |  
|------------------------------- |  | ----------- | ----- | ---------- |  | ----- | ---- | - |  | - | ----- | -
|                                |  | Employee    |       | Other      |  |      
|                                |  | Separations |       | Exit Costs |  | Total
|                                |  |             |       |            |  |      
|Restructuring charge            |  | $           | 18.3  |            |  | $     | 8.7  |   |  | $ | 27.0  |  
|Cash payments                   |  |             | (10.9 | )          |  |       | (2.4 | ) |  |   | (13.3 | )
|Non-cash items                  |  |             |      |            |  |       | (0.3 | ) |  |   | (0.3  | )
|                                |  |             |       |            |  |       |      |   |  |   |       |  
|Balance as of December 31, 2001 |  |             | 7.4   |            |  |       | 6.0  |   |  |   | 13.4  |  
|Cash payments                   |  |             | (4.9  | )          |  |       | (2.7 | ) |  |   | (7.6  | )
|Restructuring credits           |  |             | (2.0  | )          |  |       | (0.2 | ) |  |   | (2.2  | )
|                                |  |             |       |            |  |       |      |   |  |   |       |  
|Balance as of December 31, 2002 |  | $           | 0.5   |            |  | $     | 3.1  |   |  | $ | 3.6   |  
|                                |  |             |       |            |  |       |      |   |  |   |       |  

In connection with the May 2001 stock offering
process, 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, the date of the transaction, and
the exercise price of the option) by $35.44. As a result of
these transactions, the Company recorded a primarily non-cash
compensation charge of $33.5 million during 2001.

In 2000, the Company recorded a restructuring
credit of $2.0 million for the reversal of prior year
restructuring accruals due to actual costs being lower than
originally estimated. The restructuring credit related to the
domestic distribution and international distribution segments
equally and eliminated the remaining restructuring accruals
established in years prior to 2000.

Note 21  Segment and Geographical
Financial Information

The Company reports financial results on the
basis of three business segments; domestic distribution,
international distribution and laboratory workstations. The
domestic distribution segment manufacturers, sells and
distributes products to three primary customer markets:
scientific research, clinical laboratory and industrial safety.
Additionally, this segment provides contract manufacturing,
chemical manufacturing and custom chemical synthesis and
pharmaceutical services for phase III and phase IV
clinical trials. The international distribution segment sells
and distributes products primarily to the scientific research
market. The laboratory workstations segment engages in the
manufacture and sale of laboratory furniture and fume hoods to
the scientific research laboratory market and the manufacture
and sale of consoles and enclosures to the technology,
communication and financial markets.

49



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Selected business segment financial information
for the years ended December 31, 2002, 2001, and 2000 is
presented below (in millions):

|                                          |                   |       |         |                        |  |      |         |         |  |      |         |         |  |   |       |       |  |   |       |       |  |   |       |       | 
|----------------------------------------- | ----------------- | ----- | ------- | ---------------------- |  | ---- | ------- | ------- |  | ---- | ------- | ------- |  | - | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- | 
|                                          |                   |       |         |                       
|                                          |                   | Sales |         | Income from Operations
|                                          |                   |       |         |                       
|                                          |                   | 2002  |         | 2001                   |  | 2000 |         | 2002    |  | 2001 |         | 2000   
|                                          |                   |       |         |                        |  |      |         |         |  |      |         |        
|Domestic distribution                     |                   | $     | 2,776.0 |                        |  | $    | 2,439.9 |         |  | $    | 2,187.3 |         |  | $ | 210.8 |       |  | $ | 181.3 |       |  | $ | 154.2 |      
|International distribution                |                   |       | 448.4   |                        |  |      | 425.4   |         |  |      | 418.5   |         |  |   | 21.4  |       |  |   | 18.6  |       |  |   | 16.6  |      
|Laboratory workstations                   |                   |       | 193.9   |                        |  |      | 178.6   |         |  |      | 165.2   |         |  |   | 11.7  |       |  |   | 8.7   |       |  |   | 7.3   |      
|Eliminations                              |                   |       | (179.9  | )                      |  |      | (163.9  | )       |  |      | (148.7  | )       |  |   | (1.0  | )     |  |   | 0.4   |       |  |   | (0.1  | )    
|                                          |                   |       |         |                        |  |      |         |         |  |      |         |         |  |   |       |       |  |   |       |       |  |   |       |      
|                                          | Segment sub-total |       |         | 3,238.4                |  |      |         | 2,880.0 |  |      |         | 2,622.3 |  |   |       | 242.9 |  |   |       | 209.0 |  |   |       | 178.0 | 
|Restructuring and other charges (credits) |                   |       |        |                        |  |      |        |         |  |      |        |         |  |   | (2.2  | )     |  |   | 59.7  |       |  |   | (2.0  | )    
|Nonrecurring charges                      |                   |       |        |                        |  |      |        |         |  |      |        |         |  |   |      |       |  |   | 1.5   |       |  |   | 10.4  |      
|Goodwill amortization                     |                   |       |        |                        |  |      |        |         |  |      |        |         |  |   |      |       |  |   | 16.7  |       |  |   | 13.3  |      
|                                          |                   |       |         |                        |  |      |         |         |  |      |         |         |  |   |       |       |  |   |       |       |  |   |       |      
|                                          | Total             |       | $       | 3,238.4                |  |      | $       | 2,880.0 |  |      | $       | 2,622.3 |  |   | $     | 245.1 |  |   | $     | 131.1 |  |   | $     | 156.3 | 
|                                          |                   |       |         |                        |  |      |         |         |  |      |         |         |  |   |       |       |  |   |       |       |  |   |       |      

Income from operations is revenue less related
direct and allocated expenses. External customer sales of the
domestic distribution segment were $2,602 million,
$2,281 million, and $2,045 million during 2002, 2001
and 2000, respectively. Intercompany sales and transfers between
segments were not material for 2002, 2001, or 2000.

The domestic distribution, international
distribution and laboratory workstations segments accounted for
$19.6 million, $6.5 million and $0.1 million,
respectively, of the 2001 restructuring and other charges. 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 not allocated by segment.

Total assets, capital expenditures and
depreciation and amortization by segment for the year ended
December 31 is as follows (in millions):

|                           |       |        |         |                      |  |                  |         |         |  |      |       |         |  |      |      |      |  |      |      |      |  |   |      |      |  |   |      |      |  |   |      |      |  |   |      |      | 
|-------------------------- | ----- | ------ | ------- | -------------------- |  | ---------------- | ------- | ------- |  | ---- | ----- | ------- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | - | ---- | ---- |  | - | ---- | ---- |  | - | ---- | ---- |  | - | ---- | ---- | 
|                           |       |        |         |                      |  |                  |         |         |  |      |       |         |  |     
|                           |       |        |         |                      |  | Depreciation and
|                           |       | Assets |         | Capital Expenditures |  | Amortization    
|                           |       |        |         |                      |  |                 
|                           |       | 2002   |         | 2001                 |  | 2000             |         | 2002    |  | 2001 |       | 2000    |  | 2002 |      | 2001 |  | 2000
|                           |       |        |         |                      |  |                  |         |         |  |      |       |         |  |      |      |      |  |     
|Domestic distribution      |       | $      | 1,420.8 |                      |  | $                | 1,331.7 |         |  | $    | 848.4 |         |  | $    | 32.4 |      |  | $    | 30.1 |      |  | $ | 19.4 |      |  | $ | 57.8 |      |  | $ | 55.7 |      |  | $ | 38.2 |     
|International distribution |       |        | 326.7   |                      |  |                  | 340.7   |         |  |      | 375.1 |         |  |      | 6.7  |      |  |      | 5.3  |      |  |   | 4.9  |      |  |   | 12.1 |      |  |   | 17.0 |      |  |   | 16.5 |     
|Laboratory workstations    |       |        | 123.9   |                      |  |                  | 166.8   |         |  |      | 162.2 |         |  |      | 4.8  |      |  |      | 4.7  |      |  |   | 5.1  |      |  |   | 5.0  |      |  |   | 9.3  |      |  |   | 8.9  |     
|                           |       |        |         |                      |  |                  |         |         |  |      |       |         |  |      |      |      |  |      |      |      |  |   |      |      |  |   |      |      |  |   |      |      |  |   |      |     
|                           | Total |        | $       | 1,871.4              |  |                  | $       | 1,839.2 |  |      | $     | 1,385.7 |  |      | $    | 43.9 |  |      | $    | 40.1 |  |   | $    | 29.4 |  |   | $    | 74.9 |  |   | $    | 82.0 |  |   | $    | 63.6 | 
|                           |       |        |         |                      |  |                  |         |         |  |      |       |         |  |      |      |      |  |      |      |      |  |   |      |      |  |   |      |      |  |   |      |      |  |   |      |     

Sales outside the United States were
approximately 18 percent, 17 percent, and
19 percent of total sales in 2002, 2001, and 2000,
respectively. No single foreign country accounted for more than
10 percent of sales during any of the years ended
December 31, 2002, 2001 or 2000.

50



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Long lived assets and revenue by geographical
area for the year ended December 31 is as follows (in
millions):

|                                          |       |                   |       |       |  |   |       |       | 
|----------------------------------------- | ----- | ----------------- | ----- | ----- |  | - | ----- | ----- | 
|                                          |       |                  
|                                          |       | Long-Lived Assets
|                                          |       |                  
|                                          |       | 2002              |       | 2001 
|                                          |       |                   |       |      
|Long-lived assets by geographic
    area: |       |                   |       |       |  |   |       |      
|Domestic                                  |       | $                 | 617.7 |       |  | $ | 681.4 |      
|International                             |       |                   | 334.7 |       |  |   | 255.0 |      
|                                          |       |                   |       |       |  |   |       |      
|                                          | Total |                   | $     | 952.4 |  |   | $     | 936.4 | 
|                                          |       |                   |       |       |  |   |       |      

|                              |       |         |         |         |  |      |         |         |  |   |         |         | 
|----------------------------- | ----- | ------- | ------- | ------- |  | ---- | ------- | ------- |  | - | ------- | ------- | 
|                              |       |        
|                              |       | Revenue
|                              |       |        
|                              |       | 2002    |         | 2001    |  | 2000
|                              |       |         |         |         |  |     
|Revenue by geographical area: |       |         |         |         |  |      |         |         |  |   |         |        
|Domestic                      |       | $       | 2,689.5 |         |  | $    | 2,363.0 |         |  | $ | 2,152.4 |        
|International                 |       |         | 584.6   |         |  |      | 532.0   |         |  |   | 481.3   |        
|Eliminations                  |       |         | (35.7   | )       |  |      | (15.0   | )       |  |   | (11.4   | )      
|                              |       |         |         |         |  |      |         |         |  |   |         |        
|                              | Total |         | $       | 3,238.4 |  |      | $       | 2,880.0 |  |   | $       | 2,622.3 | 
|                              |       |         |         |         |  |      |         |         |  |   |         |        

Note 22  Related Parties

The Company pays an annual management fee of
$1.0 million to certain affiliates of THL. In return for
the annual management fee, THL, and certain of its affiliates,
provide consulting and management advisory services. This
agreement expires in 2005. Several of the Companys equity
investors were underwriters to the Companys May 2001 stock
offering for which the Company paid approximately $9.9 million
in underwriters discounts from the proceeds of the stock
offering. Additionally, one of the Companys equity
investors is a financial institution that provides financing to
the Company.

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, 2002, 2001 and 2000. The
Company made contributions of $1.7 million and
$0.7 million to the Winthrop Foundation (the
Foundation) in 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 23  Subsequent
Events

On January 14, 2003, the Company issued and
sold $200 million of 8 1/8 percent senior subordinated
notes due in May 2012 at a premium resulting in a yield of
7.4 percent. On February 14, 2003, the Company entered
into a new credit facility (the Credit Facility)
with a group of financial institutions, consisting of (i) a
$400 million term loan facility (the Term
Facility), which contains a provision that, upon the
Companys future request, and subject to the fulfillment of
certain conditions, an additional $250 million incremental
term facility may be drawn (the Incremental Term
Facility) and (ii) a $175 million revolving
credit facility (the Revolving Facility). The
Revolving Facility includes a sub-limit for the issuance of
letters of credit. The Credit Facility also permits borrowers to
be designated in the future to borrow loans denominated in local
currency from individual letters thereunder, either on a
negotiated basis or through a competitive bidding

51



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

process. Commitments under the Revolving Facility
expire, and the loans outstanding thereunder mature, on
March 31, 2008. The Term Facility requires the Company to
make quarterly repayments of principal equal to $1 million
through March 31, 2009, and quarterly repayments of
principal equal to $94 million beginning June 30, 2009
through the maturity of the Term Facility on March 31,
2010. Borrowing under the revolving facility bear interest, at
the borrowers election, at either the adjusted LIBOR rate
plus a margin of between 2.25 percent and 3.00 percent
per annum or the prime rate plus a margin of between
1.25 percent and 2.00 percent per annum, depending in
each case on the Companys leverage ratio. Borrowings under
the Term Facility bear interest, at the borrowers election, at
the adjusted LIBOR rate plus 2.50 percent per annum or the
prime rate plus 1.50 percent per annum. The Credit Facility
replaces the previous credit facility entered into in January
1998. A portion of the proceeds from the 8 1/8 percent
senior subordinated notes and the Term Facility were used to
refinance the Companys 9 percent senior subordinated
notes due in 2008.

Obligations of the Company and its subsidiaries
under the Credit Facility will be secured by substantially all
assets of the Company and its material domestic subsidiaries. In
addition, the Credit Facility contains covenants of the Company
and the subsidiary borrowers, including, without limitation,
certain financial covenants and restrictions on
(i) indebtedness, (ii) the incurrence of liens,
(iii) loans and investments, (iv) the sale of assets,
(v) mergers, acquisitions and other business combinations,
(vi) the payment of cash dividends to shareholders and
(vii) various financial covenants. The financial covenants
include requirements to maintain certain levels of interest
coverage, debt to earnings before interest, taxes, depreciation
and amortization and a limit on capital expenditures. Loans
under the term Facility are required to be prepaid with
100 percent 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.

On February 14, 2003, the Company entered
into a new $225 million receivables security facility
(Receivables Securitization) (see
Note 6  Accounts Receivable), 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, formerly
named FSI Receivables Corp. (FSI), a special
purpose, bankruptcy remote indirect wholly owned subsidiary of
the Company. On the same date, FSI and the Company, 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, the
originators retain collection and administrative
responsibilities for the receivables in the pool. The effective
funded interest rate on the Receivables Securitization is
approximately one month LIBOR plus an annual commitment fee of
45 basis points. The unfunded annual commitment fee is 25 basis
points.

Note 24  Accounting
Pronouncements

In January 2003, the FASB issued Interpretation
No. 46, Consolidation of Variable Interest
Entities. This interpretation defines when a business
enterprise must consolidate a variable interest entity. This
interpretation applies immediately to variable interest entities
created after January 31, 2003. It applies in the first
fiscal year or interim period beginning after June 15,
2003, to entities in which an enterprise holds a variable
interest that it acquired before February 1, 2003. It is
not deemed reasonably possible that the adoption of this
statement will have a material effect on the Companys
financial position or results of operations.

In December 2002, the FASB issued Statement of
Financial Accounting Standards No. 148, Accounting
for Stock-Based Compensation  Transition and
Disclosure (SFAS 148) which amends FASB
Statement No. 123. This statement provides alternative
methods of transition for a voluntary change to the fair
value-based method of accounting for stock-based employee
compensation and amends the disclosure

52



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

requirements of FASB Statement No. 123. The
transition guidance and annual disclosure provisions are
effective for fiscal years ending after December 15, 2003.
The interim disclosure provisions are effective for financial
reports containing financial statements for interim periods
beginning after December 15, 2002. The Company will include
the required interim disclosure provisions in its financial
statements for the quarter ending March 31, 2003. The adoption
of this statement will not have a material effect on the
Companys financial position or results of operations.

In November 2002, the FASB issued Interpretation
No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others. This interpretation requires a
guarantor to recognize, at the inception of the guarantee, a
liability for the fair value of the obligation undertaken in
issuing the guarantee. It also enhances guarantors
disclosure requirements to be made in its interim and annual
financial statements about its obligations under certain
guarantees it has issued. The initial recognition and initial
measurement provisions of this interpretation are applicable on
a prospective basis to guarantees issued or modified after
December 31, 2002. The disclosure requirements are
effective for financial statements of interim or annual periods
ending after December 15, 2002. In the normal course of
business, the Company does not issue guarantees to
third-parties; accordingly, this interpretation will not have an
effect on the Companys financial position or results of
operations.

In November 2002, the Emerging Issues Task Force
issued EITF Issue No. 00-21 Accounting for Revenue
Arrangements with Multiple Deliverables,
(EITF 00-21) effective for arrangements entered
into after June 15, 2003. EITF 00-21 defines units of
accounting for arrangements with multiple deliverables resulting
in revenue being allocated over the units of accounting for
revenue recognition purposes. The adoption of this statement is
not anticipated to have a material effect on the Companys
financial position or results of operations.

In July 2002, the FASB issued Statement of
Financial Accounting Standards No. 146, Accounting
for Exit or Disposal Activities
(SFAS 146). SFAS 146 requires the
recognition of a liability for costs associated with an exit
plan or disposal activity when incurred and nullifies Emerging
Issues Task Force (EITF) Issue 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring), which allowed recognition at the date of
an entitys commitment to an exit plan. The provisions of
this statement are effective for exit or disposal activities
that are initiated by the Company after December 31, 2002.
The adoption if this statement is not anticipated to have a
material effect on the Companys financial position or
results of operations.

In June 2001, the FASB issued Statement of
Financial Accounting Standards No. 143, Accounting
for Asset Retirement Obligations, effective for fiscal
years beginning after June 15, 2002. This statement
addresses the diverse accounting practices for obligations
associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. The adoption of this
statement will not have a material effect on the Companys
financial position or results of operations.

53



---



##### Table of Contents



FISHER SCIENTIFIC INTERNATIONAL INC.


NOTES TO FINANCIAL
STATEMENTS  (Continued)

Note 25  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 2002 and 2001, 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):

|                                                                                  |                                        |       |       |        |   |       |       |        |  |      |       |       |  |   |       |       |  |   |         |       |  
|--------------------------------------------------------------------------------- | -------------------------------------- | ----- | ----- | ------ | - | ----- | ----- | ------ |  | ---- | ----- | ----- |  | - | ----- | ----- |  | - | ------- | ----- | -
|                                                                                  |                                        |      
|                                                                                  |                                        | 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 |  

|                                    |         |       |       |        |   |       |       |        |  |      |       |       |  |   |       |       |  |   |         |       | 
|----------------------------------- | ------- | ----- | ----- | ------ | - | ----- | ----- | ------ |  | ---- | ----- | ----- |  | - | ----- | ----- |  | - | ------- | ----- | 
|                                    |         |      
|                                    |         | 2001 
|                                    |         |      
|                                    |         | First |       | Second |   | Third |       | Fourth |  | Year
|                                    |         |       |       |        |   |       |       |        |  |     
|Sales                               |         | $     | 687.0 |        |   | $     | 708.8 |        |  | $    | 729.5 |       |  | $ | 754.7 |       |  | $ | 2,880.0 |      
|Gross profit                        |         |       | 174.4 |        |   |       | 179.7 |        |  |      | 185.6 |       |  |   | 197.5 |       |  |   | 737.2   |      
|Net income (loss)(a)                |         | $     | (23.7 | )      |   | $     | 12.2  |        |  | $    | 16.9  |       |  | $ | 11.0  |       |  | $ | 16.4    |      
|Net income (loss) per common share: |         |       |       |        |   |       |       |        |  |      |       |       |  |   |       |       |  |   |         |      
|                                    | Basic   |       | $     | (0.59  | ) |       | $     | 0.25   |  |      | $     | 0.31  |  |   | $     | 0.20  |  |   | $       | 0.33  | 
|                                    | Diluted |       | $     | (0.59  | ) |       | $     | 0.23   |  |      | $     | 0.30  |  |   | $     | 0.19  |  |   | $       | 0.31  | 
|Market price:                       |         |       |       |        |   |       |       |        |  |      |       |       |  |   |       |       |  |   |         |      
|                                    | High    |       | $     | 39.88  |   |       | $     | 38.70  |  |      | $     | 27.41 |  |   | $     | 30.30 |  |   | $       | 39.88 | 
|                                    | Low     |       | $     | 32.40  |   |       | $     | 24.70  |  |      | $     | 21.70 |  |   | $     | 24.20 |  |   | $       | 21.70 | 



---



|    |                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | During the first and fourth quarter of 2001,
    Fisher recorded $51.6 million ($32.5 million, net of
    tax) and $8.1 million ($5.1 million, net of tax) of
    restructuring and other charges, respectively. See
    Note 20  Restructuring and Other
    Charges.

54



---



##### Table of Contents








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

None




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 2, 2003
(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.






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

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






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

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 Transactions and Other
Matters is incorporated herein by reference.






|         |                        
|-------- | -----------------------
|Item 14. | Controls and Procedures

Within the 90 days prior to the filing date
of this Annual Report on Form 10-K, an evaluation of the
effectiveness of the Companys disclosure controls and
procedures (pursuant to Rule 13a-14(c) 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 periodic SEC filings.

There have been no significant changes in the
Companys internal controls or in other factors that could
significantly effect the internal controls subsequent to the
date of the most recent evaluation.




PART IV






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

(a) (1) Financial Statements.
The Index to Financial Statements of the Company appears at
page 22 of this Annual Report.



| |                                                                                                    
| | ---------------------------------------------------------------------------------------------------
| | (2) Schedules. Financial statement
    schedules are listed under Item 15(d) in this Annual Report.

55



---



##### Table of Contents





| |                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (3) Exhibits. Exhibits 10.1
    through 10.14 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 |      |  |  |            
|Number  |      |  |  | Description
|        |      |  |  |            
|        | 2.1  |  |  |            |  | Second Amended and Restated Agreement and Plan of
    Merger, as amended, dated as of November 14, 1997 by and
    between the Company and FSI Merger Corp.(1)                                                                                                                                                                               
|        | 2.2  |  |  |            |  | Stock Purchase Agreement, dated November 9,
    1998, among Fisher Scientific International Inc., Fisher
    Scientific Holdings France S.A., as Buyer, and Capiac,
    Sapaca 97, Sapcar 97, Sappi 97, Sappef 97,
    Pierre Block, Anne-Catherine Block-Derriey, Pierre-Francois
    Block, Caroline Block and Marthe Block, as Sellers.(2)
|        | 2.3  |  |  |            |  | Distribution Agreement, dated March 29,
    1999, among Fisher Scientific International Inc. and ProcureNet,
    Inc.(13)                                                                                                                                                                                                                    
|        | 3.1  |  |  |            |  | Certificate of Amendment of Restated Certificate
    of Incorporation(15)                                                                                                                                                                                                                                                                    
|        | 3.2  |  |  |            |  | Certificate of Designation of Series A
    Junior Participating Preferred Stock of the Company, dated
    June 9, 1997(1)                                                                                                                                                                                                                    
|        | 3.3  |  |  |            |  | Certificate of Designation of Non-Voting Stock of
    the Company(17)                                                                                                                                                                                                                                                                        
|        | 3.4  |  |  |            |  | Certificate of Designation of Series B
    Non-Voting Common Stock(17)                                                                                                                                                                                                                                                                       
|        | 3.5  |  |  |            |  | Bylaws of the Company(3)                                                                                                                                                                                                                                                                                                                     
|        | 4.1  |  |  |            |  | Specimen Certificate of Common Stock, $.01 par
    value per share, of the Company(17)                                                                                                                                                                                                                                                       
|        | 4.2  |  |  |            |  | Certificate of Designation of Series A
    Junior Participating Preferred Stock, dated June 9, 1997
    (see Exhibit 3.2)                                                                                                                                                                                                                    
|        | 4.3  |  |  |            |  | Certificate of Designation of Non-Voting Stock
    (see Exhibit 3.3)                                                                                                                                                                                                                                                                         
|        | 4.4  |  |  |            |  | Certificate of Designation of Series B
    Non-Voting Common Stock (See Exhibit 3.4)                                                                                                                                                                                                                                                         
|        | 4.5  |  |  |            |  | Senior Debt Securities Indenture dated as of
    December 18, 1995 between the Company and Mellon Bank,
    N.A., as Trustee(6)                                                                                                                                                                                                              
|        | 4.6  |  |  |            |  | Indenture dated as of January 21, 1998
    between Fisher and State Street Bank and Trust Company, as
    Trustee, relating to the 9% Senior Subordinated Notes due 2008(7)                                                                                                                                                                  
|        | 4.7  |  |  |            |  | 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(16)                                                                                                                                        
|        | 4.8  |  |  |            |  | Form of 8 1/8% Senior Subordinated Notes due
    2012(16)                                                                                                                                                                                                                                                                                    
|        | 4.9  |  |  |            |  | Registration Rights Agreement dated as of
    April 24, 2002 among the registrant, J.P. Morgan
    Securities Inc., Credit Suisse First Boston Corporation and
    Deutsche Bank Securities Inc.(16)                                                                                                                                         
|        | 4.10 |  |  |            |  | Indenture dated as of November 20, 1998
    between the registrant and State Street Bank and Trust Company,
    as amended by the First Supplemental Indenture dated as of
    November 20, 1998(17)                                                                                                                                         
|        | 4.11 |  |  |            |  | Fifth Amendment and Consent to the Credit
    Agreement dated as of October 15, 2001(19)                                                                                                                                                                                                                                                     
|        | 4.12 |  |  |            |  | Purchase Agreement dated April 17, 2002
    among the registrant, J.P. Morgan Securities Inc., Credit
    Suisse First Boston Corporation and Deutsche Bank Securities
    Inc.(16)                                                                                                                                                          
|        | 10.1 |  |  |            |  | Employment Agreement dated as of
    December 31, 2001 between the Company and Paul M.
    Montrone(18)                                                                                                                                                                                                                                      
|        | 10.2 |  |  |            |  | Employment Agreement dated as of
    December 31, 2001 between the Company and Paul M.
    Meister(18)                                                                                                                                                                                                                                       
|        | 10.3 |  |  |            |  | Employment Agreement dated as of March 31,
    1998 between the Company and David Della Penta(10)                                                                                                                                                                                                                                            
|        | 10.4 |  |  |            |  | Fisher Scientific International Inc. Retirement
    Plan(3)                                                                                                                                                                                                                                                                                  
|        | 10.5 |  |  |            |  | Fisher Scientific International Inc. Savings and
    Profit Sharing Plan(3)                                                                                                                                                                                                                                                                  
|        | 10.6 |  |  |            |  | Fisher Scientific International Inc. Incentive
    Compensation Plan, amended and restated effective as of
    January 1, 2002*                                                                                                                                                                                                              
|        | 10.7 |  |  |            |  | Restricted Unit Plan for Non-Employee Directors
    of Fisher Scientific International Inc.(3)                                                                                                                                                                                                                                               
|        | 10.8 |  |  |            |  | Fisher Scientific International Inc. Deferred
    Compensation Plan for Non-Employee Directors(3)                                                                                                                                                                                                                                            

56



---



##### Table of Contents



|        |       |  |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | ----- |  |  | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |  |            
|Number  |       |  |  | Description
|        |       |  |  |            
|        | 10.9  |  |  |            |  | 2001 Equity on Incentive Plan(16)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 10.10 |  |  |            |  | Fisher Scientific International Inc. Long-Term
    Incentive Plan(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 10.11 |  |  |            |  | Fisher Scientific International Inc. 1998 Equity
    and Incentive Plan(11)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10.12 |  |  |            |  | Amended and Restated Investors Agreement
    dated as of March 29, 1999 among Fisher Scientific
    International Inc., Thomas H. Lee Equity Fund III, L.P.,
    THL-CCI Limited Partnership, THL Foreign Fund III, L.P.,
    THL FSI Equity Investors, L.P., DLJ Merchant Banking
    Partners II, L.P., DLJ Merchant Banking Partners IIA,
    L.P., DLJ Offshore Partners, II, C.V., DLJ Diversified
    Partners, L.P., DLJ Diversified Partners A, L.P., DLJ
    Millennium Partners, L.P., DLJ Millennium Partners A,
    L.P., DLJMB Funding II, Inc., UK Investment Plan 1997
    Partners, DLJ EAB Partners, L.P., DLJ ESC II, L.P., DLJ
    First ESC, L.P., Chase Equity Associates, L.P., Merrill
    Lynch Kecalp L.P. 1997, Kecalp Inc., ML IBK Positions, Inc.
    and certain other persons named herein(14)          
|        | 10.13 |  |  |            |  | Amendment to Amended and Restated Investors
    Agreement dated as of May 14, 2000 among Fisher Scientific
    International Inc., Thomas H. Lee Equity Fund III, L.P.
    THL-CCI Limited Partnership, THL Foreign Fund III, L.P.,
    THL FSI Equity Investors, L.P., DLJ Merchant Banking
    Partners II, L.P., DLJ Merchant Banking Partners IIA,
    L.P., DLJ Offshore Partners, II, C.V., DLJ Diversified Partners,
    L.P., DLJ Diversified Partners A, L.P., DLJ Millennium
    Partners, L.P., DLJ Millennium Partners A, L.P., DLJMB
    Funding II, Inc., UK Investment Plan 1997 Partners, DLJ EAB
    Partners, L.P., DLJ ESC II, L.P., DLJ First ESC, L.P.,
    Chase Equity Associates, L.P., Merrill Lynch Kecalp L.P. 1997,
    Kecalp Inc., ML IBK Positions, Inc. and certain other persons
    named herein(14)
|        | 10.14 |  |  |            |  | Amendment to Amended and Restated Investors
    Agreement dated as of May 2, 2001 among Fisher Scientific
    International Inc., Thomas H. Lee Equity Fund III, L.P.,
    THL-CCI Limited Partnership, THL Foreign Fund III, L.P.,
    THL FSI Equity Investors, L.P., DLJ Merchant Banking
    Partners II, L.P., DLJ Merchant Banking Partners II-A,
    L.P., DLJ Offshore Partners, II, C.V., DLJ Diversified Partners,
    L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium Partners,
    L.P., DLJ Millennium Partners-A, L.P., DLJMB Funding II,
    Inc., UK Investment Plan 1997 Partners, DLJ EAB Partners, L.P.,
    DLJ ESC II, L.P., DLJ First ESC, L.P., Chase Equity Associates,
    L.P., Merrill Lynch Kecalp L.P. 1997, Kecalp Inc., ML IBK
    Positions, Inc. and certain other persons named herein(15)   
|        | 21.1  |  |  |            |  | List of Subsidiaries of the Company*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 23.1  |  |  |            |  | Consent of DELOITTE & TOUCHE LLP*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



---



| |   |               
| | - | --------------
| | * | Filed herewith



|    |                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Included as an Annex or Exhibit to the
    Companys Proxy Statement/ Prospectus included in the
    Companys Registration Statement on Form S-4
    (Registration No. 333-42777) filed with the Securities and
    Exchange Commission on December 19, 1997 and incorporated
    herein by reference.
|   
|(2) | Included as an exhibit to the Companys
    Current Report on Form 8-K/ A filed with the Securities and
    Exchange Commission on February 17, 1999 and incorporated
    herein by reference.                                                                                                         
|   
|(3) | 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.                                                                     
|   
|(4) | Included as an exhibit to the Companys
    Registration Statement on Form 8-A filed with the
    Securities and Exchange Commission on June 9, 1997 and
    incorporated herein by reference.                                                                                                         
|   
|(5) | Included as an exhibit to the Companys
    Current Report on Form 8-K dated August 7, 1997 filed
    with the Securities and Exchange Commission on August 8,
    1997 and incorporated herein by reference.                                                                                          
|   
|(6) | Included as an exhibit to the Companys
    Registration Statement on Form S-3 (Registration
    No. 33-99884) filed with the Securities and Exchange
    Commission on November 30, 1995 and incorporated herein by
    reference.                                                                    

57



---



##### Table of Contents





|    |                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(7) | Included as an exhibit to the Companys
    Current Report on Form 8-K (Registration
    No. 001-10920) dated January 21, 1998 filed with the
    Securities and Exchange Commission on February 5, 1998 and
    incorporated herein by reference.
|   
|(8) | Included as an exhibit to the Companys
    Registration Statement on Form S-4 (Registration
    No. 333-48285) filed with the Securities and Exchange
    Commission on March 19, 1998 and incorporated herein by
    reference.                 
|   
|(9) | Included as an exhibit to the Companys
    Annual Report, as amended, on Form 10-K/ A for the year
    ended December 31, 1997, filed with the Securities and
    Exchange Commission on April 20, 1998 and incorporated
    herein by reference.



|     |                                                                                                                                                                                                                                                                      
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Included as an exhibit to the Companys
    Quarterly Report on Form 10-Q for the quarter ended
    June 30, 1998, filed with the Securities and Exchange
    Commission on August 14, 1998 and incorporated herein by
    reference.                                
|    
|(11) | 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.
|    
|(12) | Included in an exhibit to the Companys
    Annual Report on Form 10-K for the year ended
    December 31, 1995, filed with the Securities and Exchange
    Commission on March 21, 1996 and incorporated herein by
    reference.                                   
|    
|(13) | Included as an exhibit to the Companys
    Current Report on Form 8-K Registration No. 001-10920
    dated April 15, 1999 filed with the Securities and Exchange
    Commission on April 30, 1999.                                                                  
|    
|(14) | Included as an exhibit to the Companys
    Quarterly Report on Form 10-Q for the quarter ended
    March 31, 1999, filed with the Securities and Exchange
    Commission on May 14, 1999 and incorporated herein by
    reference.                                  
|    
|(15) | Included as an exhibit to the Companys
    Form 10-Q for the quarterly period ended March 31,
    2001, filed with the Securities and Exchange Commission on
    May 15, 2001 and incorporated herein by reference.                                                 
|    
|(16) | Included as an exhibit to the Companys
    Registration Statement on Form S-8 (Registration
    No. 333-68052) filed with the Securities and Exchange
    Commission on August 21, 2001 and incorporated herein by
    reference.                                   
|    
|(17) | Included in an exhibit to the Companys
    Annual Report on Form 10-K for the year ended
    December 31, 1998, filed with the Securities and Exchange
    Commission on March 31, 1999 and incorporated herein by
    reference.                                   
|    
|(18) | Included in an exhibit to the Companys
    Annual Report on Form 10-K for the year ended
    December 31, 2001, filed with the Securities and Exchange
    Commission on March 28, 2002 and incorporated herein by
    reference.                                   
|    
|(19) | Included as an exhibit to the Companys
    Registration Statement on Form S-3 (Registration
    No. 333-77046) filed with the Securities and Exchange
    Commission on January 18, 2002.                                                                           

(b) Reports on Form 8-K: The
Company did not file any Current Reports on Form 8-K during
the last quarter of the period covered by this report.

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



| |        |                                     
| | ------ | ------------------------------------
| | 21.1  | List of Subsidiaries of the Company.
|
| | 23.1  | Consent of DELOITTE & TOUCHE LLP.   

(d) Financial Statement Schedule.

58



---



##### Table of Contents



SCHEDULE II

Valuation and Qualifying Accounts and
Reserves

for the Three Years Ended December 31,
2002 (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, 2000 |            | $ | 34.9       |  |            | $ | 8.2        |  |           | $ |    |  |  | $ | (8.1 | ) |  | $ | 35.0 | 
|                                | December 31, 2001 |            |   | 35.0       |  |            |   | 2.9        |  |           |   | 1.4 |  |  |   | (4.5 | ) |  |   | 34.8 | 
|                                | December 31, 2002 |            |   | 34.8       |  |            |   | 5.6        |  |           |   |    |  |  |   | (4.8 | ) |  |   | 35.6 | 

59



---



##### 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 17, 2003

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/ ROBERT A. DAYRobert A. Day             |  | Director                                                                                   
|                                          
|/s/ ANTHONY J. DINOVIAnthony J. Dinovi     |  | Director                                                                                   
|                                          
|/s/ MICHAEL D. DINGMANMichael D. Dingman   |  | Director                                                                                   
|                                          
|/s/ DAVID V. HARKINSDavid V. Harkins       |  | Director                                                                                   
|                                          
|/s/ SCOTT M. SPERLINGScott M. Sperling     |  | Director                                                                                   
|                                          
|/s/ W. CLAYTON STEPHENSW. Clayton Stephens |  | Director                                                                                   
|                                          
|/s/ KENT R. WELDONKent R. Weldon           |  | Director                                                                                   

60



---



##### Table of Contents



CERTIFICATIONS

I, Paul M. Montrone, certify that:



| |                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1) I have reviewed this annual report on
    Form 10-K of Fisher Scientific International Inc.;                                                                                                                                                                                                                                                
|
| | 2) Based on my knowledge, this annual report
    does not contain any untrue statement of a material fact or omit
    to state a material fact necessary to make the statements made,
    in light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|
| | 3) Based on my knowledge, the financial
    statements, and other financial information included in this
    annual report, fairly present in all material respects the
    financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this annual
    report;                   
|
| | 4) The registrants other certifying
    officers and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we
    have:                                                                                                   



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) Designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | b) Evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) Presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5) The registrants other certifying
    officers and I have disclosed, based on our most recent
    evaluation, to the registrants auditors and the audit
    committee of registrants board of directors (or persons
    performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) All significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) Any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6) The registrants other certifying
    officers and I have indicated in this annual report whether or
    not there were significant changes in internal controls or in
    other factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies
    and material weaknesses.



| |                         
| | ------------------------
| | Date:     March 17, 2003



| |     |                     
| | --- | --------------------
| | By: | /s/ PAUL M. MONTRONE

| |                                         
| | ----------------------------------------
| |                                         
| | Paul
    M. Montrone                    
| | Chief
    Executive Officer             
| | Fisher
    Scientific International Inc.

61



---



##### Table of Contents



CERTIFICATIONS

I, Kevin P. Clark, certify that:



| |                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1) I have reviewed this annual report on
    Form 10-K of Fisher Scientific International Inc.;                                                                                                                                                                                                                                                
|
| | 2) Based on my knowledge, this annual report
    does not contain any untrue statement of a material fact or omit
    to state a material fact necessary to make the statements made,
    in light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    annual report;
|
| | 3) Based on my knowledge, the financial
    statements, and other financial information included in this
    annual report, fairly present in all material respects the
    financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this annual
    report;                   
|
| | 4) The registrants other certifying
    officers and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we
    have:                                                                                                   



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) Designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | b) Evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) Presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5) The registrants other certifying
    officers and I have disclosed, based on our most recent
    evaluation, to the registrants auditors and the audit
    committee of registrants board of directors (or persons
    performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) All significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) Any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6) The registrants other certifying
    officers and I have indicated in this annual report whether or
    not there were significant changes in internal controls or in
    other factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies
    and material weaknesses.



| |                         
| | ------------------------
| | Date:     March 17, 2003



| |     |                   
| | --- | ------------------
| | By: | /s/ KEVIN P. CLARK

| |                                         
| | ----------------------------------------
| |                                         
| | Kevin
    P. Clark                      
| | Chief
    Financial Officer             
| | Fisher
    Scientific International Inc.

62