<PAGE>   1
 
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
 
                                   FORM 10-K
(MARK ONE)
   [X]           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
 
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
 
   [   ]       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)
 
<TABLE>
<S>                                            <C>
                  DELAWARE                                      02-0451017
       (State or other jurisdiction of                       (I.R.S. Employer
       incorporation or organization)                       Identification No.)
 
          LIBERTY LANE, HAMPTON, NH                                03842
  (Address of principal executive offices)                      (Zip Code)
</TABLE>
 
              Registrant's telephone number, including area code:
                                 (603) 926-5911
          Securities registered pursuant to Section 12(b) of the Act:
 
<TABLE>
<CAPTION>
                                                           NAME OF EACH EXCHANGE
             TITLE OF EACH CLASS                            ON WHICH REGISTERED
             -------------------                           ---------------------
<S>                                            <C>
           Common Stock, par value                        New York Stock Exchange
               $.01 per share
</TABLE>
 
     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  [X]       No  [ ]
 
     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 definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
 
     The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 26, 1999 was approximately $69,715,027.
 
     The number of shares of Common Stock outstanding as of March 26, 1999 was
40,030,270.
 
     Documents Incorporated by Reference:  Portions of registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held May 11, 1999 are
incorporated by reference into Part III.
 
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<PAGE>   2
 
ITEM 1.  BUSINESS
 
INTRODUCTION
 
     Fisher Scientific International Inc. ("Fisher" or the "Company") is a world
leader in serving science, providing more than 260,000 products and services to
research, healthcare, industrial, educational and government customers in 145
countries. The Company serves as a one-stop source for the scientific and
laboratory needs of its customers, supplying a broad product offering of leading
brands of instruments, research chemicals, clinical consumables, diagnostics,
laboratory workstations and other laboratory supplies. The Company also provides
procurement outsourcing services and supply chain management technology and
software through its ProcureNet, Inc., Strategic Procurement Services Inc. and
UniKix Technology businesses. Fisher was founded in 1991, although the business
conducted by its principal operating subsidiary, Fisher Scientific Company, has
been in continuous operation since 1902 and traces its roots to 1851. Fisher's
principal executive offices are located at Liberty Lane, Hampton, New Hampshire
03842, and its telephone number is (603) 926-5911.
 
     During the fourth quarter of 1998, management decided to dispose of its
technology segment, which consists of its procurement outsourcing services and
supply chain management technology business (the "ProcureNet Business") and its
UniKix Technology software business. In December 1998, the Company's Board of
Directors approved a plan to (i) spinoff the ProcureNet Business to Fisher
stockholders (the "Spinoff") and (ii) sell the UniKix Technology software
business (the "UniKix Sale"). Following the Spinoff, the Company and ProcureNet
will operate as separate, stand-alone companies. As part of the Spinoff the
Company and ProcureNet will enter into a transition services agreement pursuant
to which Fisher will provide ProcureNet with certain management and other
administrative services and ProcureNet will continue to provide Fisher and its
customers third party procurement and electronic commerce support and services.
It is not expected that the Spinoff will have a material impact on Fisher's
business or operations. The Company currently anticipates that the consummation
of the Spinoff will occur in the second quarter of 1999. See Note 5 to Financial
Statements.
 
     In December 1998, Fisher acquired 90% of Bioblock Scientific S.A.
("Bioblock"), a leading distributor of scientific and laboratory instrumentation
in France. Fisher acquired the remaining 10% of Bioblock in the first quarter of
1999.
 
     Pursuant to the Second Amended and Restated Agreement and Plan of Merger
dated as of November 14, 1997, amending an Agreement and Plan of Merger dated
August 7, 1997 (as amended, the "Merger Agreement") between the Company and FSI
Merger Corp. ("FSI"), a Delaware corporation formed by Thomas H. Lee Company
("THL"), providing for the merger of FSI with and into Fisher and the
recapitalization of Fisher (collectively, "the Transaction"), which Transaction
was consummated on January 21, 1998, approximately 87% of the fully diluted
shares of common stock of Fisher were converted into the right to receive $9.65
per share in cash (approximately $955.0 million in the aggregate) pursuant to an
election process that provided stockholders the right to elect, subject to
proration, for each share of Fisher common stock held either $9.65 in cash or to
retain one share of common stock, $.01 par value ("Common Stock"), in the
recapitalized company. Pursuant to the Merger Agreement, vesting of all
outstanding options accelerated. See Note 2 to Financial Statements.
 
THE INDUSTRY
 
     Fisher's market consists of five principal sectors: (i) scientific research
and development activities conducted by biotechnology, pharmaceutical, chemical,
environmental and other entities; (ii) hospitals and physicians' offices that
perform diagnostic tests on patients, (iii) commercial and national reference
laboratories; (iv) educational activities in research institutions, medical
schools, universities, colleges, elementary and secondary schools; and (v) users
of maintenance, repair and operating ("MRO") materials and occupational health
and safety products in production and other activities.
 
                                        2
<PAGE>   3
 
     The Company's largest market is the scientific research supply market.
According to a recent study conducted by the Laboratory Products Association,
sales to the scientific research supply market were estimated to be
approximately $5 billion during 1998. The scientific research market is
primarily impacted by the level of applicable scientific and technology related
research and development ("R&D") spending in the U.S. The National Science
Foundation estimates that non-defense related R&D expenditures increased from
$44 billion in 1980 to over $200 billion in 1998, representing a compound annual
growth rate of approximately 8.8%. In addition to this growth,
non-defense-related R&D expenditures have typically not been subject to cyclical
swings, having not experienced a year-over-year decline since 1960 (when the
National Science Foundation began publishing such data).
 
     The Company's second-largest market is the U.S. clinical laboratory testing
market. A recent study by MarketData Enterprises Inc. estimated that the U.S.
clinical laboratory testing market totaled approximately $30 billion in 1997, up
from approximately $27 billion in 1993. Based on these overall spending levels,
management estimates that the clinical testing equipment and supply market, the
market the Company competes in, totals approximately $6 billion. The Company's
third-largest market, safety supply, which is a subset of the $225 billion MRO
market, is estimated to be approximately $7 billion. This market is currently
highly fragmented, but there has been a recent trend towards consolidation of
suppliers of safety products.
 
     The markets in which the Company competes are typically characterized by
high transaction volume (units) with relatively small average order prices. As a
result, customers in these markets incur relatively high average procurement
costs per order. The Company believes that as end users consolidate their vendor
base and/or outsource their procurement functions to reduce costs,
manufacturer's use of distribution and demand for the Company's distribution and
third party procurement services, including demand for the Company's electronic
ordering technology, will increase. By leveraging the Company's distribution and
technological capabilities as well as its national sales force, manufacturers
and end users can reduce the cost of procurement for an expanding list of
products.
 
     Over the last few years, the trend toward fewer suppliers has resulted in
consolidation of the fragmented scientific distribution market. Consolidation
benefits larger distributors by presenting them with the opportunity to leverage
large distribution infrastructures over higher sales volume and more customers.
The mergers of Fisher with Curtin Matheson Scientific Inc. ("CMS"), VWR
Scientific Products Corporation with Baxter International Inc. and more
recently, Cardinal Health Inc. and Allegiance Corporation, are illustrative of
this trend. These same trends exist in most international markets.
 
PRODUCTS AND SERVICES
 
     Fisher currently has over 260,000 products available for delivery from its
electronic and other order-entry systems and is continuously expanding and
refining its product offerings to provide its customers with a complete array of
laboratory and clinical testing supplies. In addition to supplying leading
brands of instruments, supplies and equipment, Fisher offers research chemicals,
clinical consumables, instruments, diagnostics, and laboratory workstations of
its own manufacture.
 
     Fisher Products.  Fisher's product portfolio is comprised of proprietary
products as well as sourced products. Proprietary offerings consist of
self-manufactured products and products sold through exclusive distribution
agreements. Management estimates that proprietary products accounted for
approximately 40% of total sales in fiscal 1998. Consumable products, such as
laboratory supplies and specialty chemicals, represented approximately 80% of
the Company's total sales in fiscal 1998.
 
     Sales and Customer Service Professionals.  In order to reduce the
complexity of today's scientific research and clinical testing product
offerings, Fisher provides customer support through a worldwide sales and
customer service network. Fisher's direct sales force consists of over 1,000
account representatives and product/systems sales specialists worldwide. Most of
the members of Fisher's direct sales force have scientific or medical
backgrounds, which enable them to provide technical assistance to the end users
of Fisher products. In addition to performing traditional selling functions,
these representatives provide the basis for a market-driven development program
for new products and services by identifying customer needs and utilizing the
Company's accumulated technical expertise to translate those needs into new
services or products, which
 
                                        3
<PAGE>   4
 
may be manufactured by either Fisher or its suppliers. In addition, Fisher's
customer service organization includes over 1,000 representatives worldwide.
These customer service representatives, supported by a scientific and technical
staff, respond to end-user product or application questions and assist Fisher's
customers with efficient order entry and order expediting.
 
     Fisher Catalog.  The Fisher Catalog has been published for over 90 years
and is a standard reference for the scientific community worldwide. In addition,
the Company publishes the CMS/Fisher HealthCare Catalog, the Fisher Chemical
Catalog, the Fisher Science Education catalog, as well as several international
catalogs in seven different languages. In 1995, Fisher established an Internet
site (Fishersci.com), which currently features the Fisher Catalog, the Fisher
Chemical Catalog, the Fisher Safety Catalog, the Acros Organics Catalog of Fine
Chemicals and the CMS/Fisher HealthCare Catalog, as well as other product,
safety and general information, all in electronic form for quick and easy
access. More than 260,000 products and over 22,000 images can be browsed. New
products are continuously added, making the Fisher suite of catalogs a dynamic
library, one of the most complete and up-to-date sources of laboratory and
safety products available. Fisher customers now have the ability to place their
orders electronically through an intuitive, integrated and easy-to-use process.
Fisher also continues to publish over a dozen international catalogs to support
its growing worldwide presence. More than one million copies of the Company's
various catalogs are produced biannually, with supplements tailored to specific
market segments such as biotechnology, research chemicals, educational materials
and occupational health and safety.
 
DISTRIBUTION
 
     The Company's distribution network comprises 25 locations in the U.S.,
including a national distribution center in Somerville, New Jersey, four
regional centers (New Jersey, California, Illinois and Georgia) and 20 local
facilities throughout the United States. The Company also has two distribution
centers in Canada and one each in Germany, France, England, Belgium, Singapore,
Korea, Malaysia, Mexico and Australia. Through its worldwide distribution
networks, the Company distributes an average of 20,000 items every business day,
with products accounting for more than 90% of total sales in fiscal 1998 shipped
to customers within 24 hours of being ordered.
 
MANUFACTURING
 
     The Company operates principal manufacturing facilities in Fair Lawn,
Somerville and Swedesboro, New Jersey; Two Rivers, Wisconsin; Indiana and
Pittsburgh, Pennsylvania; Huntersville, North Carolina; Loughborough, United
Kingdom; Geel, Belgium; Rochester and Conklin, New York; and Mountain Home,
Arkansas. Products manufactured include research, bulk and organic chemicals,
laboratory equipment, laboratory fume hoods, wood, plastic and metal laboratory
workstations and furniture, computer local area network ("LAN") furniture,
scientific glassware and plastic labware, and diagnostic instruments and
educational materials. More than one-half of these products are sold directly to
end users, other dealers and distributors with the balance sold through the
Company's distribution network.
 
     The Company's manufacturing customers range from small start-up operations
to large national corporations and government agencies. The Company's
manufacturing operations are not dependent on any single customer and are
operated on a "stand alone" basis to complement the Company's distribution
organization by providing the Company's sales representatives with a full range
of value added service and product offerings and to position the Company as a
one-stop source for all of its customers' scientific research and laboratory
needs.
 
SUPPLIERS
 
     The Company distributes laboratory instruments, supplies and equipment
obtained from over 3,200 vendors. Vendors generally offer these products to all
distributors on substantially similar terms. Although certain products are
available from only a limited number of vendors, Fisher does not anticipate that
it will be unable to purchase any of the products it distributes. The Company's
largest supplier represented approximately 10% of 1998 sales.
 
                                        4
<PAGE>   5
 
COMPETITION
 
     The Company operates in a highly competitive market. The Company competes
primarily with a wide range of suppliers and manufacturers that sell their own
products directly to end users. The Company also competes with other
distributors, such as VWR Scientific Products Corporation in the scientific
research market and Cardinal Health Inc./Allegiance Corporation in the clinical
market. The principal means of competition in the markets the Company serves are
systems capabilities, breadth and exclusivity of product offerings, price and
service. The Company believes that it competes effectively in these areas
through the Fisher Catalog, electronic procurement systems, integrated supply
capabilities, and international logistics and distribution capabilities.
 
TRADEMARKS AND PATENTS
 
     Fisher owns or licenses a number of patents and patent applications that
are important to its businesses. Fisher has more than 200 registered and
unregistered service marks and trademarks for its products and services. Some of
its more significant marks include Fisher Rims, Accumet, Acros, Biochemical
Sciences, Chemalert, Chemguard, CMS, Curtin Matheson Scientific, Enviroware,
Fisher, Fisherbiotech, Fisherbrand, Fisher Diagnostics, Fisher Healthcare,
Fisher Safety, Fisher Scientific, Gastrak, Hamilton, Histoprep, Isotemp,
Marathon, Microprobe, Optima, Pacific Hemostasis, and Valutrak. Registered
trademarks generally can have perpetual life, provided they are renewed on a
timely basis and continue to be used properly as trademarks, subject to the
rights of third parties to seek cancellation of the marks.
 
CUSTOMERS, SEASONALITY AND BACKLOG
 
     Fisher's sales are not materially dependent upon any single customer or any
few customers. No single customer of the Company represents 5% or more of the
total sales during the year. The Company's customers range in size from start-up
companies, hospital purchasing consortiums, and government agencies to
nationally and internationally recognized scientific research, medical and
educational institutions. Fisher's sales are generally related to applicable R&D
spending and to clinical testing practices and are therefore not seasonal to any
significant extent. In addition, no material portion of Fisher's business is
subject to renegotiation of profits or termination at the election of the United
States Government. Because Fisher's products are, in most cases, sold for
immediate shipment, there are no significant backlogs.
 
ENVIRONMENTAL MATTERS
 
     Some of Fisher's operations involve the handling, manufacture or use 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
of Fisher, as it is with other companies engaged in similar businesses, and
there can be no assurance that material damage will not occur or be discovered
to have occurred or be determined to be material in the future. The Company is
currently involved in various stages of investigation and remediation relative
to environmental protection matters.
 
     The Company's Fair Lawn and Somerville, New Jersey facilities are the
subject of administrative consent orders, issued pursuant to New Jersey's
Environmental Clean-Up and Responsibility Act ("ECRA") (now called the
Industrial Site Recovery Act ("ISRA")), in connection with prior transfers of a
controlling interest in the Company, which require that certain remediation and
other activities be undertaken at these sites. The Fair Lawn facility is also
part of a site listed on the "Superfund" National Priority List under the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"). Fisher has also been notified that it is among the
potentially responsible parties under CERCLA or similar state laws for the costs
of investigating and/or remediating contamination caused by hazardous materials
at certain other sites. The Company's non-Superfund liabilities for
environmental matters are principally related to compliance with ECRA/ISRA
administrative consent orders and other environmental regulatory requirements
such as the Clean Air Act, the Clean Water Act and other generally applicable
requirements.
 
                                        5
<PAGE>   6
 
     The potential costs related to environmental matters and the possible
impact on future operations are difficult to predict 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, such costs
could be material. Accruals for environmental liabilities are recorded, 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. Estimates are established based upon reports prepared
by environmental specialists, management's knowledge to date and its experience
with the foregoing environmental matters, and include potential costs for
investigation, remediation, operation and maintenance of cleanup sites and
related capital expenditures. Accrued liabilities for environmental matters were
$34.2 million and $35.1 million at December 31, 1998 and 1997, respectively.
Although these amounts do not include third-party recoveries, certain sites may
be subject to indemnification. The Company has accounted for environmental
liabilities in accordance with Accounting Standards Statement of Position 96-1,
"Environmental Remediation Liabilities", which addresses accounting and
reporting for environmental remediation liabilities. Management believes this
accrual is adequate for the environmental liabilities expected to be incurred,
and, as a result, believes that the ultimate liability incurred with respect to
environmental matters will not have a material adverse effect on the Company's
financial statements or results of operations. However, future events, such as
changes in existing laws and regulations, changes in agency direction or
enforcement policies or changes in the conduct of Fisher's operations, may give
rise to additional compliance costs which could have a material adverse effect
on the Company's financial statements.
 
     Fisher spent approximately $1.0 million and $2.3 million during the years
ended December 31, 1998 and 1997, respectively, on remediation and related
environmental monitoring and compliance. Amounts expensed for environmental
matters, including compliance costs under the existing administrative consent
orders, installation and operation of groundwater treatment systems and other
planned expenses, are expected to average between $1 million and $2 million per
year. See "Cautionary Factors Regarding Forward-Looking Statements".
 
EMPLOYEES
 
     As of December 31, 1998, Fisher had approximately 7,300 full-time
employees. Fisher considers relations with its employees to be satisfactory.
Fisher has several labor contracts, none of which are considered material to its
business as a whole. From time to time, union actions have been threatened or
taken. However, management does not believe such actions have had, or will have
a material adverse effect on the financial statements of the Company or on the
Company's ability to serve its customers.
 
FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
 
     For information regarding foreign and domestic operations and export sales,
see Note 21 to Financial Statements, which is incorporated herein by reference.
 
                                        6
<PAGE>   7
 
EXECUTIVE OFFICERS OF FISHER
 
     Set forth below is information with respect to each executive officer of
Fisher:
 
<TABLE>
<CAPTION>
            NAME AND TITLE               AGE                    BUSINESS EXPERIENCE
            --------------               ---                    -------------------
<S>                                      <C>   <C>
Paul M. Montrone.......................  57    Mr. Montrone has been Chairman of the Board of Fisher
Chairman of the Board                          since March 1998, Chief Executive Officer of Fisher
and Chief Executive Officer                    since prior to 1994, and served as President from
                                               prior to 1994 to 1998. Mr. Montrone was Vice Chairman
                                               of Abex from prior to 1994 to June 1995. Since August
                                               1994, he has been Chairman of the Board of The General
                                               Chemical Group Inc. ("General Chemical")
                                               (manufacturing) and was President from prior to 1994
                                               to August 1994. Mr. Montrone is also a director of
                                               Waste Management, Inc.
Paul M. Meister........................  46    Mr. Meister has been Vice Chairman of the Board,
Vice Chairman of the Board                     Executive Vice President and Chief Financial Officer
Executive Vice President and Chief             of Fisher since March 1998, and was Senior Vice
Financial Officer                              President and Chief Financial Officer of Fisher from
                                               prior to 1994 to March 1998. Prior to that time, he
                                               was Senior Vice President of Abex from prior to 1994
                                               to 1995. Mr. Meister is a member of the Board of
                                               Directors of M&F Worldwide Corp., General Chemical
                                               (Vice Chairman) and Minerals Technologies Inc.
David T. Della Penta...................  51    Mr. Della Penta has been President and Chief Operating
President and Chief                            Officer of Fisher since April 1998. From prior to 1994
Operating Officer                              until April 1998, Mr. Della Penta served as President
                                               of Nalge Nunc International, a subsidiary of Sybron
                                               International Corporation (medical laboratory device
                                               manufacturer).
Denis N. Maiorani......................  50    Mr. Maiorani has been President of Fisher Scientific
President of Fisher Scientific                 Worldwide Inc., a subsidiary of Fisher, since 1996. He
Worldwide Inc.                                 was President of Fisher Scientific Europe Limited from
                                               January 1996 to July 1996, and a consultant to Fisher
                                               from 1995 to 1996. From prior to 1994 to January 1995,
                                               Mr. Maiorani was president of Robertson-Ceco
                                               Corporation (building components manufacturing).
Kevin P. Clark.........................  36    Mr. Clark has been Vice President and Controller of
Vice President and Controller                  Fisher since May 1998. Mr. Clark served as Vice
                                               President and Treasurer of Fisher from September 1997
                                               to May 1998, and as Assistant Treasurer of Fisher from
                                               1995 to 1997. Mr. Clark served as Treasurer of
                                               Federal-Mogul Corporation (automotive components) from
                                               1994 to 1995, and held various financial executive
                                               positions at Chrysler Corporation from prior to 1994
                                               to 1994, the most current being Manager of Corporate
                                               Finance of Chrysler Financial Corp. (financial
                                               services).
Todd M. DuChene........................  35    Mr. DuChene has been Vice President, General Counsel
Vice President -- General                      and Secretary of Fisher since November 1996. He served
Counsel and Secretary                          as Senior Vice President, Secretary and General
                                               Counsel of OfficeMax, Inc. (retailer) from March 1995
                                               to November 1996, and Vice President, General Counsel
                                               and Assistant Secretary from January 1994 to March
                                               1995. He was an Associate with Baker & Hostetler (law
                                               firm) from prior to 1994 to January 1994.
Robert J. Gagalis......................  44    Mr. Gagalis has been Vice President-Finance and
Vice President-Finance                         Treasurer of Fisher since May 1998. From 1997 to May
and Treasurer                                  1998, he was Vice President, Chief Financial Officer
                                               and Treasurer of Wheelabrator Technologies Inc.
                                               ("WTI") (environmental services) and Vice President,
                                               Corporate Development of WTI from prior to 1994 to
                                               1996.
</TABLE>
 
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<PAGE>   8
 
ITEM 2.  PROPERTIES
 
     Fisher's principal executive offices are located in Hampton, New Hampshire.
Fisher believes that its property and equipment are generally well maintained,
in good operating condition and adequate for its present needs. The inability to
renew any short-term real property lease by Fisher or any of its subsidiaries
would not have a material adverse effect on Fisher's financial statements.
 
     The following table identifies Fisher's principal facilities, which are
owned in fee unless otherwise indicated:
 
<TABLE>
<S>                                            <C>
U.S. LOGISTICS FACILITIES
Santa Clara, California(a)                     Florence, Kentucky
Denver, Colorado(a)                            Agawam, Massachusetts
Delmar (Newark), Delaware                      Houston, Texas
Suwanee, Georgia(a)                            Tustin, California(a)
Itasca, Illinois(a)                            Somerville, New Jersey
                                               Hanover Park, Illinois
NON-U.S. FACILITIES
Geel, Belgium                                  Offices, Logistics and Manufacturing Center
Edmonton, Alberta, Canada                      Offices and Logistics Center
Whitby, Ontario, Canada                        Logistics Center
Nepean, Ontario, Canada                        Offices
Markham, Ontario, Canada(a)                    Offices and Data Center
Maurepas, France                               Offices and Logistics Center
Kamen, Germany(a)                              Logistics Center
Kuala Lumpur, Malaysia(b)                      Offices and Logistics Center
Monterrey, Mexico                              Offices and Logistics Center
Loughborough, United Kingdom                   Offices, Logistics and Manufacturing Center
Zoetermeer, Netherlands                        Manufacturing and Logistics Center
Schwerte, Germany                              Manufacturing and Logistics Center
Strasbourg, France                             Offices and Logistics Center
OTHER PROPERTIES
Hampton, New Hampshire                         Corporate Offices
Fair Lawn, New Jersey                          Manufacturing
Pittsburgh, Pennsylvania(a)                    Offices, Data Center and Manufacturing
Two Rivers, Wisconsin                          Offices and Manufacturing Center
Indiana, Pennsylvania                          Manufacturing
Somerville, New Jersey                         Manufacturing
Mountain Home, Arkansas(a)                     Manufacturing
Conklin, New York                              Manufacturing
</TABLE>
 
---------------
 
(a) Leased
 
(b) One property owned, three leased
 
ITEM 3.  LEGAL PROCEEDINGS
 
     There are various lawsuits and claims pending against Fisher and certain of
its subsidiaries. In the opinion of Fisher's management, the Company's ultimate
liability with respect to these matters, if any, will not have a material
adverse effect on Fisher's results of operations and financial condition.
 
     The Company is subject to the jurisdiction of various regulatory agencies
including, among others, the United States Food and Drug Administration and the
Agency for International Development. Various governmental agencies conduct
investigations from time to time to examine matters relating to the Company's
operations. Some of the Company's operations involve and have involved the
handling, manufacture or use of substances that are classified as toxic or
hazardous substances within the meaning of applicable environmental
 
                                        8
<PAGE>   9
 
laws. Consequently, some risk of environmental and other damage is inherent in
particular operations and products of the Company as it is with other companies
engaged in similar businesses, and there can be no assurance that material
damage will not occur or be discovered to have occurred or be determined to be
material in the future. The Company is currently involved in various stages of
investigation and remediation relative to environmental protection matters. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition -- Environmental Matters". The Company's management believes that such
investigations and expenditures in connection therewith, individually and in the
aggregate, will not have a material adverse effect upon the Company's results of
operations and financial condition.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     None.
 
                                        9
<PAGE>   10
 
                                    PART II
 
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
MARKET INFORMATION
 
     The Fisher common stock ("Common Stock") is listed on the New York Stock
Exchange (the "NYSE") under the trading symbol FSH. The following table sets
forth the high and low closing sale prices of the Common Stock, as reported by
the NYSE for each of the quarterly periods listed:
 
<TABLE>
<CAPTION>
                                                                           DIVIDENDS
                                                                            PAID PER
                                                          HIGH     LOW       SHARE
                                                          ----     ----    ---------
<S>                                                    <C>       <C>       <C>
YEAR ENDED DECEMBER 31, 1997
     First Quarter...................................   9 13/32   8 29/64    $0.004
     Second Quarter..................................   9 1/2     7 3/32     $0.004
     Third Quarter...................................  10 11/64   9 1/16     $0.004
     Fourth Quarter..................................   9 19/32   8 7/8          --
 
YEAR ENDED DECEMBER 31, 1998
     First Quarter...................................  16 1/64    9 35/64        --
     Second Quarter..................................  19 7/8    12 1/8          --
     Third Quarter...................................  17 7/16   13 1/16         --
     Fourth Quarter..................................  20 3/16   14 5/16         --
 
YEAR ENDED DECEMBER 31, 1999
     First Quarter (through March 26, 1999)..........  20 1/16   16 3/8          --
</TABLE>
 
HOLDERS
 
     As of March 26, 1999, there were approximately 146 holders of record of the
Common Stock.
 
DIVIDENDS
 
     On January 21, 1998, in connection with the Transaction, the Company and
certain of its subsidiaries entered into a Credit Agreement which restricts the
Company's ability to pay cash dividends. Accordingly, the Company does not
anticipate paying cash dividends on its Common Stock at any time in the
foreseeable future.
 
     On March 9, 1998, Fisher's Board of Directors declared a five-for-one stock
split on the Company's Common Stock. As a result of the stock split, four
additional shares of Common Stock were issued for each share of Common Stock
held by the shareholders of record as of the close of business on March 19,
1998. The number of shares and per-share amounts have been restated as
appropriate to give effect to the stock split.
 
                                       10
<PAGE>   11
 
ITEM 6.  SELECTED FINANCIAL DATA
 
     This summary of selected financial data for the five years in the period
ended December 31, 1998 should be read in conjunction with the Financial
Statements presented elsewhere herein. See Notes 1 and 3 to Financial Statements
for a further discussion of the basis of presentation, principles of
consolidation and defined terms.
 
<TABLE>
<CAPTION>
                                                          YEAR ENDED DECEMBER 31,
                                          --------------------------------------------------------
                                            1998        1997        1996      1995(I)       1994
                                          --------    --------    --------    --------    --------
                                                  (IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S>                                       <C>         <C>         <C>         <C>         <C>
INCOME STATEMENT DATA:
Sales...................................  $2,252.3    $2,175.3    $2,144.4    $1,435.8    $1,126.7
Gross profit(a).........................     636.3       591.7       578.5       386.9       318.9
Selling, general and administrative
  expense(b)............................     503.8       518.8       483.9       334.4       255.0
Transaction-related costs(c)............      71.0          --          --          --          --
Restructuring and other charges(d)......      23.6        51.8          --        34.3          --
Loss from operations to be disposed
  of(e).................................      15.1          --          --          --          --
Income from operations..................      22.8        21.1        94.6        18.2        63.9
Interest expense........................      90.3        23.0        27.1        15.0         9.0
Income tax (benefit) provision..........     (10.8)       25.4        30.8         1.1        27.0
Net (loss) income(f)....................     (49.5)      (30.5)       36.8         3.2        35.7
 
SHARE DATA:
Earnings (loss) per common share(g):
     Basic..............................  $  (1.24)   $  (0.30)   $   0.40    $   0.04    $   0.45
     Diluted............................     (1.24)      (0.30)       0.38        0.04        0.44
Weighted average shares outstanding:
     Basic..............................      40.0       101.5        91.5        81.0        80.0
     Diluted............................      40.0       101.5       102.5        81.0        82.0
Dividends declared per common share.....  $     --    $  0.012    $  0.016    $  0.016    $  0.016
 
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital.........................  $  107.9    $  237.5    $  259.8    $  284.0    $  162.8
Total assets............................   1,357.6     1,176.5     1,262.7     1,270.5       722.5
Long-term debt(h).......................   1,022.0       267.8       281.5       446.3       128.4
Stockholders' (deficit) equity(h).......    (324.7)      347.1       386.2       226.0       218.6
</TABLE>
 
---------------
 
<TABLE>
<C>  <S>
(a)  Gross profit in 1998 was negatively affected by $2.7 million
     of costs related to adjustments of certain inventory
     reserves due to the 1998 Restructuring Plan. Gross profit in
     1997 was negatively affected by $6.7 million of costs
     related to adjustments of certain inventory reserves due to
     changes in estimates, costs attributable to the impact of
     the strike by employees of United Parcel Service who are
     members of the International Brotherhood of Teamsters (the
     "UPS strike") and the integration of Curtin Matheson
     Scientific ("CMS") into Fisher. Gross profit in 1996 and
     1995 includes $1.2 million of costs in each year associated
     with the revaluation of CMS and Fisons Scientific Equipment
     ("FSE") inventory acquired from Fisons plc ("Fisons").
(b)  Selling, general and administrative expense in 1998, 1997,
     1996 and 1995 included nonrecurring and redundant costs of
     $8.5 million, $29.8 million, $18.2 million and $14.5
     million, respectively, primarily associated with the
     implementation of the 1995 Restructuring Plan (discussed
     below), the integration of CMS into Fisher, and management
     retention payments primarily related to the Transaction.
     Additionally in 1997, actions were taken to improve
     operating efficiencies, software write-offs and other
     information system-related charges associated with the
     Company's implementation of new global computer systems,
     direct costs resulting from the UPS strike, and management
     retention payments primarily related to the Transaction.
</TABLE>
 
                                       11
<PAGE>   12
<TABLE>
<C>  <S>
(c)  In connection with the Transaction, the Company recorded
     $71.0 million of expenses consisting primarily of non-cash
     compensation expense related to the conversion of employee
     stock options, the implementation of certain executive
     severance agreements and the grant of options to certain
     executives in accordance with the terms of the Transactions.
(d)  In the fourth quarter of 1998, the Company recorded $23.6
     million ($17.0 million, net of tax) of restructuring and
     other charges. The charges include asset impairment charges
     in the United States and Asia and personnel reductions in
     the United States and Europe.
     During the fourth quarter of 1997, Fisher recorded $51.8
     million ($47.0 million, net of tax) of restructuring and
     other charges. These charges related to the closure of
     additional logistics and customer-service centers and
     related asset write-offs in the United States, personnel
     reductions in the United States and internationally, and the
     write-off of goodwill related to certain international
     operations.
     During the third quarter of 1995, Fisher recorded a $34.3
     million ($20.3 million, net of tax) restructuring charge.
     The charge is primarily related to the elimination and in
     some cases relocation of certain administrative functions, a
     sales force reorganization, and the global consolidation of
     certain domestic and international logistics and customer
     service facilities and systems.
(e)  The Company is implementing its plan relating to the Spinoff
     and the UniKix Sale. The 1998 results from operations of
     these businesses are reported as loss from operations to be
     disposed of.
(f)  Net (loss) income in 1998, 1997, 1996 and 1995 includes the
     costs discussed in (a), (b), (c) and (d) above as well as
     $5.0 million of other expense in 1997 related to the Board's
     review of strategic alternatives and a loss on the sale of a
     non-strategic business, $2.8 million of gains realized in
     1997 related to the sale of non-core assets, and $1.5
     million of realized gains in 1996 related primarily to the
     restructuring and integration plans.
(g)  In February 1997, the Financial Accounting Standards Board
     issued Statement No. 128, "Earnings Per Share" (SFAS No.
     128). SFAS No. 128 establishes new standards for computing
     and presenting earnings per share. Earnings per share for
     all years presented have been restated to comply with this
     statement.
     On March 9, 1998, Fisher's Board of Directors declared a
     five-for-one stock split on the Company's Common Stock. As a
     result of the stock split, four additional shares of Common
     Stock were issued for each share of Common Stock held by the
     shareholders of record as of the close of business on March
     19, 1998. The number of shares and per-share amounts have
     been restated as appropriate to give effect to the stock
     split.
(h)  In 1996, the Company issued a notice of redemption for its
     $125 million step-up convertible subordinated notes due
     2003. Approximately 97%, or $121.6 million, of the notes
     were converted into 3,463,154 shares of the Company's Common
     Stock and the remaining notes were redeemed by the Company.
     The conversion of the debt and associated accrued interest
     and subsequent redemption resulted in an increase in
     stockholders' equity and a reduction in long-term debt of
     approximately $125 million. In addition, the Transaction,
     which was consummated on January 21, 1998, resulted in a
     significant increase in long-term debt and a decrease in
     stockholders' equity.
(i)  On October 17, 1995, Fisher acquired CMS and FSE from Fisons
     plc. The operations of CMS and FSE have been included in
     Fisher's financial statements from the date of acquisition.
</TABLE>
 
                                       12
<PAGE>   13
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
         FINANCIAL CONDITION
 
OVERVIEW
 
     Fisher Scientific International Inc. ("Fisher" or the "Company") was formed
in September 1991. The Company's operations are conducted by wholly-owned and
majority-owned subsidiaries, joint ventures, equity interests and agents,
located in North and South America, Europe, the Far East, the Middle East and
Africa. The Company is managed in four business segments: domestic distribution,
international distribution, laboratory workstations and technology. The domestic
and international distribution segments engage in the supply, marketing, service
and manufacture of scientific, clinical, educational, occupational health and
safety products. The laboratory workstations segment manufactures laboratory
workstations and computer (LAN) furniture. Fisher's technology segment provides
procurement outsourcing services and supply chain management technology and
software.
 
     Pursuant to the Second Amended and Restated Agreement and Plan of Merger
dated as of November 14, 1997, amending an Agreement and Plan of Merger dated
August 7, 1997 (as amended, the "Merger Agreement") between the Company and FSI
Merger Corp. ("FSI"), a Delaware corporation formed by Thomas H. Lee Company
("THL"), providing for the merger of FSI with and into Fisher and the
recapitalization of Fisher (collectively, "the Transaction"), which Transaction
was consummated on January 21, 1998, approximately 87% of the fully diluted
shares of common stock of Fisher were converted into the right to receive $9.65
per share in cash (approximately $955.0 million in the aggregate) pursuant to an
election process that provided stockholders the right to elect, subject to
proration, for each share of Fisher common stock held either $9.65 in cash or to
retain one share of common stock, $.01 par value ("Common Stock"), in the
recapitalized company. Pursuant to the Merger Agreement, vesting of all
outstanding options accelerated. See Note 2 to Financial Statements.
 
     In December 1998, Fisher acquired 90% of Bioblock Scientific S.A.
("Bioblock"), a leading distributor of scientific and laboratory instrumentation
in France in a transaction accounted for as a purchase. The remaining 10% of
Bioblock was acquired by Fisher in the first quarter of 1999. In October 1995,
Fisher acquired the principal businesses of the laboratory supplies division of
Fisons in a transaction accounted for as a purchase. The Company purchased the
outstanding stock of CMS and substantially all of the net assets of FSE. CMS is
a supplier of diagnostic test kits, equipment and laboratory supplies to
integrated health care organizations, managed care organizations, national and
independent reference laboratories, and physicians' office laboratories where
human specimens are tested for subsequent diagnosis, as well as a supplier to
the scientific research community. FSE is a leading supplier of laboratory
products in the United Kingdom and also serves markets throughout Europe,
Africa, the Middle East and the Far East. During 1998, 1997 and 1996, Fisher
made certain smaller acquisitions of laboratory products distributors and other
businesses. All acquisitions have been accounted for as purchases; operations of
the companies and businesses acquired have been included in Fisher's
consolidated financial statements from their respective dates of acquisition.
See Note 4 to Financial Statements.
 
     During the fourth quarter of 1998, management decided to dispose of its
technology segment, which consists of its procurement outsourcing services and
supply chain management technology business (the "ProcureNet Business") and its
UniKix Technology software business. In December 1998, the Company's Board of
Directors approved the Spinoff and the UniKix Sale. Following the Spinoff, the
Company and ProcureNet will operate as separate, stand-alone companies. As part
of the Spinoff the Company and ProcureNet will enter into a transition services
agreement pursuant to which Fisher will provide ProcureNet with certain
management and other administrative services and ProcureNet will continue to
provide Fisher and its customers third party procurement and electronic commerce
support and services. It is not expected that the Spinoff will have a material
impact on Fisher's business or operations. The Company currently anticipates
that the consummation of the Spinoff will occur in the second quarter of 1999.
See Note 5 to Financial Statements.
 
                                       13
<PAGE>   14
 
RESULTS OF OPERATIONS
 
     The following table sets forth the Company's sales and income (loss) from
operations by segment:
 
<TABLE>
<CAPTION>
                                                                            INCOME (LOSS) FROM
                                                   SALES                        OPERATIONS
                                       ------------------------------     -----------------------
                                         1998       1997       1996        1998    1997     1996
                                       --------   --------   --------     ------   -----   ------
<S>                                    <C>        <C>        <C>          <C>      <C>     <C>
Domestic distribution................  $1,830.8   $1,740.7   $1,727.4     $113.2   $85.3   $100.9
International distribution...........     417.3      403.8      383.8       (1.5)  (12.5)    (7.3)
Laboratory workstations..............     145.6      122.4      108.0       21.0    16.1      8.7
Technology...........................        --       41.0       36.7      (15.1)  (14.3)    (7.4)
Transaction-related costs............        --         --         --      (71.0)     --       --
Restructuring and other charges......        --         --         --      (23.6)  (51.8)      --
Eliminations.........................    (141.4)    (132.6)    (111.5)      (0.2)   (1.7)    (0.3)
                                       --------   --------   --------     ------   -----   ------
     Total...........................  $2,252.3   $2,175.3   $2,144.4     $ 22.8   $21.1   $ 94.6
                                       ========   ========   ========     ======   =====   ======
</TABLE>
 
1998 AS COMPARED WITH 1997
 
  Sales
 
     Sales for the year ended December 31, 1998 increased 3.5% to $2,252.3
million from $2,175.3 million for the comparable period in 1997. Sales growth in
Fisher's domestic distribution, international distribution, and laboratory
workstations segments were partially offset by the exclusion of technology sales
in reported sales for 1998. Sales in the laboratory workstations segment
increased 18.9% due to internal growth and a strategic acquisition during 1998.
Overall sales volume and income from operations in 1997 was negatively effected
by the strike by employees of United Parcel Service ("UPS") who are members of
the International Brotherhood of Teamsters (the "UPS Strike"), which occurred in
August of 1997.
 
     As a national distributor, Fisher utilizes the services of UPS for a
significant portion of its domestic shipments. Fisher believes it is one of
UPS's largest customers in terms of annual revenue to the shipper. The UPS
Strike negatively affected sales for the third and fourth quarters of 1997 and
increased operating costs.
 
  Gross Profit
 
     Fisher's gross profit for the year ended December 31, 1998 increased 7.5%
to $636.3 million from $591.7 million for the comparable period in 1997,
primarily as a result of higher volume. Gross profit as a percent of sales
increased to 28.3% for the year ended December 31, 1998 from 27.2% for the
comparable period in 1997. Gross profit in 1997 was negatively affected by $6.7
million of charges related to adjustments to certain inventory reserves due to
changes in estimates, direct costs resulting from the UPS Strike and the
integration of CMS into Fisher. Gross profit in 1998 was negatively affected by
$2.7 million of charges for adjustments of certain domestic and international
inventory reserves related to the 1998 Restructuring Plan (discussed below). The
increase in gross profit percentage largely reflects improvements in gross
margins of Fisher's domestic operations and decreased inventory adjustments.
 
  Selling, General and Administrative Expense
 
     Selling, general and administrative expense for the year ended December 31,
1998 decreased 2.9% to $503.8 million from $518.8 million for the comparable
period in 1997. Selling, general and administrative expense in both periods
includes nonrecurring and redundant costs associated with the implementation of
the 1995 Restructuring Plan (discussed below), the integration of CMS into
Fisher, and management retention payments related to the Transaction. During
1997 selling, general and administrative expense included software write-offs
and other information system-related charges associated with the Company's
implementation of new global computer systems and direct costs resulting from
the UPS Strike. Additionally, 1998 includes nonrecurring costs associated with
the implementation of the 1997 Restructuring Plan. Nonrecurring integration and
restructuring-related costs include costs resulting from the temporary
duplication of operations, relocation of inventories and employees, hiring and
training new employees, and other one-time and
 
                                       14
<PAGE>   15
 
redundant costs, which will be eliminated as the integration and restructuring
plans are completed. These costs are recognized as incurred. For the year ended
December 31, 1998, approximately $8.5 million of such nonrecurring costs were
included in selling, general and administrative expense compared with $29.8
million for the corresponding period in 1997.
 
     Excluding such costs, selling, general and administrative expense as a
percentage of sales was 22.0% for 1998 compared with 22.5% for 1997. This
decrease is principally the result of increased sales volume and the impact of
excluding selling, general and administrative expense (and the related sales)
from the technology segment in 1998. See discussion below. The Company has taken
and is continuing to take actions to improve efficiencies and reduce this
expense as a percent of sales.
 
     The international distribution segment continues to have significantly
higher selling, general and administrative expense as a percentage of sales as
compared with that of Fisher's domestic distribution segment. These higher costs
are being incurred as part of a plan to develop an integrated worldwide supply
capability, the benefit of which has not been fully realized.
 
  Transaction-Related Costs
 
     In connection with the Transaction, the Company recorded $71.0 million of
expenses consisting primarily of non-cash compensation expense relating to the
conversion of employee stock options, the implementation of certain executive
severance agreements and the grant of options to certain executives in
accordance with the terms of the Transaction.
 
  Restructuring and Other Charges
 
     In the fourth quarter of 1998, the Company recorded $23.6 million of
restructuring and other charges which included $26.5 million of charges related
to the 1998 Restructuring Plan and $2.9 million of reversals for adjustments to
prior period restructuring charges due to revised estimates. The 1998
Restructuring was adopted in December 1998 and affects the Company's domestic
and international distribution segments. The charges include asset impairment
charges internationally attributable to the economic slow-down in the Far East
and write-offs of information systems as a result of the Company's global
information system strategy. The charges also include employee separation and
other exit costs due to a restructuring in Europe and a restructuring
domestically of the Company's management team and selected components of its
sales force. Implementation of the 1998 Restructuring Plan is expected to be
completed and the related accrual substantially expended by the end of 1999.
 
     Following the execution of the Merger Agreement, during the fourth quarter
of 1997 in conjunction with the annual business planning process, the Company
evaluated its business strategy for both its domestic and international
operations and, as a result, adopted the 1997 Restructuring Plan and recorded
restructuring and other charges of $51.8 million. The charges include costs
associated with the closure of additional logistics and customer-service centers
and related asset write-offs in the United States and internationally, the
write-off of goodwill related to certain international operations and the
write-off of systems-related assets. During 1998 the Company continued to close
additional logistics and customer-service centers in an orderly fashion, in
conjunction with the original plan. The 1997 Restructuring Plan is expected to
be substantially completed and the original accruals expended by the end of
2000.
 
  Loss From Operations To Be Disposed Of
 
     As discussed above, Management plans to dispose of its technology segment.
Accordingly, the 1998 results of operations of this segment are reported
separately in the statement of operations. The loss includes $1.3 million of
asset write-offs and $1.3 million of severance and other exit costs, all related
to a restructuring plan in contemplation of the disposal of the businesses.
 
                                       15
<PAGE>   16
 
  Income from Operations
 
     Income from operations for the year ended December 31, 1998 increased to
$22.8 million from $21.1 million for the comparable period in 1997 primarily due
to the items discussed above. Income from operations as a percent of sales
remained the same at 1.0% for the year ended December 31, 1998 as compared with
the same period in 1997. Excluding Transaction-related, restructuring and other
charges and nonrecurring costs of $108.4 million and $88.3 million for 1998 and
1997, respectively, income from operations for the year ending December 31, 1998
increased to $131.2 million from $109.4 million in 1997.
 
  Interest Expense
 
     Interest expense for the year ended December 31, 1998 increased by $67.3 to
$90.3 million from $23.0 million for the comparable period in 1997. The increase
is the result of additional indebtedness resulting from the Transaction as well
as $6.5 million of charges related to the consummation of the Transaction,
including one-time bank commitment fees, the write-off of unamortized financing
costs related to long-term debt refinanced and the loss on the sale of accounts
receivable.
 
  Other (Income) Expense, net
 
     Other (income) expense, net for the year ended December 31, 1998 increased
to $7.2 million of income from $3.2 million of expense for the comparable period
in 1997. The increase in income is due to increased interest income resulting
from the timing of cash received from the Transaction and certain unusual
expenses in 1997 including $5.0 million of fees and expenses related to the
Board of Directors' review of strategic alternatives and a loss on the sale of a
non-strategic business.
 
  Income Tax (Benefit) Provision
 
     The income tax (benefit) provision was ($10.8) million for the year ended
December 31, 1998 compared with $25.4 million for the comparable period in 1997.
The effective tax rate was 18% for 1998, decreasing significantly compared with
that of 1997. The 1997 effective tax rate was unusually high due to foreign
losses for which no tax benefits were currently being provided, the write-off of
previously recognized foreign tax benefits, and non-deductible fees and expenses
incurred in connection with the Board's review of strategic alternatives. The
effective tax rate for 1998 is primarily the result of reductions in domestic
pretax income due to the additional interest expense incurred as a result of the
Transaction and foreign losses for which no tax benefit was recorded.
 
  Net Income (Loss)
 
     Net income (loss) for the year ended December 31, 1998 decreased to a loss
of $49.5 million from a loss of $30.5 million during the comparable period in
1997. These changes are due to the factors discussed above.
 
1997 AS COMPARED WITH 1996
 
  Sales
 
     Sales for the year ended December 31, 1997 increased 1.4% to $2,175.3
million from $2,144.4 million for the comparable period in 1996 due to sales
growth in all segments and the inclusion of sales of operations acquired in the
fourth quarter of 1996 (UniKix Technologies and a laboratory products
distributor in Mexico). Sales growth in the domestic distribution segment slowed
due to decreased sales to the U.S. clinical laboratory market and the impact of
the strike by employees of United Parcel Service ("UPS") who are members of the
International Brotherhood of Teamsters (the "UPS Strike"), which occurred in
August 1997.
 
     As a national distributor, Fisher utilizes the services of UPS for a
significant portion of its domestic shipments. In 1997, Fisher was one of UPS's
largest customers in terms of annual revenue to the shipper. The UPS Strike
significantly reduced sales for the third and fourth quarters of 1997 and
increased operating costs.
 
                                       16
<PAGE>   17
 
  Gross Profit
 
     Fisher's gross profit for the year ended December 31, 1997 increased 2.3%
to $591.7 million from $578.5 million for the comparable period in 1996,
primarily as a result of volume. Gross profit as a percent of sales increased to
27.2% for the year ended December 31, 1997 from 27.0% for the comparable period
in 1996. Gross profit in 1997 was negatively affected by $6.7 million of costs
related to adjustments to certain inventory reserves due to changes in
estimates, direct costs resulting from the UPS Strike and the integration of CMS
into Fisher. Gross profit in 1996 includes $1.2 million of costs associated with
the revaluation of CMS and FSE acquired inventory.
 
  Selling, General and Administrative Expense
 
     Selling, general and administrative expense for the year ended December 31,
1997 increased 7.2% to $518.8 million from $483.9 million for the comparable
period in 1996. Selling, general and administrative expense in both periods
includes nonrecurring and redundant costs associated with the implementation of
the 1995 Restructuring Plan (defined below), the integration of CMS into Fisher,
and, in 1997, software write-offs and other information system-related charges
associated with the Company's implementation of new global computer systems,
direct costs resulting from the UPS Strike, and management retention payments
related primarily to the Transaction. Nonrecurring integration and
restructuring-related costs include costs resulting from the temporary
duplication of operations, relocation of inventories and employees, hiring and
training new employees, and other one-time and redundant costs, which will be
eliminated as the integration and restructuring plans are completed. These costs
were recognized as incurred. For the year ended December 31, 1997, approximately
$29.8 million of such nonrecurring costs were included in selling, general and
administrative expense compared with $18.2 million for the corresponding periods
in 1996.
 
     Excluding nonrecurring costs, selling, general and administrative expense
as a percentage of sales was 22.5% for 1997 compared with 21.7% for 1996. This
increase is primarily due to lower than expected sales volume without a
corresponding decrease in expense. The Company has taken actions to improve
efficiencies and reduce this expense as a percent of sales.
 
     The international distribution segment continued to have significantly
higher selling, general and administrative expense as a percentage of sales as
compared with that of Fisher's domestic distribution segment.
 
  Restructuring and Other Charges
 
     Following the execution of the Merger Agreement, during the fourth quarter
of 1997 in conjunction with the annual business planning process, the Company
evaluated its business strategy for both its domestic and international
operations and, as a result, adopted the 1997 restructuring plan and recorded
restructuring and other charges of $51.8 million. The charges include costs
associated with the closure of additional logistics and customer-service centers
and related asset write-offs in the United States and internationally, the
write-off of goodwill related to certain international operations and the
write-off of systems-related assets. During 1998 the Company continued to close
additional logistics and customer-service centers in an orderly fashion, in
conjunction with the original plan. The 1997 restructuring plan is expected to
be substantially completed and the original accruals expended by the end of
2000.
 
  Income from Operations
 
     Income from operations for the year ended December 31, 1997 decreased to
$21.1 million from $94.6 million for the comparable period in 1996 primarily due
to the 1997 restructuring and other nonrecurring charges and the increased
selling, general and administrative expense discussed above. Income from
operations as a percent of sales decreased to 1.0% for the year ended December
31, 1997, compared with 4.4% for the same period in 1996.
 
                                       17
<PAGE>   18
 
  Interest Expense
 
     Interest expense for the year ended December 31, 1997 decreased to $23.0
million from $27.1 million for the comparable period in 1996. The decrease
principally reflects a reduction in interest expense as a result of the June
1996 conversion and redemption of the Company's $125 million step-up convertible
notes.
 
  Other (Income) Expense, net
 
     Other (income) expense, net for the year ended December 31, 1997 decreased
to $3.2 million of expense from $0.1 million of income for the comparable period
in 1996. The increase in expense for the year was primarily due to foreign
exchange losses, $5.0 million of fees and expenses related to the Board of
Directors' review of strategic alternatives and a loss on the sale of
non-strategic business, offset by $2.8 million of gains on sales of non-core
assets.
 
  Income Tax Provision
 
     The income tax provision was $25.4 million for the year ended December 31,
1997 compared with $30.8 million for the comparable period in 1996. The
effective income tax rate for 1997 increased significantly compared with 45.5%
for the corresponding period in 1996. The increased rate is a result of foreign
losses for which no tax benefits are currently being provided, write-off of
previously recognized foreign tax benefits, and nondeductible fees and expenses
incurred in connection with the Board's review of strategic alternatives.
 
  Net Income (Loss)
 
     Net income (loss) for the year ended December 31, 1997 decreased to $30.5
million of loss from $36.8 million of income for the comparable period in 1996.
These changes are due to the factors discussed above.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     For the year ended December 31, 1998, the Company's operations generated
$149.9 million of cash compared with $46.1 million in 1997. This increase in
cash provided by operating activities primarily reflects an increase in net
income adjusted for noncash items, coupled with an increase in cash flows from
changes in working capital. The net increase in cash flows from changes in
working capital is due to changes in accounts payable and accrued and other
current liabilities partially offset by changes in inventories. The payables and
accruals change is primarily due to the timing of accounts payable payments,
reduced payments of accrued compensation and increased accrued interest as a
result of the Transaction. The decreased cash flow from changes in inventories
is due to efforts in 1997 to decrease inventory levels which had increased in
1996 due to the integration of CMS into Fisher.
 
     The Company's operating working capital (defined as receivables plus
inventories less accounts payable and accrued liabilities) decreased to $(7.0)
million at December 31, 1998 from $185.7 million at December 31, 1997. This
decrease is primarily due to decreases in receivables and increases in payables
and accruals. The decrease in receivables is primarily the result of the sale of
receivables under the receivables securitization, discussed below. The increases
in accounts payable and accrued liabilities are principally attributable to the
timing of payments, accrued interest associated with the new debt resulting from
the Transaction and accruals recorded as part of the 1998 Restructuring Plan.
Excluding the effect, if any, of future acquisitions and anticipated temporarily
higher levels of inventory as the Company stocks up in anticipation of higher
demand related to Year 2000 (see below) and as it completes the consolidation
and relocation of certain of its logistical facilities in North America, the
Company's working capital requirements are not anticipated to increase in 1999.
 
     During the year ended December 31, 1998, the Company used $231.8 million
for investing activities compared with $50.7 million for the same period in
1997. The increase in cash used for investing activities is primarily
attributable to acquisitions. During 1998 the Company completed five
acquisitions, the largest of
 
                                       18
<PAGE>   19
 
which was Bioblock for approximately $138 million. The acquisitions were funded
with cash flow from operations and $187 million of net proceeds from new debt
issued in November 1998. During the years ended December 31, 1998 and 1997, the
Company made capital expenditures of $67.2 million and $59.2 million,
respectively. The increase is due to the Company's continued investments in
logistical facilities in North America and global computer systems. The decrease
in proceeds from the sale of property, plant and equipment is due to the receipt
of proceeds in 1997 from the sale of non-core fixed assets. Capital expenditures
in 1999 are expected to be at a similar level as 1998 as the Company continues
its consolidation and relocation of logistical facilities in North America. The
Company's capital expenditures were primarily funded by the Company's cash on
hand, cash provided by operating activities and financing activities.
 
     Cash provided by financing activities was $129.3 million in 1998 compared
with cash used in financing activities of $1.9 million in 1997. This change is
primarily due to an increase of $861.0 million in net long-term debt proceeds,
including proceeds from a receivables securitization, attributable to the
Transaction and the November 1998 notes offering.
 
     In January 1999, the Company spent $14 million to purchase the majority of
the remaining 10% of Bioblock stock outstanding. The Company also acquired
Columbia Diagnostics Inc., a Virginia-based provider of laboratory products and
supplies to the healthcare industry, and Structured Computer Systems, a
Connecticut-based provider of procurement and materials management solutions to
businesses, for total cash consideration of approximately $25 million. The
Company intends to continue to pursue acquisitions of complementary businesses
that will enhance growth and profitability. The Company currently has no
commitment, understanding or arrangement relating to any material acquisition.
 
     Fisher expects that 1999 cash flows from operations, together with cash on
hand and funds available under the new debt financing arrangement entered into
as part of the Transaction, will be sufficient to meet ongoing operating and
capital expenditure requirements.
 
  Restructuring and Other Charges
 
     In the fourth quarter of 1998, the Company recorded $23.6 million of
restructuring and other charges which included $26.5 million of charges related
to the 1998 Restructuring Plan and $2.9 million of reversals for adjustments to
prior period restructuring charges due to revised estimates. The 1998
Restructuring was adopted in December 1998 and affects the Company's domestic
and international distribution segments. The charges include asset impairment
charges internationally attributable to the economic slow-down in the Far East
and write-offs of information systems as a result of the Company's global
information system strategy. The charges also include employee separation and
other exit costs due to a restructuring in Europe and a restructuring
domestically of the Company's management team and selected components of its
sales force. The 1998 charges consist of $13.6 million related to noncash asset
impairments, $12.0 million of accruals for employee separation arrangements and
$0.9 million of exit costs. Upon completion of the 1998 Restructuring Plan, the
Company expects an improvement in annual pre-tax profitability in excess of $6
million. The 1998 Restructuring Plan is expected to be completed and the related
accruals substantially expended by the end of 1999. See "Cautionary Factors
Regarding Forward-Looking Statements."
 
     Following execution of the Merger Agreement, during the fourth quarter of
1997 in conjunction with the annual business planning process, the Company
evaluated its business strategy for both its domestic and international
operations, and, as a result, adopted the 1997 Restructuring Plan and recorded
restructuring and other charges of $51.8 million. The charges include costs
associated with the closure of additional logistics and customer-service centers
and related asset write-offs in the United States and internationally, the
write-off of goodwill related to certain international operations and the
write-off of systems-related assets. The restructuring and other charges consist
of $38.3 million related to noncash asset impairments, $9.1 million of accruals
for employee separation arrangements and $4.4 million of exit costs. During 1998
the Company continued to close additional logistics and customer-service centers
in an orderly fashion, in conjunction with the original plan. The 1997
Restructuring Plan is expected to be substantially completed and the original
accruals expended by the end of 2000.
 
                                       19
<PAGE>   20
 
     As previously noted, in 1995 the Company recorded a pre-tax restructuring
charge of $34.3 million, of which approximately $18 million consisted of noncash
charges and approximately $16 million consisted of accrued cash charges related
to separation arrangements and exit costs related to consolidation efforts. The
1995 Restructuring Plan is expected to be completed in conjunction with the 1997
Restructuring Plan. Fisher expects cash expenditures in 1999 related to these
plans to approximate $4 million, which will be paid from available funds. Cash
expenditures in 1998 and 1997 were approximately $6 million and $2 million,
respectively. Certain costs resulting from the temporary duplication of certain
operations, relocation of inventory, relocation of employees, hiring and
training new employees, other start-up costs and redundant costs, which are
expected to be eliminated as the plan is implemented, are not included in the
restructuring charge and were recognized in income from operations as incurred.
Upon completion of the 1995 and 1997 Restructuring Plans and the integration of
CMS into Fisher, the Company expects an improvement in annual pretax
profitability in excess of $25 million. See "Cautionary Factors Regarding
Forward-Looking Statements".
 
  Environmental Matters
 
     Some of Fisher's operations involve and have involved the handling,
manufacture or use 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 of Fisher, as it is with other companies engaged in similar
businesses, and there can be no assurance that material damage will not occur or
be discovered to have occurred or be determined to be material in the future.
The Company is currently involved in various stages of investigation and
remediation relative to environmental protection matters.
 
     The Company's Fair Lawn and Somerville, New Jersey, facilities are the
subject of administrative consent orders, issued pursuant to New Jersey's
Environmental Clean-Up and Responsibility Act ("ECRA") (now called the
Industrial Site Recovery Act ("ISRA")), in connection with prior transfers of a
controlling interest in the Company, which require that certain remediation and
other activities be undertaken at these sites. The Fair Lawn facility is also
part of a site listed on the "Superfund" National Priority List under the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"). Fisher has also been notified that it is among the
potentially responsible parties under CERCLA or similar state laws for the costs
of investigating and/or remediating contamination caused by hazardous materials
at certain other sites. The Company's non-Superfund liabilities for
environmental matters are principally related to compliance with ECRA/ISRA
administrative consent orders and other environmental regulatory requirements
such as the Clean Air Act, the Clean Water Act and other generally applicable
requirements.
 
     The potential costs related to environmental matters and the possible
impact on future operations are difficult to predict 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, such costs
could be material. Accruals for environmental liabilities are recorded, 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. Estimates are established based upon reports prepared
by environmental specialists, management's knowledge to date and its experience
with the foregoing environmental matters, and include potential costs for
investigation, remediation, operation and maintenance of cleanup sites and
related capital expenditures. Accrued liabilities for environmental matters were
$34.2 million and $35.1 million at December 31, 1998 and 1997, respectively.
Although these amounts do not include third-party recoveries, certain sites may
be subject to indemnification. The Company has accounted for environmental
liabilities in accordance with Accounting Standards Statement of Position 96-1,
"Environmental Remediation Liabilities," which addresses accounting and
reporting for environmental remediation liabilities. Management believes this
accrual is adequate for the environmental liabilities expected to be incurred
and, as a result, believes that the ultimate liability incurred with respect to
environmental matters will not have a material adverse effect on the Company's
financial statements or results of operations. However, future events, such as
changes in existing laws and regulations, changes in agency direction or
enforcement policies, or changes in the conduct of Fisher's
 
                                       20
<PAGE>   21
 
operations, may give rise to additional compliance costs which could have a
material adverse effect on the Company's financial statements.
 
  Dividends
 
     On January 21, 1998, in connection with the Transaction, the Company and
certain of its subsidiaries entered into a Credit Agreement which restricts the
Company's ability to pay future dividends. Accordingly, the Company does not
anticipate paying cash dividends on its Common Stock at any time in the future.
 
  Financial Condition
 
     At December 31, 1998, current assets decreased $31.3 million from December
31, 1997, with reductions in accounts receivable of $91.5 million offset by
increases in cash and cash equivalents of $47.4 million. The decrease in
accounts receivable is primarily due to the sale of certain of the Company's
accounts receivables under a receivables securitization. Increased cash and cash
equivalents at December 31, 1998 was a result of excess proceeds from the $200
million 9% Notes issued in November 1998, $39 million of which was used for
acquisitions in January 1999.
 
     Current liabilities increased by $98.3 million from December 31, 1997
primarily due to an increase of $46.5 million in accounts payable and an
increase of $51.8 million in accrued and other current liabilities related to
the timing of accounts payable payments, increased accrued interest relating to
the additional indebtedness associated with the Transaction and additional
accruals recorded as part of the 1998 Restructuring Plan. Long-term debt
increased by $754.2 million due to additional indebtedness as a result of the
Transaction and the 9% Notes issued in November 1998. Stockholders' equity at
December 31, 1998 is a deficit of $324.7 million as a result of the Transaction.
 
EUROPEAN ECONOMIC AND MONETARY UNION
 
     The Company conducts business in many of the 11 countries which have agreed
to join the European Economic and Monetary Union (the "EMU") and, among other
things, adopt a single currency called the Euro. On January 1, 1999, a
three-year transition period for the Euro began and the conversion rates between
the Euro and the national currencies were fixed. Business enterprises have the
option of switching to the single currency at any time prior to January 1, 2002.
In connection with the upgrade of its management information systems, the
Company is incorporating the necessary changes to allow it to conduct business
in Euros and the national currencies during the transition period and entirely
in Euros thereafter. The Company is not able to estimate or segregate the costs
relating to the conversion to the Euro, but management does not believe that
such costs are material. The Company does not anticipate that the conversion to
the Euro will have a material impact on its future results of operations.
 
ACCOUNTING PRONOUNCEMENTS
 
     During 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" (SFAS No. 130) and Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS No. 131). SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its components
in the financial statements and requires companies to disclose comprehensive
income as part of the basic financial statements. SFAS No. 131 establishes
standards for reporting information on operating segments in financial
statements. The Company has adopted SFAS No. 130 during the first quarter of
1998 and SFAS No. 131 during the fourth quarter of 1998.
 
     In February 1998, the Financial Accounting Standards Board issued Statement
of Accounting Standards No. 132, "Employers' Disclosures About Pensions and
Other Postretirement Benefits" (SFAS No. 132). SFAS No. 132 addresses
disclosures only and supersedes the disclosure requirements in SFAS No. 87
"Employers' Accounting for Pensions", SFAS No. 88, "Employers' Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits" and SFAS No. 106 "Employers' Accounting for Postretirement
Benefits Other Than Pensions." The Company adopted SFAS No. 132 in the fourth
quarter of 1998.
 
                                       21
<PAGE>   22
 
     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activity," which will be effective for the fiscal year beginning
January 1, 2000. Management does not anticipate that the adoption of this
statement will have a material effect on the Company's financial statements.
 
     During 1998, the Accounting Standards Executive Committee of the AICPA
(AcSEC) released Statement of Position 98-1 (SOP 98-1) "Accounting for the Cost
of Computer Software Developed or Obtained for Internal Use," and Statement of
Position 98-5 (SOP 98-5) "Reporting on the Cost of Start-Up Activities." SOP
98-1 requires the capitalization of certain costs related to the development of
software for internal use, and SOP 98-5 requires entities to expense, as
incurred, costs associated with start-up activities. Both standards will be
effective for the Company during fiscal year 1999. The Company is essentially
complying with these new standards and therefore does not expect their
implementation in 1999 to have a material effect on the Company's financial
statements.
 
     In October 1996, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of Position
("SOP") 96-1, "Environmental Remediation Liabilities", which addresses
accounting and reporting for environmental remediation liabilities. The
implementation of SOP 96-1 during 1997 did not have a material effect on the
Company's financial statements.
 
DEPENDENCE ON INFORMATION SYSTEMS; SYSTEMS CONVERSION; YEAR 2000 ISSUE
 
     The statements in the following section include "Year 2000 readiness
disclosure" within the meaning of Year 2000 Information and Readiness Disclosure
Act.
 
     The Company's business is dependent in large part on its information
systems. These systems play an integral role in: tracking product offerings
(including pricing and availability); processing and shipping more than 20,000
items per day; warehouse operations; purchasing from more than 3,000 vendors;
inventory management; financial reporting; and other operational functions.
 
     Year 2000 issues exist when dates in computer systems are recorded using
two digits (rather than four) and are then used for arithmetic operations,
comparisons or sorting. A two-digit date recording may recognize a date using
"00" as 1900 rather than 2000, which could cause the Company's computer systems
to perform inaccurate computations. The Company's Year 2000 issues relate not
only to its own systems but also to those of its customers and suppliers.
 
     Based upon assessments of each of the Company's business units and the
information systems supporting those operations, the Company has begun
implementing a program having the following major elements and a target
completion date no later than December 31, 1999:
 
     First, the applications and other software supporting each business unit
has been inventoried and analyzed and then planned for either: (a) confirmation
as Year 2000 compliant, (b) upgrade to a Year 2000 compliant version, (c)
remediation to become Year 2000 compliant or (d) replacement by other software
which provides Year 2000 compliance and other benefits. For example, certain of
the financial applications supporting the U.S. distribution business have been
replaced by Oracle software; most of the remaining software (including all
remaining essential core software applications) supporting the U.S. distribution
businesses have been remediated, tested by software professionals and end-users,
and implemented in regular business operations. A limited number of other
software applications are scheduled for upgrade or replacement prior to June 30,
1999.
 
     The primary methods of assuring Year 2000 compliance for core business
systems are: (a) remediation for the U.S., Canadian and U.K. distribution
systems, (b) replacement by new Year 2000 and Euro compliant software for the
other European businesses, (c) upgrade to Year 2000 versions for certain
manufacturing businesses and (d) replacement by new Year 2000 software for the
remaining manufacturing businesses and overseas distribution businesses.
 
     Second, the Company has initiated programs to assure Year 2000 compliance
for the equipment and software licenses that it currently markets to customers
and to obtain and transmit to customers information
 
                                       22
<PAGE>   23
 
about the equipment and software licenses which customers may have purchased in
the past. Various units of the Company are also assisting customers in
developing plans to replace or upgrade any non-compliant equipment or software,
especially in laboratories, whether or not the products were acquired from the
Company.
 
     Third, the Company has initiated programs to identify those suppliers whose
own systems could lead to delays or interruptions in supply, either because of
Year 2000 non-compliance or because of the necessity of extensive systems
upgrades or replacements to avoid Year 2000 issues. The Company is addressing
such system changes by suppliers, where appropriate, by adjusting inventory
levels and order lead times to ameliorate any delays or interruptions of product
supply to the Company's customers and is developing similar contingency plans,
on a supplier-specific basis to assure availability of products from suppliers
making future systems changes or not providing adequate assurances of readiness
to fill orders at the beginning of 2000 and in order to prevent or reduce any
adverse effect on fill rates to the Company's customers.
 
     Fourth, with particular regard to Electronic Data Interchange ("EDI"), the
Company has developed plans to work with trading partners, including both
suppliers and customers, to either work around the requirement for six digit
date fields in the prior EDI standards or to migrate, with the trading partner,
to ANSI version 4010, which employs eight digit date fields. The Company has
begun exchanging ANSI Version 4010 transactions with customers and has
identified many of the customers who plan to migrate to Version 4010 and many of
the customers who plan to remain on earlier levels, windowing the transmitted
six digit date at both ends and recognizing the correct year. The Company is
scheduling test sessions with customers requesting either migration to Version
4010 or testing of Year 2000 compliance of such windowing. The Company will
schedule similar testings of suppliers during the second and third quarters.
 
     Fifth, the Company is implementing a project involving testing, with
available test software, personal computers and associated software at various
Company locations, followed by upgrade or replacement where appropriate. In
addition, the Company is implementing projects which include inventory,
identification, assessment (through vendor contacts, testing or both), planning,
implementation (replacement, repair or upgrade) and testing of manufacturing
equipment, environmental control equipment, elevators, security systems,
telecommunications software, and equipment and similar purchased equipment,
software, and systems. While this portion of the overall program is targeted for
completion by June 30, 1999, it is currently anticipated that a limited amount
of this activity of certain of the Company's sites would remain incomplete until
a date no later than September 1999. Contingency plans may be developed to work
around these sites not fully compliant by June 30, 1999.
 
     With regard to financial cost, implementation of the program has resulted
in and will continue to result in significant time expenditure by Company
personnel and outside software and equipment providers and some expenditures for
equipment and software upgrades and replacements. Because many of these efforts
have been designed to achieve other functional or systems improvements, in
addition to Year 2000 compliance, and are being carried out by operational
personnel within each business unit, it is difficult to allocate particular
funding levels solely to the Year 2000 compliance activities. In general,
however, the Company has spent $3.3 million in operating expenses and $27.6
million in capital expenditures on Year 2000 activities to date and estimates
incurring an additional $4.2 million in operating expenses and $10.2 million in
capital expenditures to complete its Year 2000 programs.
 
     Although the Company believes that its present remediation and replacement
programs will adequately address the Year 2000 issues with respect to its
internal systems, there can be no assurance that the Company's belief is correct
or that its present assessment is in fact accurate. There can be no assurance
that the remediation and replacement programs will be completed prior to the
Year 2000 or that if completed prior to the Year 2000 that disruption will not
occur. In addition, there can be no assurance that the Company's vendors,
suppliers and the myriad of other financial, transportation, utility and other
service providers will successfully resolve their own Year 2000 issues in a
manner which avoids significant impact to the Company. The Company has received
written assurances from many of its suppliers and other providers acknowledging
the Year 2000 issues and stating their present intention to be compliant. The
Company has not received assurances from all of its suppliers and other
providers and there is no guarantee that one or more key suppliers and other
providers will not fail to become compliant in time to avoid a disruption to the
Company's business
 
                                       23
<PAGE>   24
 
which, in spite of the Company's contingency plans, would have a significant
adverse impact on the Company. Because of the complexity of the Company's
systems, the number of transactions processed and the number of third parties
with whom the Company interacts, certain failures of the Company or its
suppliers, vendors and other service providers to completely overcome the Year
2000 issue could result in substantial and material impact on the Company's
business, operations and financial results.
 
     The Company's forecasted costs and timing for completion of its Year 2000
programs are based on its best estimates, which in turn are based on numerous
assumptions of future events, including the continued availability and cost of
necessary personnel and other resources, third party modification plans, and
other factors. However, the Company cannot be certain that these estimates will
be achieved and actual results could differ materially from these estimates.
 
     The preceding "Year 2000 Readiness Disclosure" contains various
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934 and the Section 27A Securities Act of 1933. These
forward-looking statements represent the Company's beliefs or expectations
regarding future events. When used in the "Year 2000 Readiness Disclosure", the
words "believes," "expects," "estimates" and similar expressions are intended to
identify forward-looking statements. Forward-looking statements include, without
limitation, the Company's expectations as to when it will complete the
modification and testing phases of its Year 2000 project plan as well as its
Year 2000 contingency plans; its estimated cost of achieving Year 2000
readiness; and the Company's belief that its internal systems will be Year 2000
compliant in a timely manner. All forward-looking statements involve a number of
risks and uncertainties that could cause the actual results to differ materially
from the projected results. Factors that may cause these differences include,
but are not limited to, the availability of qualified personnel and other
information technology resources; the ability to identify and remediate all date
sensitive lines of computer code or to replace embedded computer chips in
affected systems or equipment; and the actions of governmental agencies or other
third parties with respect to Year 2000 problems.
 
CONTROL OF THE COMPANY
 
     As a result of the Transaction, certain affiliates of THL ("THL Entities"),
Chase Equity Associates, L.P. ("Chase Equity"), Merrill Lynch & Co. ("Merrill
Lynch") and DLJ Merchant Banking Partners II, L.P. and certain of its affiliates
("DLJMB" and, together with the THL Entities, Chase Equity and Merrill Lynch,
the "Equity Investors") own 78.4% of the issued and outstanding Fisher Common
Stock, with the THL Entities owning 55.8% of such outstanding stock.
Accordingly, the Equity Investors control the Company and have the power to
elect a majority of its directors, appoint new management and approve any action
requiring the approval of the holders of recapitalized Fisher Common Stock,
including adopting amendments to the Company's certificate of incorporation and
approving mergers or sales of substantially all of the Company's assets. In
connection with the Transaction, the Equity Investors and certain members of
management entered into an Investor's Agreement dated January 21, 1998, as
amended March 29, 1999 (the "Investor's Agreement"). The Investor's Agreement
provides that the Board of Directors of the Company will comprise at least 9,
but not more than 10 directors, four of whom will be appointed by the THL
Entities, one of whom will be appointed by DLJMB, one of whom will be Mr. Paul
M. Montrone and one of whom will be Mr. Paul M. Meister. The directors elected
pursuant to the Investors' Agreement will have the authority to make decisions
affecting the capital structure of the Company, including the issuance of
additional capital stock, the implementation of stock repurchase programs and
the declaration of dividends. There can be no assurance that the interests of
the Equity Investors will not conflict with the interests of the other
shareholders.
 
CAUTIONARY FACTORS REGARDING FORWARD-LOOKING STATEMENTS
 
     Certain statements in this Form 10-K, in future filings by the Company with
the Securities and Exchange Commission (the "Commission"), in the Company's
press releases, and in oral statements made by or with the approval of an
authorized executive officer of the Company constitute "forward-looking
statements" as that term is defined under the Private Securities Litigation
Reform Act of 1995 (the "Act") and releases issued by the commission. These
statements concern the beliefs or current expectations of the Company or its
management with respect to the Company's operating and growth strategies,
financing, regulatory matters, industry trends, competition, risks associated
with foreign operations, reliance on suppliers, environmental
 
                                       24
<PAGE>   25
 
matters and legal proceedings and other factors affecting the Company's
financial condition or results of operations. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that are beyond
the Company's control, and could cause the actual results, performance or
achievements of the Company to differ materially from those contemplated,
projected, estimated or budgeted in or expressed or implied by the
forward-looking statements. These factors include: general economic and business
conditions; industry trends; overseas expansion; the loss of major customers or
suppliers; the timing of orders received from customers; cost and availability
of raw materials; changes in business strategy or development plans;
availability and quality of management; and availability, terms and deployment
of capital. Special attention should be paid to the forward-looking statements
including, but not limited to, statements relating to (i) the Company's ability
to execute its post-merger business strategy, (ii) the Company's ability to
obtain sufficient resources to finance its working capital and capital
expenditure needs and provide for its known obligations, (iii) industry sales
growth and the ability of the Company to make acquisitions, and (iv) the impact
of environmental regulation on the Company's operations.
 
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
     The Company operates manufacturing and logistical facilities as well as
offices around the world and utilizes fixed and floating rate debt to finance
its global operations. As a result, the Company is 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. The Company believes the political
and economic risks related to its foreign operations are mitigated due to the
stability of the countries in which its largest foreign operations are located.
 
     In the normal course of business, the Company uses derivative financial
instruments including interest rate swaps and foreign currency forward exchange
contracts to manage its market risks. Additional information regarding the
Company's financial instruments is contained in Notes 6 and 12 to the financial
statements. The Company's objective in managing its exposure to changes in
interest rates is to limit the impact of such changes on earnings and cash flow
and to lower its overall borrowing costs. The Company's objective in managing
its exposure to changes in foreign currency exchange rates is to reduce
volatility on earnings and cash flow associated with such changes. The Company's
principal currency exposures are in the major European currencies and in
Canadian currency. The Company does not hold derivatives for trading purposes.
 
     The Company measures its market risk, related to its holdings of financial
instruments based on changes in interest rates and foreign currency rates
utilizing a sensitivity analysis. The sensitivity analysis measures the
potential loss in fair values, cash flows and earnings based on a hypothetical
10% change (increase and decrease) in interest and currency exchange rates. The
Company used December 31, 1998 market rates on its financial instruments to
perform the sensitivity analysis. Certain items such as lease contracts,
insurance contracts, and obligations for pension and other post-retirement
benefits were not included in the analysis.
 
     The Company's primary interest rate exposures relate to its cash, fixed and
variable rate debt and interest rate swaps. The potential loss in fair values is
based on an immediate change in the net present values of the Company's interest
rate sensitive exposures resulting from a 10% change in interest rates. The
potential loss in cash flows and earnings is based on the change in the net
interest income/expense over a one-year period due to an immediate 10% change in
rates. A hypothetical 10% change in interest rates does not have a material
impact on the fair values, cash flows or earnings of the Company.
 
     The Company's primary currency rate exposures are to its foreign
denominated debt, intercompany debt, cash and foreign currency forward exchange
contracts. The potential loss in fair values is based on an immediate change in
the U.S. dollar equivalent balances of the Company's currency exposures due to a
10% shift in exchange rates. The potential loss in cash flows and earnings is
based on the change in cash flow and earnings over a one-year period resulting
from an immediate 10% change in currency exchange rates. A hypothetical 10%
change in the currency exchange rates does not have a material impact on the
fair values, cash flows or earnings of the Company.
 
                                       25
<PAGE>   26
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                      FISHER SCIENTIFIC INTERNATIONAL INC.
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                              PAGES
                                                              -----
<S>                                                           <C>
Independent Auditors' Report................................   27
Statements of Operations for the years ended December 31,
  1998, 1997 and 1996.......................................   28
Balance Sheets at December 31, 1998 and 1997................   29
Statements of Cash Flows for the years ended December 31,
  1998, 1997 and 1996.......................................   30
Statements of Changes in Stockholders' (Deficit) Equity and
  Comprehensive Income for the years ended December 31,
  1998, 1997 and 1996.......................................   31
Notes to Financial Statements...............................   32
</TABLE>
 
                                       26
<PAGE>   27
 
                          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 as of December 31, 1998 and 1997, and the
related statements of operations, cash flows, and changes in stockholders'
(deficit) equity and comprehensive income for each of the three years in the
period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. 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, such financial statements present fairly, in all material
respects, the financial position of Fisher Scientific International Inc. and
subsidiaries at December 31, 1998 and 1997, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1998 in conformity with generally accepted accounting principles.
 
DELOITTE & TOUCHE LLP
 
New York, New York
February 26, 1999
 
                                       27
<PAGE>   28
 
                      FISHER SCIENTIFIC INTERNATIONAL INC.
 
                            STATEMENTS OF OPERATIONS
                    (IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                                                              --------------------------------
                                                                1998        1997        1996
                                                              --------    --------    --------
<S>                                                           <C>         <C>         <C>
Sales.......................................................  $2,252.3    $2,175.3    $2,144.4
Cost of sales...............................................   1,616.0     1,583.6     1,565.9
Selling, general and administrative expense.................     503.8       518.8       483.9
Transaction-related costs...................................      71.0          --          --
Restructuring and other charges.............................      23.6        51.8          --
Loss from operations to be disposed of......................      15.1          --          --
                                                              --------    --------    --------
Income from operations......................................      22.8        21.1        94.6
Interest expense............................................      90.3        23.0        27.1
Other (income) expense, net.................................      (7.2)        3.2        (0.1)
                                                              --------    --------    --------
(Loss) income before income taxes...........................     (60.3)       (5.1)       67.6
Income tax (benefit) provision..............................     (10.8)       25.4        30.8
                                                              --------    --------    --------
Net (loss) income...........................................  $  (49.5)   $  (30.5)   $   36.8
                                                              ========    ========    ========
Net (loss) income per common share:
     Basic..................................................  $  (1.24)   $  (0.30)   $   0.40
                                                              ========    ========    ========
     Diluted................................................  $  (1.24)   $  (0.30)   $   0.38
                                                              ========    ========    ========
</TABLE>
 
              See the accompanying notes to financial statements.
 
                                       28
<PAGE>   29
 
                      FISHER SCIENTIFIC INTERNATIONAL INC.
 
                                 BALANCE SHEETS
                        (IN MILLIONS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                              --------------------
                                                                1998        1997
                                                                ----      --------
<S>                                                           <C>         <C>
                                      ASSETS
Current assets:
     Cash and cash equivalents..............................  $   65.6    $   18.2
     Receivables, net.......................................     205.6       297.1
     Inventories............................................     220.9       223.8
     Other current assets...................................      69.0        53.3
                                                              --------    --------
          Total current assets..............................     561.1       592.4
Property, plant and equipment, net..........................     246.0       223.6
Goodwill....................................................     385.9       251.4
Other assets................................................     149.9       109.1
Net assets from operations to be disposed of................      14.7          --
                                                              --------    --------
          Total assets......................................  $1,357.6    $1,176.5
                                                              ========    ========
 
                  LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
     Short-term debt........................................  $   19.7    $   19.7
     Accounts payable.......................................     246.3       199.8
     Accrued and other current liabilities..................     187.2       135.4
                                                              --------    --------
          Total current liabilities.........................     453.2       354.9
Long-term debt..............................................   1,022.0       267.8
Other liabilities...........................................     207.1       206.7
                                                              --------    --------
          Total liabilities.................................   1,682.3       829.4
                                                              --------    --------
Commitments and contingencies (Note 14)
Stockholders' (deficit) equity:
     Preferred stock ($.01 par value; 15,000,000 shares
      authorized, none outstanding).........................        --          --
     Common stock ($.01 par value; 100,000,000 shares
      authorized; 40,034,150, and 101,783,820 shares issued
      and outstanding at December 31, 1998 and 1997,
      respectively).........................................       0.4         0.2
Capital in excess of par value..............................     313.3       278.9
Retained (deficit) earnings.................................    (618.2)       96.7
Accumulated other comprehensive income......................     (19.7)      (22.6)
Treasury stock, at cost, 39,785 shares at December 31,
  1998......................................................      (0.5)         --
Other.......................................................        --        (6.1)
                                                              --------    --------
          Total stockholders' (deficit) equity..............    (324.7)      347.1
                                                              --------    --------
          Total liabilities and stockholders' (deficit)
           equity...........................................  $1,357.6    $1,176.5
                                                              ========    ========
</TABLE>
 
              See the accompanying notes to financial statements.
                                       29
<PAGE>   30
 
                      FISHER SCIENTIFIC INTERNATIONAL INC.
 
                            STATEMENTS OF CASH FLOWS
                                 (IN MILLIONS)
 
<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31,
                                                              ---------------------------
                                                               1998       1997      1996
                                                              ------     ------     -----
<S>                                                           <C>        <C>        <C>
Cash flows from operating activities:
     Net (loss) income......................................  $(49.5)    $(30.5)    $36.8
     Adjustments to reconcile net (loss) income to cash
       provided by operating activities:
       Transaction-related costs............................    70.5         --        --
       Restructuring and other charges, net of cash
          expended..........................................    23.6       51.6        --
       Depreciation and amortization........................    53.0       47.0      44.6
       Loss (gain) on sale of property, plant and equipment,
          and write-off of assets...........................    (2.5)       0.9      (3.0)
       Gain on sale of business and investments.............      --       (0.7)       --
       Deferred income taxes................................   (17.8)      (1.3)     12.3
     Changes in working capital:
       Receivables, net.....................................     2.3       22.0     (22.3)
       Inventories..........................................    10.8       32.0     (13.7)
       Other current assets.................................    (4.6)       4.1       9.4
       Accounts payable.....................................    45.3      (41.7)     12.3
       Accrued and other current liabilities................    33.2      (14.8)    (22.1)
     Net cash flow from operations to be disposed of........     0.4         --        --
     Other assets and liabilities...........................   (14.8)     (22.5)     (5.3)
                                                              ------     ------     -----
          Cash provided by operating activities.............   149.9       46.1      49.0
                                                              ------     ------     -----
Cash flows from investing activities:
     Acquisitions, net of cash acquired.....................  (172.7)     (11.6)    (10.4)
     Capital expenditures...................................   (67.2)     (59.2)    (40.7)
     Proceeds from sale of property, plant and equipment....     8.1       19.1       6.9
     Marketable securities proceeds and maturities..........      --        7.8       3.0
     Other..................................................      --       (6.8)     (0.8)
                                                              ------     ------     -----
          Cash used in investing activities.................  (231.8)     (50.7)    (42.0)
                                                              ------     ------     -----
Cash flows from financing activities:
     Common stock repurchased and conversion of stock to
       cash.................................................  (955.1)        --        --
     Proceeds from common stock sold to FSI.................   303.0         --        --
     Financing-related fees and expenses....................   (72.2)        --        --
     Proceeds from accounts receivable securitization,
       net..................................................   105.2         --        --
     Long-term debt proceeds................................   958.8      107.3      29.8
     Long-term debt payments................................  (210.4)    (114.7)    (82.2)
     Proceeds from sale of common stock.....................     0.5         --        --
     Acquisition of treasury stock..........................    (0.5)        --        --
     Proceeds from stock options exercised..................      --        6.7       7.9
     Dividends paid.........................................      --       (1.2)     (1.5)
                                                              ------     ------     -----
          Cash provided by (used in) financing activities...   129.3       (1.9)    (46.0)
                                                              ------     ------     -----
Net change in cash and cash equivalents.....................    47.4       (6.5)    (39.0)
Cash and cash equivalents -- beginning of year..............    18.2       24.7      63.7
                                                              ------     ------     -----
Cash and cash equivalents -- end of year....................  $ 65.6     $ 18.2     $24.7
                                                              ======     ======     =====
Supplemental Cash Flow Information:
     Cash paid during the year for:
       Income taxes.........................................  $  7.7     $ 19.6     $10.7
                                                              ======     ======     =====
       Interest.............................................  $ 64.3     $ 23.0     $27.7
                                                              ======     ======     =====
</TABLE>
 
              See the accompanying notes to financial statements.
                                       30
<PAGE>   31
 
                      FISHER SCIENTIFIC INTERNATIONAL INC.
 
                STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT)
                        EQUITY AND COMPREHENSIVE INCOME
                    (IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
                                            CAPITAL                                               ACCUMULATED
                                              IN          SHARES      SHARES TO BE   RETAINED        OTHER
                                  COMMON   EXCESS OF   DEPOSITED IN   DISTRIBUTED    EARNINGS    COMPREHENSIVE   TREASURY
                                  STOCK    PAR VALUE      TRUST        FROM TRUST    (DEFICIT)      INCOME        STOCK      TOTAL
                                  ------   ---------   ------------   ------------   ---------   -------------   --------   -------
<S>                               <C>      <C>         <C>            <C>            <C>         <C>             <C>        <C>
Balance, December 31, 1995......  $ 0.2     $ 135.5       $   --         $  --        $  93.1       $  (2.8)      $  --     $ 226.0
Comprehensive income (loss):
  Net income....................     --          --           --            --           36.8            --          --        36.8
  Foreign currency translation
    adjustment..................     --          --           --            --             --          (4.3)         --        (4.3)
  Subtotal-comprehensive
    income......................     --          --           --            --             --            --          --          --
  Proceeds from stock options...     --         7.9           --            --             --            --          --         7.9
  Tax benefit from exercise of
    stock options...............     --         1.9           --            --             --            --          --         1.9
  Dividends ($0.08 per share)...     --          --           --            --           (1.5)           --          --        (1.5)
  Conversion of Convertible
    Subordinated Notes..........     --       125.4           --            --             --            --          --       125.4
  Shares deposited in trust.....     --          --         (6.0)           --             --            --          --        (6.0)
                                  -----     -------       ------         -----        -------       -------       -----     -------
Balance, December 31, 1996......    0.2       270.7         (6.0)           --          128.4          (7.1)         --       386.2
Comprehensive income (loss):
  Net loss......................     --          --           --            --          (30.5)           --          --       (30.5)
  Foreign currency translation
    adjustment..................     --          --           --            --             --         (14.5)         --       (14.5)
  Minimum pension liability.....     --          --           --            --             --          (1.0)         --        (1.0)
  Subtotal-comprehensive
    (loss)......................     --          --           --            --             --            --          --          --
  Proceeds from stock options...     --         6.7           --            --             --            --          --         6.7
  Tax benefit from exercise of
    stock options...............     --         1.5           --            --             --            --          --         1.5
  Dividends ($0.06 per share)...     --          --           --            --           (1.2)           --          --        (1.2)
  Shares deposited in trust.....     --          --         (0.1)           --             --            --          --        (0.1)
                                  -----     -------       ------         -----        -------       -------       -----     -------
Balance, December 31, 1997......    0.2       278.9         (6.1)           --           96.7         (22.6)         --       347.1
Comprehensive income (loss):
  Net loss......................     --          --           --            --          (49.5)           --          --       (49.5)
  Foreign currency translation
    adjustment..................     --          --           --            --             --           2.9          --         2.9
  Subtotal-comprehensive
    (loss)......................     --          --           --            --             --            --          --          --
  Five-for-one stock split......    0.3        (0.3)          --            --             --            --          --          --
  Common stock issued...........     --         0.5           --            --             --            --          --         0.5
  Shares held in Treasury.......     --          --           --            --             --            --        (0.5)       (0.5)
  Reversal of changes in market
    value of common stock held
    in trust....................     --          --          4.3            --             --            --          --         4.3
  Reclass from other
    liabilities.................     --          --           --          29.8             --            --          --        29.8
  Transaction-related activity:
    Common stock repurchased and
      conversion of options to
      cash......................   (0.2)     (268.7)          --            --         (686.2)           --          --      (955.1)
  Shares deposited in trust.....     --          --        (28.0)           --             --            --          --       (28.0)
  Equity contribution by FSI....    0.1       302.9           --            --             --            --          --       303.0
  Proceeds from stock options...     --          --           --            --           55.7            --          --        55.7
  Recapitalization fees and
    expenses....................     --          --           --            --          (34.9)           --          --       (34.9)
                                  -----     -------       ------         -----        -------       -------       -----     -------
Balance, December 31, 1998......  $ 0.4     $ 313.3       $(29.8)        $29.8        $(618.2)      $ (19.7)      $(0.5)    $(324.7)
                                  =====     =======       ======         =====        =======       =======       =====     =======
 
<CAPTION>
                                    SUBTOTAL
                                  COMPREHENSIVE
                                     INCOME
                                     (LOSS)
                                  -------------
<S>                               <C>
Balance, December 31, 1995......
Comprehensive income (loss):
  Net income....................     $ 36.8
  Foreign currency translation
    adjustment..................       (4.3)
                                     ------
  Subtotal-comprehensive
    income......................     $ 32.5
                                     ======
  Proceeds from stock options...
  Tax benefit from exercise of
    stock options...............
  Dividends ($0.08 per share)...
  Conversion of Convertible
    Subordinated Notes..........
  Shares deposited in trust.....
Balance, December 31, 1996......
Comprehensive income (loss):
  Net loss......................     $(30.5)
  Foreign currency translation
    adjustment..................      (14.5)
  Minimum pension liability.....       (1.0)
                                     ------
  Subtotal-comprehensive
    (loss)......................     $(46.0)
                                     ======
  Proceeds from stock options...
  Tax benefit from exercise of
    stock options...............
  Dividends ($0.06 per share)...
  Shares deposited in trust.....
Balance, December 31, 1997......
Comprehensive income (loss):
  Net loss......................     $(49.5)
  Foreign currency translation
    adjustment..................        2.9
                                     ------
  Subtotal-comprehensive
    (loss)......................     $(46.6)
                                     ======
  Five-for-one stock split......
  Common stock issued...........
  Shares held in Treasury.......
  Reversal of changes in market
    value of common stock held
    in trust....................
  Reclass from other
    liabilities.................
  Transaction-related activity:
    Common stock repurchased and
      conversion of options to
      cash......................
  Shares deposited in trust.....
  Equity contribution by FSI....
  Proceeds from stock options...
  Recapitalization fees and
    expenses....................
Balance, December 31, 1998......
</TABLE>
 
              See the accompanying notes to financial statements.
 
                                       31
<PAGE>   32
 
                      FISHER SCIENTIFIC INTERNATIONAL INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
NOTE 1 -- FORMATION AND BACKGROUND
 
     Fisher Scientific International Inc. ("Fisher" or the "Company") was formed
in September 1991. The Company's operations are conducted by wholly owned and
majority-owned subsidiaries, joint ventures, equity interests and agents,
located in North and South America, Europe, the Far East, the Middle East and
Africa. The Company is managed in four business segments: domestic distribution,
international distribution, laboratory workstations and technology. The domestic
and international distribution segments engage in the supply, marketing, service
and manufacture of scientific, clinical, educational, occupational health and
safety products. The laboratory workstations segment manufactures laboratory
workstations and computer (LAN) furniture. Fisher's technology segment provides
procurement outsourcing services and supply chain management technology and
software.
 
     Fisher provides more than 260,000 products and services to research, health
care, industrial, educational and governmental markets in 145 countries. The
Company serves scientists engaged in biomedical, biotechnology, pharmaceutical,
chemical and other fields of research and development, and is a supplier to
clinical laboratories, hospitals, health care alliances, physicians' offices,
environmental testing centers, remediation companies, quality-control
laboratories and many other customers. The Company's largest supplier represents
approximately 10% of 1998 sales.
 
NOTE 2 -- RECAPITALIZATION AND MERGER
 
     Pursuant to the Second Amended and Restated Agreement and Plan of Merger
dated as of November 14, 1997, amending an Agreement and Plan of Merger dated
August 7, 1997 (as amended, the "Merger Agreement") between the Company and FSI
Merger Corp. ("FSI"), a Delaware corporation formed by Thomas H. Lee Company
("THL"), providing for the merger of FSI with and into Fisher and the
recapitalization of Fisher (collectively, "the Transaction"), which Transaction
was consummated on January 21, 1998, approximately 87% of the fully diluted
shares of common stock of Fisher were converted into the right to receive $9.65
per share in cash (approximately $955.0 million in the aggregate) pursuant to an
election process that provided stockholders the right to elect, subject to
proration, for each share of Fisher common stock held either $9.65 in cash or to
retain one share of common stock, $.01 par value ("Common Stock"), in the
recapitalized company. Pursuant to the Merger Agreement, vesting of all
outstanding options accelerated.
 
     The Transaction has been accounted for as a recapitalization which had no
impact on the historical basis of assets and liabilities. In connection with the
Transaction, the Company recorded $71.0 million of expenses consisting primarily
of non-cash compensation expense relating to the conversion of employee stock
options, the implementation of certain executive employment agreements and the
grant of options to certain executives in accordance with the terms of the
Transaction. See Note 19.
 
     On March 9, 1998, Fisher's Board of Directors declared a five-for-one stock
split on the Company's Common Stock. As a result of the stock split, four
additional shares of Common Stock were issued for each share of Common Stock
held by the shareholders of record as of the close of business on March 19,
1998. All references in this report to the number of shares and per-share
amounts have been restated as appropriate to give effect to the stock split.
 
NOTE 3 -- 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.
 
     Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles 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
                                       32
<PAGE>   33
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
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.
 
     Cash and Cash Equivalents -- Cash and cash equivalents consist primarily of
highly liquid investments with insignificant interest rate risk and 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
inventories of Fisher Scientific Company L.L.C., and by the first-in, first-out
("FIFO") method for all other subsidiaries.
 
     Other Current Assets -- Other current assets primarily consist of deferred
income taxes of $51.0 million and $43.7 million at December 31, 1998 and 1997,
respectively.
 
     Property, Plant and Equipment -- Property, plant and equipment is recorded
at cost and is generally depreciated based upon the following estimated useful
lives: buildings and improvements 5 to 33 years, machinery and equipment 3 to 12
years, and office furniture and equipment 3 to 10 years. For financial statement
purposes, depreciation is computed principally using the straight-line method.
For tax purposes, depreciation is generally computed by accelerated methods
based on allowable useful lives.
 
     Goodwill -- Goodwill is being amortized for financial statement purposes on
a straight-line basis over 15 to 40 years. The amounts presented are net of
accumulated amortization of $59.9 million and $50.5 million at December 31, 1998
and 1997, respectively.
 
     Intangible Assets -- Intangible assets are being amortized on a
straight-line basis over their estimated useful lives, ranging up to 20 years,
are included in Other Assets and are stated net of accumulated amortization of
$15.8 million and $12.1 million at December 31, 1998 and 1997, respectively.
During 1998, 1997, and 1996, the Company amortized $3.7 million, $3.5 million,
and $2.9 million, respectively, of intangible assets.
 
     Impairment of Long-Lived Assets -- Impairment losses are recorded on
long-lived assets used in operations when indicators of impairment are present
and the anticipated undiscounted operating cash flow generated by those assets
are less than the assets' carrying value. During 1998, the Company recorded an
impairment loss of $13.6 million. See Note 20.
 
     Revenue Recognition -- The Company recognizes revenue from product sales at
the time products are shipped.
 
     Income Taxes -- Deferred income taxes are determined based on the
difference between the financial statement and tax bases of assets and
liabilities, using expected rates in effect in the years in which the
differences are expected to reverse.
 
     Deferred Debt Issue Costs -- Deferred debt issue costs of $36.7 million and
$3.3 million at December 31, 1998 and 1997, respectively, relate to the
Company's 9% Notes, 7 1/8% 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 1998, 1997, and
1996, the Company amortized $4.8 million, $0.7 million, and $0.7 million,
respectively, of capitalized debt costs.
 
     Environmental accruals are recorded 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. These
amounts do not include third-party recoveries. See Note 14 for additional
information.
 
                                       33
<PAGE>   34
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
     Other (income) expense, net represents interest income on cash and cash
equivalents and other non-operating income and expense items, including income
resulting from the Company's inactive insurance subsidiary.
 
     Foreign Currency Translation -- Assets and liabilities of the Company's
foreign subsidiaries 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 in a separate component of
stockholders' equity. Gains and losses resulting from foreign currency
transactions are reported on the income statement line item "other (income)
expense, net," when recognized.
 
     Financial Instruments -- The Company enters into forward currency contracts
to hedge exposure to fluctuations in foreign currency rates. Gains and losses on
the Company's forward currency contracts generally offset gains and losses on
certain firm commitments of the Company. Gains and losses on these positions are
deferred and included in the basis of the transaction when it is completed. At
December 31, 1998 the outstanding forward currency contracts all had maturities
of less than twelve months. Cash flows from forward currency contracts accounted
for as hedges are classified in the Statement of Cash Flows in the same category
as the item being hedged or on a basis consistent with the nature of the
instrument.
 
     Interest-Rate Swap Agreements -- The Company enters into interest-rate swap
agreements in order to manage its exposure to interest-rate fluctuations. The
Company does not hold or issue financial instruments for trading or speculative
purposes. Net-interest differentials to be paid or received are included in
interest expense. Any undesignated interest rate swap agreements are immediately
marked-to-market.
 
     Accounting Pronouncements -- During 1997, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" (SFAS No. 130) and Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information" (SFAS No. 131). SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components in the
financial statements and requires companies to disclose comprehensive income as
part of the basic financial statements. SFAS No. 131 establishes standards for
reporting information on operating segments in financial statements. The Company
adopted SFAS No. 130 during the first quarter of 1998 and SFAS No. 131 during
the fourth quarter of 1998.
 
     In February 1998, the FASB issued Statement of Financial Accounting
Standards No. 132, "Employers' Disclosures About Pensions and Other
Postretirement Benefits" (SFAS No. 132). SFAS No. 132 addresses disclosures only
and supersedes the disclosure requirements in SFAS No. 87 "Employers' Accounting
for Pensions", SFAS No. 88, "Employers' Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for Termination Benefits" and
SFAS No. 106 "Employers' Accounting for Postretirement Benefits Other Than
Pensions." The Company adopted SFAS No. 132 in the fourth quarter of 1998.
 
     In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activity," which
will be effective for fiscal years beginning January 1, 2000. Management does
not anticipate that the adoption of this statement will have a material impact
on the Company's financial statements.
 
     During 1998, the Accounting Standards Executive Committee of the AICPA
(AcSEC) released Statement of Position 98-1 (SOP 98-1) "Accounting for the Cost
of Computer Software Developed or Obtained for Internal Use," and Statement of
Position 98-5 (SOP 98-5) "Reporting on the Cost of Start-Up Activities." SOP
98-1 requires the capitalization of certain costs related to the development of
software for internal use, and SOP 98-5 requires entities to expense, as
incurred, costs associated with start-up activities. Both standards will be
effective for the Company during fiscal year 1999. The Company is essentially
complying with these new standards and therefore does not expect their
implementation to have a material effect on the Company's financial statements.
                                       34
<PAGE>   35
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
NOTE 4 -- ACQUISITIONS
 
     In December 1998, Fisher purchased for approximately $138 million in cash
approximately 90% of Bioblock Scientific S.A. ("Bioblock"), a leading
distributor of scientific and laboratory instrumentation in France. At the time
of the acquisition, Bioblock had approximately $32 million of cash and cash
equivalents on hand. In addition, the Company acquired the remaining Bioblock
shares in January 1999 for an additional $14 million, bringing Fisher's the
total ownership position to 100%.
 
     The following unaudited pro forma financial information presents the
consolidated results of operations as if the acquisition of Bioblock had
occurred at the beginning of the period presented (in millions, except per share
amounts).
 
<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31,
                                                      ------------------------
                                                         1998          1997
                                                      ----------    ----------
<S>                                                   <C>           <C>
Sales...............................................   $2,325.8      $2,243.8
Net income (loss)...................................      (57.3)        (37.2)
Earnings (loss) per common share:
     Basic..........................................   $  (1.43)     $  (0.37)
     Diluted........................................      (1.43)        (0.37)
</TABLE>
 
     The pro forma financial information includes the results of Bioblock
combined with the Company's historical results (including the 1998 and 1997
restructuring charges described in Note 20 and Transaction related costs
described in Note 2), the effects of the purchase accounting allocations, and
adjustments to interest expense to reflect borrowings to finance the
acquisitions described in Note 12. The pro forma financial information does not
purport to present what the Company's results of operations would actually have
been had the acquisition of Bioblock occurred on the assumed date, nor does it
project the Company's results of operations for any future period.
 
     The Company's balance sheet at December 31, 1998 includes the estimated
fair value of assets and liabilities acquired in connection with the acquisition
of Bioblock based upon valuations and other studies which have not been
finalized. Estimates of acquisition liabilities relating to the integration of
Bioblock with Fisher's operations are not reflected as the integration plans
have not been finalized. Accordingly, the allocation of the purchase price is
preliminary. The preliminary goodwill related to the acquisition of Bioblock is
approximately $92 million and is being amortized over 25 years.
 
     In August of 1998, the Company acquired the net assets of Systems
Manufacturing Corporation, a manufacturer of local area network ("LAN")
furniture and command bridges for $58 million in cash. The Company also made
three smaller acquisitions with an aggregate purchase price of approximately $11
million in cash during 1998. These acquisitions were accounted for as purchases.
 
     During 1997 and 1996, the Company made several small acquisitions for an
aggregate purchase price of approximately $12 million and $10 million,
respectively. These acquisitions were accounted for as purchases; operations of
the companies and businesses acquired have been included in the accompanying
financial statements from their respective dates of acquisition. These
acquisitions are not material to the Company's financial statements.
 
     The excess of the purchase price over the fair value of all net assets
acquired in 1998 and 1997 was approximately $151 million and $10 million,
respectively, and is being amortized over 15 to 40 years.
 
NOTE 5 -- OPERATIONS TO BE DISPOSED OF
 
     During the fourth quarter of 1998, management decided to dispose of its
technology segment, which consists of its procurement outsourcing services and
supply chain management technology business (the "ProcureNet Business") and its
UniKix Technology software business. In December 1998, the Company's
 
                                       35
<PAGE>   36
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
Board of Directors approved a plan to (i) spinoff the ProcureNet Business to
Fisher stockholders (the "Spinoff") and (ii) sell the UniKix Technology software
business (the "UniKix Sale"). Following the Spinoff, the Company and ProcureNet
will operate as separate, stand-alone companies. As part of the Spinoff, the
Company and ProcureNet will enter into a transition services agreement pursuant
to which Fisher will provide ProcureNet with certain management and other
administrative services and ProcureNet will continue to provide Fisher and its
customers third party procurement and electronic commerce support and services.
It is not expected that the Spinoff will have a material impact on Fisher's
business or operations. The Company currently anticipates that the consummation
of the Spinoff will occur in the second quarter of 1999.
 
     Revenues, costs and expenses, assets and liabilities, and cash flows of the
new company have been excluded from their respective captions in the Statement
of Operations, Balance Sheet, and Statements of Cash Flows. These items have
been reported as "loss from operations to be disposed of", "net assets from
operations to be disposed of" and "net cash flows from operations to be disposed
of" at December 31, 1998.
 
     Summarized financial information for the technology segment is set for
below (in millions):
 
<TABLE>
<CAPTION>
                                                    1998     1997     1996
                                                    -----    -----    -----
<S>                                                 <C>      <C>      <C>
Net sales.........................................  $59.5    $41.0    $36.7
Operating loss....................................   15.1     14.3      7.4
Net loss..........................................    9.1      8.6      4.4
Diluted loss per share............................   0.23     0.08     0.04

Current assets....................................  $12.2    $11.3
Current liabilities...............................   10.1     12.1
Total assets......................................   24.6     28.8
Total liabilities.................................    9.9     12.1
                                                    -----    -----
Net assets from operations to be disposed of......  $14.7    $16.7
                                                    =====    =====
</TABLE>
 
     The operating loss in 1998 includes $1.3 million of asset write-offs and
$1.3 million of severance and other exit costs. All balance sheet data presented
above excludes intercompany obligations.
 
NOTE 6 -- FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     The Company's financial instruments consist primarily of cash in banks,
receivables, debt and interest rate swaps. In addition, the Company has forward
foreign currency contracts that hedge certain firm commitments and balance sheet
exposures.
 
     The carrying amounts for cash and cash equivalents, 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 $1,022.0
million and $1,011.6 million, respectively, at December 31, 1998 and $267.8
million and $257.6 million, respectively, at December 31, 1997. 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. The Company has off-balance
sheet standby letters of credit with a notional amount of $25.6 million with no
unrealized gain or loss at December 31, 1998.
 
     During 1998, the Company executed two interest-rate swap agreements with a
counterparty exchanging its floating-rate obligation on $120 million notional
principal amount for a fixed-rate payment obligation of 5.6425% per annum
through January 23, 2001 and on $250 million notional principal amount for a
fixed- rate payment obligation of 5.7375% per annum through January 23, 2003. In
the unlikely event that the counterparty fails to meet the terms of the
interest-rate swap agreement, the Company's exposure is limited to the
interest-rate differential on the notional amount at each quarterly settlement
period over the life of the agreements. The Company does not anticipate
non-performance by the counterparty. The fair values of interest-rate swap
agreements are the estimated amounts that the Company would receive or (pay) 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 counterparty. The fair value of
 
                                       36
<PAGE>   37
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
these interest-rate swap agreements as of December 31, 1998, based upon quoted
market prices, was ($5.8) million of which approximately $1.0 million was
recorded at December 31, 1998 to accrue for the undesignated portion.
 
     None of the Company's financial instruments represent a concentration of
credit risk because the Company deals with a variety of major banks worldwide,
and its accounts receivable are spread among a number of major customers and
geographic areas. None of the Company's off-balance-sheet financial instruments
would result in a significant loss to the Company if the other party failed to
perform according to the terms of its agreement, as any such loss would
generally be limited to the unrealized gain in any contract.
 
NOTE 7 -- RECEIVABLES
 
     The following is a summary of receivables at December 31 (in millions):
 
<TABLE>
<CAPTION>
                                                           1998      1997
                                                          ------    ------
<S>                                                       <C>       <C>
Trade and other receivables.............................  $233.4    $320.9
Allowance for doubtful accounts.........................   (27.8)    (23.8)
                                                          ------    ------
                                                          $205.6    $297.1
                                                          ======    ======
</TABLE>
 
     Provisions for doubtful accounts were $7.7 million, $5.5 million and $4.4
million and write-offs were $3.7 million, $3.6 million and $1.6 million for the
years ending December 31, 1998, 1997 and 1996, respectively. Allowances of
companies acquired at their acquisition date were $0.3 million and $1.1 million
in 1998 and 1997, respectively, and allowances of operations to be disposed were
$0.3 million at December 31, 1997.
 
NOTE 8 -- INVENTORIES
 
     The following is a summary of inventories by major category at December 31
(in millions):
 
<TABLE>
<CAPTION>
                                                           1998      1997
                                                          ------    ------
<S>                                                       <C>       <C>
Raw materials...........................................  $ 19.5    $ 17.5
Work in process.........................................     3.7       3.2
Finished products.......................................   197.7     203.1
                                                          ------    ------
                                                          $220.9    $223.8
                                                          ======    ======
</TABLE>
 
     Inventories valued using the LIFO method amounted to $153.4 million at
December 31, 1998 and $169.6 million at December 31, 1997, which were below
estimated replacement cost by approximately $26.4 million and $28.8 million for
the years ended December 31, 1998 and 1997, respectively.
 
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):
 
<TABLE>
<CAPTION>
                                                          1998      1997
                                                         ------    ------
<S>                                                      <C>       <C>
Land, buildings and improvements.......................  $176.0    $154.9
Machinery, equipment and other.........................   176.6     159.1
                                                         ------    ------
                                                          352.6     314.0
Accumulated depreciation...............................  (106.6)    (90.4)
                                                         ------    ------
                                                         $246.0    $223.6
                                                         ======    ======
</TABLE>
 
                                       37
<PAGE>   38
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
NOTE 10 -- OTHER ASSETS
 
     The following is a summary of other assets at December 31 (in millions):
 
<TABLE>
<CAPTION>
                                                          1998      1997
                                                         ------    ------
<S>                                                      <C>       <C>
Deferred income taxes..................................  $ 47.8    $ 37.1
Deferred financing fees................................    37.0       3.3
Intangible assets......................................    17.9      23.0
Other..................................................    47.2      45.7
                                                         ------    ------
                                                         $149.9    $109.1
                                                         ======    ======
</TABLE>
 
NOTE 11 -- ACCRUED AND OTHER CURRENT LIABILITIES
 
     The following is a summary of accrued and other current liabilities at
December 31 (in millions):
 
<TABLE>
<CAPTION>
                                                          1998      1997
                                                         ------    ------
<S>                                                      <C>       <C>
Wages and benefits.....................................  $ 43.0    $ 29.3
Interest...............................................    22.0       0.8
Other..................................................   122.2     105.3
                                                         ------    ------
                                                         $187.2    $135.4
                                                         ======    ======
</TABLE>
 
NOTE 12 -- DEBT
 
     The following is a summary of debt and other obligations at December 31 (in
millions):
 
<TABLE>
<CAPTION>
                                                          1998       1997
                                                        --------    ------
<S>                                                     <C>         <C>
9% Senior Subordinated Notes (net of discount of $7.0
  million)............................................  $  593.0    $   --
New Credit Facility...................................     253.7        --
Prior Credit Facility.................................        --     100.6
7 1/8% Notes (net of a discount of $0.9 and $1.0
  million in 1998 and 1997, respectively).............     149.1     149.0
Other.................................................      45.9      37.9
Less short-term debt..................................     (19.7)    (19.7)
                                                        --------    ------
          Total.......................................  $1,022.0    $267.8
                                                        ========    ======
</TABLE>
 
     On January 21, 1998, in connection with the Transaction, Fisher entered
into new debt financing arrangements, providing for up to $469.2 million of
senior bank financing (the "New Credit Facility"), a $150 million receivables
securitization facility (the "Receivables Securitization") and $400 million of
9% Senior Subordinated Notes due 2008 (the "9% Notes"). The proceeds of the 9%
Notes, together with a portion of the proceeds of the New Credit Facility, were
used to finance the conversion into cash of the common stock then outstanding
that were not retained by existing stockholders and employees, to refinance
$107.8 million of indebtedness outstanding on the date of the Transaction and to
pay related fees and expenses of the Transaction. In addition, the New Credit
Facility will be used to provide for the Company's working capital requirements
and future acquisitions, if any.
 
     In March, the Company paid down $40.0 million of borrowings under the New
Credit Facility, funded by $20 million of proceeds from the sale of accounts
receivable under the Receivables Securitization, increasing that facility limit
to $170 million, and $20 million of cash generated by operations. As of December
31, 1998, the New Credit Facility consisted of (i) a $253.7 million term loan
facility (the "Term Facility") consisting of a (a) $107.5 million tranche A term
loan ("Tranche A"), (b) $86.4 million tranche B term loan ("Tranche B") and (c)
$59.8 million tranche C term loan ("Tranche C"); and (ii) a $175.0 million
revolving credit
 
                                       38
<PAGE>   39
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
facility (the "Revolving Facility"). Of the $253.7 million outstanding under the
Term Facility, $205.0 million is denominated in U.S. dollars, $36.8 million is
denominated in British pounds and $11.9 million is denominated in Canadian
dollars. Borrowings under the Term Facility bear interest at a rate equal to, at
the Company's option, the following: Tranche A, LIBOR plus 2.25% or Prime Rate
plus 1.25%; Tranche B, LIBOR plus 2.50% or Prime Rate plus 1.50%; and Tranche C,
LIBOR plus 2.75% or Prime Rate plus 1.75%. Borrowings made under the Revolving
Facility bear interest at a rate equal to, at the Company's option, LIBOR plus
2.25%, or the Prime Rate plus 1.25%. The Company will also pay to the lenders a
commitment fee equal to .50% per annum of the undrawn portion of each lender's
commitment from time to time. The LIBOR and Prime Rate margins and the
commitment fees are subject to reductions, based upon certain changes in the
leverage ratio. The Term Facilities have the following maturity periods from the
date of inception: Tranche A -- 6 years, Tranche B -- 7 years and Tranche
C -- 7.75 years. The Revolving Facility expires six years from the date of
inception. The mandatory repayment schedule of the Term Facility over the next
five years and thereafter is as follows: $5.2 million in 1999, $14.6 million in
2000, $18.9 million in 2001, $31.8 million in 2002, $23.2 million in 2003, and
$160.0 million in years subsequent to 2003.
 
     The obligations of Fisher and the subsidiary borrowers under the New Credit
Facility are secured by substantially all assets of the Company and its material
domestic subsidiaries, a pledge of the stock of all domestic subsidiaries, and a
pledge of 65% of the stock of material foreign subsidiaries, which are direct
subsidiaries of the Company or one of its material domestic subsidiaries.
Obligations of each foreign subsidiary borrower are secured by a pledge of 100%
of the shares of such borrower. The obligations of Fisher and the subsidiary
borrowers are further guaranteed by Fisher and each material domestic subsidiary
of Fisher.
 
     The New Credit Facility contains covenants of the Company and the
subsidiary borrowers, including, without limitation, restrictions on (i)
indebtedness, (ii) the sale of assets, (iii) mergers, acquisitions and other
business combinations, (iv) minority investments, (v) the payment of cash
dividends to shareholders, and (vi) various financial covenants. The financial
covenants include requirements to maintain certain levels of interest coverage,
debt to earnings before interest, taxes, depreciation and amortization
("EBITDA") and minimum EBITDA and to limit capital expenditures. The Company is
in compliance with all covenants at December 31, 1998. Loans under the Term
Facility are required to be prepaid with 50% of excess cash flow (as defined in
the New Credit Facility and subject to certain limits as specified therein) and
certain equity issuances of the Company, and 100% of net-cash proceeds of
certain asset sales, certain insurance and condemnation proceeds and certain
debt issuances of the Company.
 
     The Receivables Securitization relates to the sale, on a revolving basis,
of certain of the accounts receivable of Fisher Scientific Company, L.L.C., a
Delaware limited liability corporation ("FSC"), to a bankruptcy remote
subsidiary of FSC that 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 of December 31,
1998, the Company sold $105.2 million under the Receivables Securitization. The
facility has a maturity of five years, and the effective interest rate is
approximately LIBOR plus 50 basis points.
 
     On January 21, and November 20, 1998, the Company issued $400 million and
$200 million, respectively, of 9% Senior Subordinated Notes ("9% Notes"). The 9%
Notes issued in January were issued at par while the 9% Notes issued in November
were issued net of a $7 million discount. The 9% Notes will mature on February
1, 2008 with interest payable semiannually in arrears on February 1 and August 1
of each year commencing August 1, 1998. The 9% Notes are unsecured senior
subordinated obligations of the Company, subordinated in right of payment to all
existing and future senior indebtedness and rank pari passu in light of payment
with all other existing and future senior subordinated indebtedness of the
Company. The 9% Notes are redeemable at the option of the Company at any time
after February 1, 2003 at an initial redemption price of 104.5%, declining
ratably to par on or after February 1, 2006. In addition, on or prior to
February 1, 2001, the Company may redeem up to 40% of the original principal
amount of the 9% Notes at a redemption price of 109% of the
 
                                       39
<PAGE>   40
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of redemption with the net cash proceeds of one or more public equity offerings,
provided that at least 60% of the aggregate principal amount of the 9% Notes
originally issued remains outstanding immediately after the occurrence of such
redemption. Upon a Change of Control Triggering Event (as defined in the
Indenture under which the 9% Notes are issued), the Company will be required to
make an offer to purchase all outstanding 9% Notes at 101% of the principal
amount thereof, together with accrued and unpaid interest, if any, to the date
of purchase.
 
     The Indenture under which the 9% Notes are issued contains covenants that
restrict, among other things, (i) the ability of the Company and its
subsidiaries to incur additional indebtedness, (ii) pay dividends or make
certain other restricted payments, (iii) merge or consolidate with any other
person, (iv) minority investments, and (v) 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% Notes due December 15, 2005, which were sold on December 18, 1995 at a
price to the public equal to 99.184% of principal bringing the effective
interest rate to 7.5%. The estimated fair market value of the 7 1/8% Notes at
December 31, 1998, based on quotes from bond traders making a market in the
Notes, was approximately $142.5 million.
 
     On November 20, 1998, the Company borrowed $8.8 million from LaSalle
National Bank, as lender, pursuant to the Illinois State Treasurer's Economic
Program ("STEP"). The Company was eligible for the STEP benefits based on its
creation of permanent jobs in the state of Illinois. The Company subsequently
pledged a first lien mortgage on the property at Hanover Park which was approved
by the lenders under the New Credit Facility. The Company will use the amounts
borrowed under the loan agreement to finance part of the consolidation of the
Midwestern distribution centers into one central location. The loan agreement
provides for an interest rate of 4.90% up until November 20, 2000, and an
interest rate thereafter of 0.25% plus the rate for U.S. Treasury Bonds maturing
over a three year period.
 
NOTE 13 -- OTHER LIABILITIES
 
     The following is a summary of other liabilities at December 31 (in
millions):
 
<TABLE>
<CAPTION>
                                                          1998      1997
                                                         ------    ------
<S>                                                      <C>       <C>
Postretirement benefit costs other than pensions.......  $ 71.5    $ 74.7
Environmental..........................................    31.6      32.3
Other..................................................   104.0      99.7
                                                         ------    ------
                                                         $207.1    $206.7
                                                         ======    ======
</TABLE>
 
NOTE 14 -- COMMITMENTS AND CONTINGENCIES
 
     The following is a summary of annual future minimum lease and rental
commitments under operating leases as of December 31, 1998 (in millions):
 
<TABLE>
<S>                                                           <C>
1999........................................................  $18.6
2000........................................................   13.5
2001........................................................   10.4
2002........................................................    6.8
2003........................................................    5.3
Thereafter..................................................   24.8
                                                              -----
Net minimum lease payments..................................  $79.4
                                                              =====
</TABLE>
 
     Total rental expense included in the accompanying income statements
amounted to $19.4 million in 1998, $18.7 million in 1997, and $16.9 million in
1996.
 
                                       40
<PAGE>   41
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
     There are various lawsuits and claims pending against the Company involving
contract, product liability and other issues. In addition, the Company has
assumed certain insurance liabilities, including liabilities related to an
inactive insurance subsidiary, primarily related to certain historical
businesses of its former parent, including those related to workers'
compensation, employers', automobile, general and product liability. 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, related to these matters will have a
material adverse effect on the Company's financial condition or results of
operations.
 
     The Company is currently involved in various stages of investigation and
remediation relative to environmental protection matters. The potential costs
related to environmental matters and the possible impact on future operations
are difficult to predict 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. Accruals for environmental liabilities are
recorded, 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. Estimates are established
based upon reports prepared by environmental specialists, management's knowledge
to date and its experience with the foregoing environmental matters, and include
potential costs for investigation, remediation, operation and maintenance of
cleanup sites and related capital expenditures. Accrued liabilities for
environmental matters were $34.2 million and $35.1 million at December 31, 1998
and 1997, respectively. Although these amounts do not include third-party
recoveries, certain sites may be subject to indemnification. The Company has
accounted for environmental liabilities in accordance with Accounting Standards
Statement of Position 96-1, "Environmental Remediation Liabilities," which
addresses accounting and reporting for environmental remediation liabilities.
Management believes this accrual is adequate for the environmental liabilities
expected to be incurred and, as a result, believes that the ultimate liability
incurred with respect to environmental matters will not have a material adverse
effect on the Company's financial condition or results of operations. However,
future events, such as changes in existing laws and regulations, changes in
agency direction or enforcement policies or changes in the conduct of Fisher's
operations, may give rise to additional compliance costs which could have a
material adverse effect on the Company's financial condition or results of
operations.
 
     At December 31, 1998, the Company had letters of credit outstanding
totaling $25.6 million, which primarily represent guarantees with respect to
various insurance activities as well as performance letters of credit issued in
the normal course of business. In addition, the Company has $8.4 million of
insurance related letters of credit related to its inactive insurance subsidiary
each of which is collateralized by the cash of such subsidiary.
 
NOTE 15 -- STOCKHOLDERS' EQUITY
 
     On May 12, 1998, the stockholders of the Company approved the Amendment to
the Restated Certificate of Incorporation of the Company increasing the
authorized number of shares of Common Stock that may be issued from 50,000,000
to 100,000,000. Fisher's authorized capital stock consists of Common Stock, par
value $.01 per share, of which 40,034,150 and 101,783,820 shares were
outstanding at December 31, 1998 and 1997, respectively, and 15,000,000 shares
of Preferred Stock, par value $.01 per share (the "Fisher Preferred Stock"),
none of which were outstanding at the above dates. At December 31, 1998, the
Company's capital stock consisted of 35,998,860 shares of Common Stock,
4,035,290 shares of non-voting Common Stock outstanding and 39,785 shares of
Treasury Stock. Of the total 40,034,150 shares of Common Stock outstanding,
3,702,655 represents shares owned by employees as a result of the conversion of
stock options and 1,206,350 represents shares retained by management pursuant to
the stock election process. In addition, warrants to purchase 2,583,315 shares
of Common Stock at $9.65 per share were issued as part of the Transaction.
 
                                       41
<PAGE>   42
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
     The Fisher Preferred Stock and the Common Stock 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.
 
NOTE 16 -- EARNINGS PER SHARE
 
     The computation of basic and diluted earnings per share for 1998, 1997, and
1996 in accordance with Financial Accounting Standard No. 128 "Earnings Per
Share" is as follows (in millions):
 
<TABLE>
<CAPTION>
                                                            1998      1997     1996
                                                           ------    ------    -----
<S>                                                        <C>       <C>       <C>
BASIC (LOSS) EARNINGS PER SHARE:
     Net (Loss) Income...................................  $(49.5)   $(30.5)   $36.8
     Average Shares of Common Stock Outstanding..........    40.0     101.5     91.5
                                                           ------    ------    -----
     Basic (Loss) Earnings Per Share.....................  $(1.24)   $(0.30)   $0.40
                                                           ======    ======    =====
DILUTED (LOSS) EARNINGS PER SHARE:
     Net (Loss) Income...................................  $(49.5)   $(30.5)   $36.8
     Interest Expense of Convertible Subordinated Notes,
       Net of Tax........................................      --        --      2.1
                                                           ------    ------    -----
                                                            (49.5)    (30.5)    38.9
     Average Shares of Common Stock Outstanding..........    40.0     101.5     91.5
     Effective of Dilutive Securities:
     Convertible Subordinated Notes......................      --        --      8.5
     Common Stock Equivalents............................      --        --      2.5
                                                           ------    ------    -----
     Total Shares Used in Diluted Earnings Per Share
       Calculation.......................................    40.0     101.5    102.5
                                                           ------    ------    -----
     Diluted (Loss) Earnings Per Share...................  $(1.24)   $(0.30)   $0.38
                                                           ======    ======    =====
</TABLE>
 
     At December 31, 1998, the Company had options and warrants outstanding to
purchase 7.3 million and 2.6 million shares, respectively, that could
potentially dilute basic earnings per share that were excluded from the diluted
earnings per share computation because to do so would have been anti-dilutive.
Additionally, options to purchase 250,000 and 325,000 shares of Common Stock
were outstanding at December 31, 1997 and 1996, respectively that were also not
included in the computation of diluted earnings per share as inclusion would
have been anti-dilutive.
 
     Earnings (loss) per share and weighted average common shares outstanding at
December 31, 1998 are based on the Company's recapitalized structure and reflect
the five-for-one stock split declared on March 9, 1998. Earnings (loss) per
share at December 31, 1997 and 1996 are based on the Company's capital structure
at that time (prior to the recapitalization) and have been restated to reflect
the aforementioned stock split.
 
                                       42
<PAGE>   43
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
NOTE 17 -- INCOME TAXES
 
     The domestic and foreign components of (loss) income before income taxes
are as follows (in millions):
 
<TABLE>
<CAPTION>
                                                  YEAR ENDED DECEMBER 31,
                                                  ------------------------
                                                   1998     1997     1996
                                                  ------    -----    -----
<S>                                               <C>       <C>      <C>
Domestic........................................  $(49.1)   $44.4    $69.2
Foreign.........................................   (11.2)   (49.5)    (1.6)
                                                  ------    -----    -----
(Loss) income before income taxes...............  $(60.3)   $(5.1)   $67.6
                                                  ======    =====    =====
</TABLE>
 
     The components of the income tax (benefit) provision are as follows (in
millions):
 
<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31,
                                                       ------------------------
                                                        1998     1997     1996
                                                       ------    -----    -----
<S>                                                    <C>       <C>      <C>
Current income tax expense:
     Federal.........................................  $  3.1    $16.8    $11.6
     State...........................................     0.4      5.9      5.8
     Foreign.........................................     3.5      4.0      1.1
                                                       ------    -----    -----
          Total current..............................     7.0     26.7     18.5
                                                       ------    -----    -----
Deferred income tax (benefit) expense:
     Federal.........................................   (13.8)    (2.5)    11.8
     State...........................................    (4.0)    (0.3)     1.1
     Foreign.........................................      --      1.5     (0.6)
                                                       ------    -----    -----
          Total deferred.............................   (17.8)    (1.3)    12.3
                                                       ------    -----    -----
Total income tax (benefit) provision.................  $(10.8)   $25.4    $30.8
                                                       ======    =====    =====
</TABLE>
 
     The principal items accounting for the differences in taxes on (loss)
income computed at the applicable U.S. statutory rate and as recorded are as
follows (in millions):
 
<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31,
                                                       ------------------------
                                                        1998     1997     1996
                                                       ------    -----    -----
<S>                                                    <C>       <C>      <C>
Taxes computed at statutory rate.....................  $(21.1)   $(1.8)   $23.7
Foreign taxes over U.S. rate and foreign losses not
  tax benefited......................................     6.3     21.4      1.8
State income taxes (net of federal benefit)..........    (2.4)     3.6      4.5
Increase in valuation allowance......................      --      2.4       --
Nondeductible permanent items........................     5.2       --       --
Other................................................     1.2     (0.2)     0.8
                                                       ------    -----    -----
Income tax (benefit) provision.......................  $(10.8)   $25.4    $30.8
                                                       ======    =====    =====
</TABLE>
 
     The tax effects of temporary items that gave rise to significant portions
of the deferred tax accounts are as follows (in millions):
 
<TABLE>
<CAPTION>
                                                           DECEMBER 31,
                                                         ----------------
                                                          1998      1997
                                                         ------    ------
<S>                                                      <C>       <C>
Deferred tax assets:
     Postretirement benefit costs other than
       pensions........................................  $ 30.6    $ 38.0
     Environmental accruals............................    13.2      13.6
     Operating loss and tax credit carryforwards.......    33.2      28.5
     Goodwill writeoff.................................     8.2       8.0
     Accrued employee benefits.........................    24.6       5.8
     Restructuring accruals............................    13.4       9.4
     Other items not deductible until paid.............    49.4      48.1
                                                         ------    ------
     Gross deferred tax assets.........................   172.6     151.4
</TABLE>
 
                                       43
<PAGE>   44
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
<TABLE>
<CAPTION>
                                                           DECEMBER 31,
                                                         ----------------
                                                          1998      1997
                                                         ------    ------
<S>                                                      <C>       <C>
     Less valuation allowance..........................   (37.7)    (31.4)
                                                         ------    ------
                                                         $134.9    $120.0
                                                         ======    ======
Deferred tax liabilities:
     Goodwill..........................................  $ 16.6    $ 15.8
     Property, plant and equipment.....................     6.8      11.5
     Other.............................................    12.7      11.9
                                                         ------    ------
                                                         $ 36.1    $ 39.2
                                                         ======    ======
</TABLE>
 
     The deferred tax asset includes 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, 1998, the Company had
accumulated foreign net operating loss carryforwards for tax purposes of
approximately $87.6 million. These net operating losses expire as follows (in
millions):
 
<TABLE>
<S>                                                             <C>
1999........................................................    $ 2.4
2000........................................................      1.2
2001........................................................      1.1
2002........................................................      3.6
2003........................................................      5.5
No Expiration...............................................     73.8
                                                                -----
                                                                $87.6
                                                                =====
</TABLE>
 
     Statement of Financial Accounting Standards No. 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, 1998, 1997 and 1996 predominantly represent
allowances against foreign net operating losses which are not anticipated to
result in future tax benefits. At December 31, 1998 and 1997, $1.5 million and
$2.3 million, respectively, relates to deferred tax assets applicable to net
operating loss carryforwards of acquired companies (subsequent recognition of
tax benefits, if any, will result in a reduction of goodwill).
 
     At December 31, 1998, the Company had not recognized a deferred tax
liability on approximately $23 million of undistributed earnings of foreign
subsidiaries as these earnings are considered to be permanently reinvested.
These earnings could become subject to additional tax if they were remitted as
dividends or if the Company should sell its stock in the subsidiaries. The
amount of additional tax on these earnings has not been determined.
 
     Fisher and its former parent are parties to a Tax Sharing Agreement that
provides for (i) the payment of taxes for periods during which Fisher and its
former parent were included in the same consolidated, combined or unitary group
for federal, state or local income tax purposes, (ii) the allocation of the
responsibility for the filing of tax returns, (iii) the cooperation of the
parties in realizing certain tax benefits, (iv) the conduct of tax audits and
(v) various related matters.
 
NOTE 18 -- RETIREMENT BENEFITS
 
  Pension Plans
 
     The Company has defined benefit pension plans available to substantially
all employees that are either fully paid for by the Company or provide for
mandatory employee contributions as a condition of participation. Effective July
1, 1997, the Company amended the U.S. plans to change the current pension
benefit formula to
 
                                       44
<PAGE>   45
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
reflect that of a cash balance plan. Under the cash balance plan, a
participating employee accumulates a cash balance account which is credited
monthly with a 3.5% of compensation allocation and interest. The Company's
funding policy is to contribute annually the statutorily required minimum amount
as actuarially determined.
 
     The Company, generally at its own discretion, provides a postretirement
health care program that is administered by the Company to employees who elect
to and are eligible to participate . Fisher funds a portion of the costs of this
program on a self-insured and insured-premium basis and, for the years ended
December 31, 1998, 1997 and 1996, made premium payments totaling $1.7 million,
$1.5 million and $1.4 million, respectively.
 
     The changes in benefit obligations and plan assets were as follows at
December 31 (in millions):
 
<TABLE>
<CAPTION>
                                                                                    OTHER
                                                                                POSTRETIREMENT
                                                          PENSION BENEFITS         BENEFITS
                                                          ----------------      --------------
                                                           1998      1997       1998     1997
                                                          ------    ------      -----    -----
<S>                                                       <C>       <C>         <C>      <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year.................  $213.9    $164.9      $34.2    $31.7
     Service costs......................................     8.1       6.5        0.7      0.8
     Interest costs.....................................    14.6      12.3        2.1      2.3
     Plan amendment.....................................      --     (11.1)
     Special termination benefit........................     0.7        --         --       --
     Curtailment........................................     1.3        --         --       --
     Actuarial (gain) loss..............................    10.1      20.0       (2.6)     0.9
     Acquisition........................................      --      30.2         --       --
     Benefits paid......................................   (15.6)     (8.9)      (1.7)    (1.5)
                                                          ------    ------      -----    -----
Benefit obligation at end of year.......................  $233.1    $213.9      $32.7    $34.2
                                                          ======    ======      =====    =====
</TABLE>
 
<TABLE>
<CAPTION>
                                                          PENSION BENEFITS
                                                          ----------------
                                                           1998      1997
                                                          ------    ------
<S>                                                       <C>       <C>         <C>      <C>
CHANGE IN PLAN ASSETS
     Fair value of plan assets at beginning of year.....  $246.7    $180.8
     Actual return (loss) on plan assets................    15.7      40.0
     Acquisition........................................      --      33.7
     Employer contribution..............................     1.3        --
     Plan participants' contribution....................     1.7       1.0
     Benefits paid......................................   (13.5)     (8.8)
                                                          ------    ------
Fair value of plan assets at end of year................  $251.9    $246.7
                                                          ======    ======
</TABLE>
 
                                       45
<PAGE>   46
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
     The funded status of the Company's pensions and postretirement programs was
as follows at December 31 (in millions):
 
<TABLE>
<CAPTION>
                                                                              OTHER POSTRETIREMENT
                                                          PENSION BENEFITS          BENEFITS
                                                          ----------------    --------------------
                                                           1998      1997       1998        1997
                                                          ------    ------    --------    --------
<S>                                                       <C>       <C>       <C>         <C>
FUNDED STATUS...........................................  $ 18.8    $ 32.8     $(32.7)     $(34.2)
Unrecognized net actuarial (gain) loss..................    (7.0)    (16.8)     (25.9)      (25.4)
Unrecognized prior service costs........................     3.4      (8.4)     (13.9)      (16.0)
Unrecognized net transition (asset)/obligation..........     3.4      (4.0)        --          --
Adjusted required to recognize minimum liability........      --      (3.8)        --          --
                                                          ------    ------     ------      ------
Prepaid (accrued) pension cost..........................  $ 18.6    $ (0.2)    $(72.5)     $(75.6)
                                                          ======    ======     ======      ======
</TABLE>
 
     The net periodic pension costs and postretirement health care benefit
obligation income includes the following components for the years ended December
31, (in millions):
 
<TABLE>
<CAPTION>
                                                                                   OTHER
                                                   PENSION BENEFITS       POSTRETIREMENT BENEFITS
                                               ------------------------   ------------------------
                                                1998     1997     1996     1998     1997     1996
                                               ------   ------   ------   ------   ------   ------
<S>                                            <C>      <C>      <C>      <C>      <C>      <C>
COMPONENTS OF NET PERIODIC BENEFIT COST
  (INCOME)
Service cost.................................  $  8.1   $  6.5   $  6.2   $ 0.7    $ 0.8    $ 0.7
Interest cost................................    14.6     12.3     11.5     2.1      2.3      2.2
Expected return on plan assets...............   (20.3)   (16.2)   (16.8)     --       --       --
Amortization of unrecognized net
  (gain)/loss................................      --      0.4      0.2    (2.3)    (2.0)    (2.0)
Amortization of unrecognized prior service
  cost.......................................    (0.6)    (0.2)     0.6    (2.1)    (2.1)    (2.1)
Amortization of unrecognized net transition
  (asset)/obligation.........................    (1.1)    (1.1)     1.0      --       --       --
Special termination benefit (gain)/loss......     0.7       --       --      --       --       --
Settlement/Curtailment (gain)/loss...........     1.3       --       --     0.2       --       --
                                               ------   ------   ------   -----    -----    -----
Net periodic benefit cost (income)...........  $  2.7   $  1.7   $  2.7   $(1.4)   $(1.0)   $(1.2)
                                               ======   ======   ======   =====    =====    =====
</TABLE>
 
     In 1993, the Company amended certain of its existing postretirement health
care programs creating an unrecognized prior service benefit. The unrecognized
prior service benefit is being amortized over approximately 13 years, providing
a $2 million credit to postretirement costs in 1998, 1997 and 1996.
 
     The development of the net periodic pension cost and the projected benefit
obligation was based upon the following assumptions:
 
<TABLE>
<CAPTION>
                                                      1998    1997    1996
                                                      ----    ----    ----
<S>                                                   <C>     <C>     <C>
Discount rate.......................................  6.75%   7.25%   7.5%
Average rate of increase in employee compensation...   4.0%    4.5%   4.5%
Expected long-term rate of return on assets.........  9.75%   9.75%   9.0%
</TABLE>
 
     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.
 
  Defined Contribution Plan
 
     The Company 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%
and 15% of their annual compensation as defined in the Plan. The Company is
obligated to contribute an amount equal to 25% of each employee's basic
contribution, as defined, and may, at the discretion of the Company, contribute
additional amounts. Through June 30, 1997, certain employees participated in a
Company sponsored retirement account in lieu of a defined benefit pension plan.
Generally, the Company made a contribution equal to a certain percentage of a
participating employee's annual salary into the defined contribution plan.
Effective July 1, 1997, the Company amended the Plan for consistency
 
                                       46
<PAGE>   47
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
among all Fisher employees. As a result, future contributions to the retirement
account were eliminated and the assets of the Curtis Matheson Scientific Savings
Incentive Plan were merged into the Plan. For the years ended December 31, 1998,
1997 and 1996 the Company's contributions to the Plan were $2.5 million, $3.2
million and $5.0 million, respectively.
 
     The weighted average discount rate used in determining the accumulated
postretirement health care benefit obligation was 6.75% for December 31, 1998,
7.25% for December 31, 1997, and 7.5% for December 31, 1996. A 7.5% annual rate
of increase in per capita cost of covered health care benefits was assumed for
1998 which gradually decreases to an average ultimate rate of 6.5%. Because of
limitations on the Company's contributions under the amended health care
program, changes in the health care trend rate assumption do not have a
significant effect on the amounts reported. To illustrate, a change in the
assumed health care cost trend rate by 1 percentage point effective January 1998
would change the accumulated postretirement benefit obligation as of December
31, 1998 by approximately $2.3 million and the aggregate of the service and
interest cost components of net periodic postretirement benefit cost for the
year ended December 31, 1998 by approximately $0.3 million.
 
NOTE 19 -- STOCK AND OTHER PLANS
 
  Stock Plans
 
     During 1998, the Company's Board of Directors approved the 1998 Equity
Incentive Plan ("1998 Plan"). Under the 1998 Plan, the Company may grant up to
an aggregate of 10,000,000 shares of stock. Awards under the 1998 Plan may be
made in the form of options (whether incentive or otherwise), stock appreciation
rights, restricted stock, dividend equivalents and other stock-based awards. At
December 31, 1998, the Company granted options to purchase 4,026,982 shares of
Common Stock having a ten-year term and vesting over three to five years, on a
pro rata basis. Outstanding options under the 1998 Plan were generally granted
at 100% of market price on the date of grant. The Company also granted options
to purchase 2,225,000 shares of Common Stock having a ten-year term and vesting
nine years from the date of grant, unless sooner vested upon the achievement of
certain performance targets and other factors. These options have an exercise
price equal to $19.30 per share. In addition, the Company granted to certain
executives, options to purchase 1,016,665 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 their terms. The total "put" and/or "call" rights are limited to $14.5
million plus interest.
 
     Prior to the 1998 Plan, Fisher had three stock option plans, the 1991 Stock
Plan, as amended, (the "1991 Plan") the 1995 Operating Unit Stock Plan ("OUSP")
and the 1997 Equity-Based Incentive Plan (the "1997 Plan"). Following adoption
of the 1997 Plan by shareholders on May 13, 1997, all of the stock available for
award under the 1991 Plan was incorporated into the 1997 Plan and made subject
to the terms of the 1997 Plan. Outstanding awards under the 1991 Plan remained
subject to the terms of the 1991 Plan. Fisher may grant options for up to an
aggregate of 23,020,000 shares of stock under the 1991 Plan and the 1997 Plan
and 7,500,000 shares of stock under the OUSP to officers, employees and other
individuals who provide services to Fisher. Under these plans, the Company
granted options of 15,671,000 shares and 6,311,000 shares, respectively, through
January 21, 1998 at which point all outstanding options vested, pursuant to the
Merger Agreement. Outstanding options under these stock plans were granted at
100% of market value on the date of grant. The 1991 Plan, the 1997 Plan and OUSP
have a ten-year term, vest after three years and expire 90 days after the last
day of an employee's employment; 12 months if the employee retires.
 
                                       47
<PAGE>   48
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
     A summary of the status of the Company's two stock option plans at December
31, 1998, 1997 and 1996 and changes during the years then ended is presented in
the table:
 
<TABLE>
<CAPTION>
                                               1998                1997                1996
                                        ------------------   -----------------   -----------------
                                                  WEIGHTED            WEIGHTED            WEIGHTED
                                                  AVERAGE             AVERAGE             AVERAGE
                                        SHARES    EXERCISE   SHARES   EXERCISE   SHARES   EXERCISE
                                         (000)     PRICE     (000)     PRICE     (000)     PRICE
                                        -------   --------   ------   --------   ------   --------
<S>                                     <C>       <C>        <C>      <C>        <C>      <C>
Outstanding at beginning of year......   17,570    $ 6.45    18,150    $6.29     17,760    $5.79
Granted...............................    7,544     14.48     2,370     7.80      3,470     7.50
Exercised.............................       --        --    (1,145)    5.80     (2,025)    3.86
Canceled/Expired/Forfeited............  (17,845)     6.57    (1,805)    8.99     (1,055)    6.49
                                        -------              ------              ------
Outstanding at end of year............    7,269    $14.47    17,570    $6.45     18,150    $6.29
                                        =======              ======              ======
Exercisable at end of year............                 --     9,175    $5.98      6,185    $5.39
Weighted average fair value of options
  granted.............................             $ 3.95              $2.30               $1.97
</TABLE>
 
     Pursuant to the Merger Agreement, the vesting of all options accelerated on
the date of the Transaction. Of the 17,570,000 options outstanding at December
31, 1997, approximately 6,720,000 were converted to cash and the remainder were
converted to common stock. When the options were converted, the Company recorded
compensation expense of approximately $56 million to reflect the "cashless"
conversion of the options into cash or common stock having a value on the date
of the Transaction equal to the product of (x) the excess of $9.65 over the
exercise price per share of Fisher Common Stock subject to such option, and (y)
the total number of shares of Fisher Common Stock subject to option, subject to
any required tax withholdings.
 
  Restricted Unit Plan
 
     Pursuant to the restricted unit plan of Fisher, each non-employee director
of the Company received a one-time grant of 25,000 units upon becoming a
director of the Company. The units represent the right to receive an equivalent
number of shares of Common Stock upon separation from service as a member of the
Board of Directors, subject to certain restrictions. The units are subject to
certain transfer restrictions for a specified period during which the director
has the right to receive dividends. The units vest 25% for each year of service.
Unvested units are generally forfeited if the director ceases to be a
non-employee director prior to the end of the restricted period. During 1996 and
1991, 25,000 and 100,000 units, respectively, were granted under the restricted
unit plan. Pursuant to the Merger Agreement, the vesting of all units
accelerated and the units were converted to cash.
 
  SFAS 123 Pro Forma Disclosures
 
     Had compensation cost for options granted subsequent to January 1, 1995
been based upon fair value determined under SFAS No. 123, the Company's 1998,
1997 and 1996 net income (loss) would have been ($51.2) million, ($35.9)
million, and $31.7 million, respectively, with basic earnings (loss) per share
of ($1.28), ($0.35), and $0.35 and diluted earnings (loss) per share of ($1.28),
($0.35) and $0.33. In 1998, the Company's Board of Directors approved the 1998
Equity Incentive Plan, replacing all prior equity incentive plans. The fair
value of each option grant is estimated on the date of grant using a binomial
option pricing model with the following weighted average assumptions used for
grants in 1998: risk-free interest rates of approximately 5.2%, annual dividend
of $0; expected lives of 5 years and expected volatility of 50%. In order to
reflect the restrictive nature of the stock underlying the options granted,
discount factors of 33% and 25%, depending upon the specific type of option,
were applied in determining fair value.
 
                                       48
<PAGE>   49
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
     Prior to 1998, the Company had three stock option plans, the 1991 Stock
Plan as amended (the "1991 Plan"), the 1995 Operating Unit Stock Plan ("OUSP")
and the 1997 Equity-Based Incentive Plan (the "1997 Plan"). Pursuant to the
Merger Agreement, the vesting of all options outstanding accelerated on the date
of the Transaction, and were replaced by the 1998 Equity Incentive Plan. The
following weighted average assumptions were used for grants in 1997 and 1996:
risk-free interest rates of approximately 6.5% and 6.5% for the 1991 Plan
options and 6.3% and 6.0% for the OUSP Plan; an annual dividend of $0.8 per
share; expected lives of 7 years for the 1991 Plan options and 3 years for the
OUSP options and expected volatility of 30% for grants in 1997 and 25% for
grants in 1996. Because the SFAS 123 method of accounting has not been applied
to options granted prior to January 1, 1995, the resulting pro forma
compensation cost may not be representative of that to be expected in future
years.
 
NOTE 20 -- RESTRUCTURING AND OTHER CHARGES
 
     In the fourth quarter of 1998, the Company recorded $23.6 million of
restructuring and other charges which included $26.5 million of charges related
to the 1998 Restructuring Plan and $2.9 million of reversals for adjustments to
prior period restructuring charges due to revised estimates. The 1998
Restructuring was adopted in December 1998 and affects the Company's domestic
and international distribution segments. The charges include asset impairment
charges internationally attributable to the economic slow-down in the Far East
and write-offs of information systems due to a change in management's global
information system strategy. The charges also include employee separation and
other exit costs due to a restructuring in Europe and a restructuring
domestically of the Company's management team and selected components of its
sales force. The 1998 charges consists of $13.6 million related to noncash asset
impairments, $12.0 million of accruals for employee separation arrangements and
$0.9 million of exit costs.
 
     Asset impairment charges in 1998 include $0.9 million of goodwill and other
intangibles and $12.7 million of property, plant and equipment. The property,
plant and equipment impairment charge includes $5.6 million related to land in
the Far East which the Company no longer plans to develop and warehouses in the
same region which are impaired due to reduced volume and projected operating
losses. The impairment amounts are based on independent appraisals. The carrying
value of this land held for sale is $1.4 million at December 31, 1998. The
remainder of the property, plant and equipment impairment charge is primarily
attributable to global information system software which the Company no longer
uses due to a change in system strategy. The charge for employee separation
arrangements relates to the termination and other severance costs associated
with approximately 139 salaried and hourly employees who will be severed as part
of the 1998 Restructuring Plan, none of whom were terminated as of December 31,
1998. The other exit costs primarily relate to the European restructuring.
 
     Following the execution of the Merger Agreement, during the fourth quarter
of 1997 in conjunction with the annual business planning process, the Company
evaluated its business strategy for both its domestic and international
operations, and, as a result, adopted the 1997 Restructuring Plan and recorded
restructuring and other charges of $51.8 million. The charges include costs
associated with the closure of additional logistics and customer-service centers
and related asset write-offs in the United States and internationally and the
impairment of goodwill and property, plant and equipment related to certain
international operations and the impairment of systems-related assets. The
restructuring and other charges consist of $38.3 million related to noncash
asset impairments, $9.1 million of accruals for employee separation arrangements
and $4.4 million of exit costs.
 
     Asset impairment charges in 1997 include $31.5 million of goodwill and $1.3
million of property, plant and equipment related to the Company's international
operations. The remaining amounts relate to facilities to be closed under the
United States restructuring plan and to system-related assets. The charge for
employee separation arrangements, relates to the termination and other severance
costs associated with the approximately 520 salaried and hourly employees who
have been or will be severed as a result of the 1997 Restructuring Plan.
Approximately 270 employees were terminated as of December 31, 1998. The exit
costs consist principally of future rent, net of estimated sublease rentals, and
other costs related to leased facilities
 
                                       49
<PAGE>   50
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
which as a result of the 1997 Restructuring Plan, will be closed and exited
prior to the contractual termination date of the leases.
 
     In the third quarter of 1995, the Company adopted a restructuring plan
aimed at improving the efficiency and reducing the costs of its global
logistics, customer service and administrative functions. As a result, the
Company recorded a restructuring charge of $34.3 million. The 1995 Restructuring
Plan, which anticipated the integration of the former Fisons businesses,
including CMS, with the Company, included the elimination and in some cases
relocation of certain administrative functions, reorganization of the research
sales force and the consolidation and relocation of certain logistics and
customer service systems and locations throughout the world. The 1995
Restructuring Plan is expected to be completed in conjunction with the 1997
Restructuring Plan. The restructuring charge consisted of $18.2 million related
to noncash asset impairments, $12.0 million of employee separation arrangements
and $4.1 million of exit costs.
 
     Asset impairment charges in 1995 were recorded primarily for certain owned
facilities which were closed and sold in 1996. The net book value of each
facility was adjusted to its estimated fair market value less costs to sell. The
charge for employee separation arrangements relates to the termination and other
severance costs associated with the approximately 300 salaried and hourly
employees severed as a result of the 1995 Restructuring Plan, all of which were
terminated prior to December 31, 1997. The exit costs relate primarily to future
rent, net of estimated sublease rentals, and other costs related to leased
facilities that as a result of the 1995 Restructuring Plan will be closed and
exited prior to the contractual termination date of the leases.
 
     The following table summarizes the recorded accruals and impairments
related to the 1998, 1997 and 1995 Restructuring Plan (in millions):
 
<TABLE>
<CAPTION>
                                                                EMPLOYEE
                                                               SEPARATIONS
                                                   ASSET        AND OTHER
                                                IMPAIRMENTS    EXIT COSTS     TOTAL
                                                -----------    -----------    -----
<S>                                             <C>            <C>            <C>
1995 PLAN
Restructuring charge..........................     $18.2          $16.1       $34.3
Cash payments.................................        --           (1.8)       (1.8)
Noncash items.................................     (18.2)          (0.3)      (18.5)
                                                   -----          -----       -----
Balance as of December 31, 1995...............        --           14.0        14.0
Adjustments...................................       0.8           (0.8)         --
Cash payments.................................        --           (6.5)       (6.5)
Noncash items.................................      (0.8)            --        (0.8)
                                                   -----          -----       -----
Balance as of December 31, 1996...............        --            6.7         6.7
Cash payments.................................        --           (1.9)       (1.9)
                                                   -----          -----       -----
Balance as of December 31, 1997...............        --            4.8         4.8
Cash payments.................................        --           (1.4)       (1.4)
Change in estimates...........................        --           (1.5)       (1.5)
                                                   -----          -----       -----
Balance as of December 31, 1998...............     $  --          $ 1.9       $ 1.9
                                                   =====          =====       =====
 
1997 PLAN
Restructuring and other charges...............     $38.3          $13.5       $51.8
Cash payments.................................        --           (0.2)       (0.2)
Noncash items.................................     (38.3)            --       (38.3)
                                                   -----          -----       -----
Balance as of December 31, 1997...............        --           13.3        13.3
Cash payments.................................        --           (4.6)       (4.6)
Change in estimates...........................        --           (0.7)       (0.7)
                                                   -----          -----       -----
Balance as of December 31, 1998...............     $  --          $ 8.0       $ 8.0
                                                   =====          =====       =====
</TABLE>
 
                                       50
<PAGE>   51
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
<TABLE>
<CAPTION>
                                                                EMPLOYEE
                                                               SEPARATIONS
                                                   ASSET        AND OTHER
                                                IMPAIRMENTS    EXIT COSTS     TOTAL
                                                -----------    -----------    -----
<S>                                             <C>            <C>            <C>
1998 PLAN
Restructuring and other charges...............     $13.6          $12.9       $26.5
Noncash items.................................     (13.6)            --       (13.6)
                                                   -----          -----       -----
Balance as of December 31, 1998...............     $  --          $12.9       $12.9
                                                   =====          =====       =====
</TABLE>
 
     The 1995 Restructuring Plan and the 1997 Restructuring Plan also include
opening new logistics facilities and relocating certain customer service and
administrative functions. In accordance with Financial Accounting Standards
Board Emerging Issues Task Force Issue 94-3, "Liability Recognition for Costs to
Exit an Activity (including Certain Costs Incurred in a Restructuring)", certain
costs resulting from the relocation of inventories, relocation of employees,
hiring and training new employees, and costs resulting from the temporary
duplication of certain operations have not been included in the restructuring
charge and are recognized as incurred.
 
     During the third quarter of 1991, Fisher recorded a $20.0 million
restructuring charge relating primarily to improving operations of its North
American distribution system through consolidation and expansion of certain
facilities. Based upon current estimates, the Company reversed $0.7 million of
the 1991 Restructuring charge in 1998. This plan is substantially complete and
the remaining $1.0 million of accruals will be substantially expended by the end
of 1999.
 
NOTE 21 -- SEGMENT AND GEOGRAPHICAL FINANCIAL INFORMATION
 
     During 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 131, "Disclosures about Segments of an
Enterprise and Related Information". Selected business segment financial
information for the years ended December 31, 1998, 1997 and 1996 is shown below
(in millions):
 
<TABLE>
<CAPTION>
                                                                           INCOME (LOSS) FROM
                                                    SALES                      OPERATIONS
                                        ------------------------------   -----------------------
                                          1998       1997       1996      1998    1997     1996
                                        --------   --------   --------   ------   -----   ------
<S>                                     <C>        <C>        <C>        <C>      <C>     <C>
SALES AND INCOME (LOSS) FROM
  OPERATIONS BY SEGMENT:
Domestic distribution.................  $1,830.8   $1,740.7   $1,727.4   $113.2   $85.3   $100.9
International distribution............     417.3      403.8      383.8     (1.5)  (12.5)    (7.3)
Laboratory workstations...............     145.6      122.4      108.0     21.0    16.1      8.7
Technology............................        --       41.0       36.7    (15.1)  (14.3)    (7.4)
Transaction-related costs.............        --         --         --    (71.0)     --       --
Restructuring and other charges.......        --         --         --    (23.6)  (51.8)      --
Eliminations..........................    (141.4)    (132.6)    (111.5)    (0.2)   (1.7)    (0.3)
                                        --------   --------   --------   ------   -----   ------
     Total............................  $2,252.3   $2,175.3   $2,144.4   $ 22.8   $21.1   $ 94.6
                                        ========   ========   ========   ======   =====   ======
</TABLE>
 
     Income (loss) from operations is revenue less related costs and direct and
allocated expenses. Intercompany sales and transfers between segments were not
material for the years ended December 31, 1998, 1997 or 1996.
 
                                       51
<PAGE>   52
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
     The domestic and international distribution segments accounted for $15.3
million and $8.3 million, respectively, of the 1998 restructuring charge. The
1997 charge consisted of $7.7 million, $41.8 million, $1.0 million and $1.3
million at the domestic distribution, international distribution, laboratory
workstations and technology segments, respectively. See Note 20.
 
<TABLE>
<CAPTION>
                                                                       CAPITAL      DEPRECIATION AND
                                                    ASSETS          EXPENDITURES      AMORTIZATION
                                              -------------------   -------------   -----------------
                                                1998       1997     1998    1997     1998      1997
                                              --------   --------   -----   -----   -------   -------
<S>                                           <C>        <C>        <C>     <C>     <C>       <C>
ASSETS, CAPITAL EXPENDITURES AND
  DEPRECIATION AND AMORTIZATION BY SEGMENT:
Domestic distribution.......................  $  699.7   $  763.3   $47.3   $41.8    $33.1     $26.9
International distribution..................     475.6      277.6    14.4    14.0     13.0      12.6
Laboratory workstations.....................     167.6      110.7     3.8     2.0      6.9       6.2
Technology group............................      14.7       24.9     1.7     1.4       --       1.3
                                              --------   --------   -----   -----    -----     -----
     Total..................................  $1,357.6   $1,176.5   $67.2   $59.2    $53.0     $47.0
                                              ========   ========   =====   =====    =====     =====
</TABLE>
 
     The Company operates in more than 145 countries outside the United States.
Sales outside the United States comprised 19% of consolidated sales in 1998 and
1997, and 17% of consolidated sales in 1996. No single foreign country accounted
for more than 10% of consolidated sales during the past three years.
 
<TABLE>
<CAPTION>
                                                         LONG-LIVED ASSETS
                                                         ------------------
                                                          1998       1997
                                                         -------    -------
<S>                                                      <C>        <C>
LONG-LIVED ASSETS BY GEOGRAPHIC AREA:
Domestic...............................................  $184.2     $171.3
International..........................................    61.8       52.3
                                                         ------     ------
          Total........................................  $246.0     $223.6
                                                         ======     ======
</TABLE>
 
     Fisher's product portfolio is comprised of consumable products, such as
laboratory supplies and specialty chemicals, and durables. Approximately 80% of
1998 and 1997 sales were of consumable products and 20% of 1998 and 1997 sales
were of durable products.
 
NOTE 22 -- RELATED PARTIES
 
     The Company paid a one-time transaction fee aggregating $20 million and
will pay an aggregate annual management fee of $1 million to certain affiliates
of THL. In exchange for the transaction fee, THL and its affiliates provided
equity commitments for the Transaction, arranged additional equity financing,
arranged the Transaction debt financing and structured and negotiated the
Transaction. In return for the annual management fee, THL, and certain of its
affiliates, will provide consulting and management advisory services.
Additionally, in connection with the Transaction and the related debt
financings, the Company paid its other equity investors (excluding management)
one-time fees aggregating approximately $35 million.
 
     One of the Company's equity investors is a financial institution that
provides financing to the Company at terms that are considered to be at
arm's-length.
 
NOTE 23 -- SUBSEQUENT EVENTS
 
     In January 1999, the Company acquired Columbia Diagnostics Inc., a
Virginia-based provider of laboratory products and supplies to the healthcare
industry, and Structured Computer Systems, a Connecticut-based provider of
procurement and materials management solutions to businesses, for total cash
consideration of approximately $25 million.
 
                                       52
<PAGE>   53
                      FISHER SCIENTIFIC INTERNATIONAL INC.
                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
NOTE 24 -- UNAUDITED QUARTERLY FINANCIAL INFORMATION
 
     The following is a summary of quarterly financial information for 1998 and
1997 (in millions, except per share amounts):
 
<TABLE>
<CAPTION>
                                                                     1998
                                               ------------------------------------------------
                                               FIRST     SECOND    THIRD     FOURTH      YEAR
                                               ------    ------    ------    ------    --------
<S>                                            <C>       <C>       <C>       <C>       <C>
Sales........................................  $549.1    $549.1    $576.4    $577.7    $2,252.3
Gross profit.................................   151.1     153.7     164.3     167.2       636.3
Net (loss) income (a)........................   (41.9)      2.4       6.7     (16.7)      (49.5)
Earnings (loss) per common share:
     Basic...................................  $(1.05)   $ 0.06    $ 0.17    $(0.42)   $  (1.24)
     Diluted.................................   (1.05)     0.06      0.16     (0.42)      (1.24)
</TABLE>
 
<TABLE>
<CAPTION>
                                                                     1997
                                               ------------------------------------------------
                                               FIRST     SECOND    THIRD     FOURTH      YEAR
                                               ------    ------    ------    ------    --------
<S>                                            <C>       <C>       <C>       <C>       <C>
Sales........................................  $526.7    $542.6    $554.8    $551.2    $2,175.3
Gross profit.................................   146.3     148.5     153.0     143.9       591.7
Net income (loss) (b)........................    11.0       9.6       3.9     (55.0)      (30.5)
Earnings (loss) per common share:
     Basic...................................  $ 0.11    $ 0.09    $ 0.04    $(0.54)   $  (0.30)
     Diluted.................................    0.11      0.09      0.04     (0.54)      (0.30)
</TABLE>
 
---------------
 
NOTE:  Amounts may not add due to rounding.
 
(a) During the fourth quarter of 1998, Fisher recorded $23.6 million ($17.0
    million, net of tax) of restructuring and other charges. See Note 20.
 
(b) During the fourth quarter of 1997, Fisher recorded $51.8 million ($47.0
    million, net of tax) of restructuring and other charges. See Note 20.
 
                                       53
<PAGE>   54
 
                                    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 11, 1999 (the "Proxy
Statement") under the caption "Nomination and Election of Directors," pages 5
and 6, is incorporated herein by reference.
 
     Executive Officers.  Information in answer to this Item appears under the
caption "Executive Officers of Fisher" 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," page 6, 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," pages 9 through 12, 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", pages 3 and 4,
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," pages 14 through 16, is incorporated herein by
reference.
 
                                       54
<PAGE>   55
 
                                    PART IV
 
ITEM 14.  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 26 of this Annual Report.
 
        (2) SCHEDULES.  Financial statement schedules are listed under Item
14(d) in this Annual Report.
 
        (3) EXHIBITS.  Exhibits 10.1 through 10.15 constitute all of the
management contracts and compensation plans and arrangements of the Company
required to be filed as exhibits to this Annual Report.
 
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                 DESCRIPTION
-------                                -----------
<S>       <C>  <C>
 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)
 3.1      --   Amended and Restated Certificate of Incorporation of the
               Company, as amended*
 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*
 3.4      --   Certificate of Designation of Series B Non-Voting Common
               Stock*
 3.5      --   Bylaws of the Company (3)
 4.1      --   Specimen Certificate of Common Stock, $.01 par value per
               share, of the Company*
 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      --   Rights Agreement dated as of June 9, 1997, between the
               Company and ChaseMellon Shareholder Services L.L.C., as
               Rights Agent, which includes the form of Right Certificate
               as Exhibit A and the Summary of Rights to Purchase Common
               Stock as Exhibit B (4)
 4.6      --   First Amendment to Rights Agreement dated as of August 7,
               1997 between the Company and ChaseMellon Shareholder
               Services L.L.C. (5)
 4.7      --   Senior Debt Securities Indenture dated as of December 18,
               1995 between the Company and Mellon Bank, N.A., as Trustee
               (6)
 4.8      --   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)
 4.9      --   Registration Rights Agreement dated as of January 21, 1998
               among Fisher and Merrill Lynch, Pierce, Fenner and Smith
               Incorporated, Chase Securities Inc. and Donaldson, Lufkin
               and Jenrette Securities Corporation (8)
10.1      --   Amended and Restated Employment Agreement dated as of
               January 21, 1998 between the Company and Paul M. Montrone
               (9)
10.2      --   Amended and Restated Employment Agreement dated as of
               January 21, 1998 between the Company and Paul M. Meister (9)
10.3      --   Employment Agreement dated as of March 31, 1998 between the
               Company and David Della Penta (10)
</TABLE>
 
                                       55
<PAGE>   56
 
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                 DESCRIPTION
-------                                -----------
<S>       <C>  <C>
10.4      --   Credit Agreement among Fisher, Certain Subsidiaries of
               Fisher, Various Lending Institutions, The Chase Manhattan
               Bank, as Administrative Agent, The Chase Manhattan Bank of
               Canada, as Administrative Agent, Chase Manhattan
               International Limited, as U.K. Administrative Agent, Merrill
               Lynch Capital Corporation, as Syndication Agent, and DLJ
               Capital Funding, Inc., as Documentation Agent, dated as of
               January 21, 1998 (the "Credit Agreement")(7)
10.5      --   First Amendment and Waiver to the Credit Agreement dated as
               of November 13, 1998*
10.6      --   Second Amendment and Waiver to the Credit Agreement dated as
               of December 31, 1998*
10.7      --   Investors Agreement dated January 21, 1998 as amended March
               29, 1999 among the Company and (i) Thomas H. Lee Equity Fund
               III, L.P. ("THL"), certain individuals associated with THL,
               THL-CCI Limited Partnership, THL Foreign Fund III, L.P., and
               THL FSI Equity Investors, L.P., (ii) DLJ Merchant Banking
               Partners II, L.P., DLJ Offshore Partners II, C.V., DLJ
               Diversified Partners, L.P., DLJMB Funding II, Inc., DLJ
               Merchant Banking Partners II-A, L.P., DLJ Diversified
               Partners-A , L.P., DLJ Millenium Partners, L.P., DLJ
               Millennium Partners-A, L.P., UK Investment Plan 1997
               Partners, DLJ EAB Partners, L.P., DLJ ESC II, L.P. and DLJ
               First ESC, L.P., (iii) Chase Equity Associates, L.P. ("Chase
               Equity") and (iv) Merrill Lynch KECALP L.P. 1997, KECALP
               Inc., and ML IBK Positions, Inc.*
10.8      --   Fisher Scientific International Inc. Retirement Plan (3)
10.9      --   Fisher Scientific International Inc. Savings and Profit
               Sharing Plan (3)
10.10     --   Fisher Scientific International Inc. Incentive Compensation
               Plan (12)
10.11     --   Restricted Unit Plan for Non-Employee Directors of Fisher
               Scientific International Inc. (3)
10.12     --   Fisher Scientific International Inc. Deferred Compensation
               Plan for Non-Employee
               Directors (3)
10.13     --   Retirement Plan for Non-Employee Directors of Fisher
               Scientific International Inc. (3)
10.14     --   Fisher Scientific International Inc. Long-Term Incentive
               Plan (3)
10.15     --   Fisher Scientific International Inc. 1998 Equity and
               Incentive Plan (11)
21.1      --   List of Subsidiaries of the Company*
23.1      --   Consent of DELOITTE & TOUCHE LLP*
27.1      --   Financial Date Schedule-Fiscal Year Ended 1998*
</TABLE>
 
---------------
   * 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.
 
                                       56
<PAGE>   57
 
 (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.
 
 (b) Report on Form 8-K: During the last quarter of the period covered by this
     report, the Company filed a Form 8-K (Registration No. 001-10920) with the
     Securities and Exchange Commission on December 4, 1998.
 
 (c) EXHIBITS.  The following exhibits are filed with this annual report:
 
<TABLE>
<S>       <C>  <C>
     21.1 --   List of Subsidiaries of the Company.
          --
   23.1        Consent of DELOITTE & TOUCHE LLP.
          --
   27.1        Financial Data Schedule.
</TABLE>
 
 (d) FINANCIAL STATEMENT SCHEDULES.
 
     All financial statement schedules have been omitted since the information
required to be submitted has been included in the financial statements and
related notes or because they are either not applicable or not required under
the rules of Regulation S-X.
 
                                       57
<PAGE>   58
 
                                   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 31, 1999
 
     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.
 
<TABLE>
<CAPTION>
                     SIGNATURE                                       TITLE                         DATE
                     ---------                                       -----                         ----
<C>                                                  <S>                                    <C>
 
               /s/ PAUL M. MONTRONE                  President, Chief Executive Officer         March 31, 1999
---------------------------------------------------  and Director (Principal Executive
                 PAUL M. MONTRONE                    Officer)
 
                /s/ PAUL M. MEISTER                  Executive Vice President, Chief            March 31, 1999
---------------------------------------------------  Financial Officer and Director
                  PAUL M. MEISTER                    (Principal Financial and Accounting
                                                     Officer)
 
            /s/ MITCHELL J. BLUTT, M.D.              Director                                   March 31, 1999
---------------------------------------------------
              MITCHELL J. BLUTT, M.D.
 
                 /s/ ROBERT A. DAY                   Director                                   March 31, 1999
---------------------------------------------------
                   ROBERT A. DAY
 
               /s/ ANTHONY J. DINOVI                 Director                                   March 31, 1999
---------------------------------------------------
                 ANTHONY J. DINOVI
 
              /s/ MICHAEL D. DINGMAN                 Director                                   March 31, 1999
---------------------------------------------------
                MICHAEL D. DINGMAN
 
               /s/ DAVID V. HARKINS                  Director                                   March 31, 1999
---------------------------------------------------
                 DAVID V. HARKINS
 
               /s/ SCOTT M. SPERLING                 Director                                   March 31, 1999
---------------------------------------------------
                 SCOTT M. SPERLING
 
                /s/ KENT R. WELDON                   Director                                   March 31, 1999
---------------------------------------------------
                  KENT R. WELDON
</TABLE>
 
                                       58
<PAGE>   59
 
================================================================================
 
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
 
                             WASHINGTON, D.C. 20549
 
                            ------------------------
                                    EXHIBITS
                                       TO
                                   FORM 10-K
 
                            ------------------------
 
                      FISHER SCIENTIFIC INTERNATIONAL INC.
 
================================================================================