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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



|For The Quarterly Period Ended June 30, 2003 |  | Commission File Number 001-11091
|-------------------------------------------- |  | --------------------------------



APOGENT TECHNOLOGIES
INC.

(Exact name of registrant as specified in its charter)



|Wisconsin                                                      |  | 22-2849508                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of Incorporation or organization) |  | (I.R.S. Employer Identification No.)



30 Penhallow Street,
 Portsmouth, New Hampshire 03801

(Address of principal executive offices, including zip code)



(603) 433-6131

(Registrants telephone number, including area code)



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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).



YES ̈NO  x



At August 11, 2003, there were
91,958,616 shares of the Registrants Common Stock, par value $0.01 per share, outstanding.



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



FORM 10-Q

QUARTER ENDED JUNE 30, 2003



TABLE OF CONTENTS



|                                                                                                         |  | Page
|-------------------------------------------------------------------------------------------------------- |  | ----
|PART IFINANCIAL INFORMATION                                                                             |  |     
|                                                                                                         | 
|Item 1: Financial Statements                                                                             |  |     
|                                                                                                         | 
|Consolidated Balance Sheets as of June 30, 2003 and September 30, 2002 (unaudited)                       |  | 1   
|                                                                                                         | 
|Consolidated Statements of Income for the Three and Nine Months Ended June 30, 2003 and 2002 (unaudited) |  | 2   
|                                                                                                         | 
|Consolidated Statement of Shareholders Equity for the Nine Months Ended June 30, 2003 (unaudited)       |  | 3   
|                                                                                                         | 
|Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2003 and 2002 (unaudited)       |  | 4   
|                                                                                                         | 
|Notes to Unaudited Consolidated Financial Statements                                                     |  | 5   
|                                                                                                         | 
|Item 2:
Managements Discussion and Analysis of Financial Condition and Results of Operations            |  | 24  
|                                                                                                         | 
|Cautionary Factors                                                                                       |  | 36  
|                                                                                                         | 
|Item 3:
Quantitative and Qualitative Disclosures About Market Risk                                       |  | 40  
|                                                                                                         | 
|Item 4:
Controls and Procedures                                                                          |  | 40  
|                                                                                                         | 
|PART IIOTHER INFORMATION                                                                                |  |     
|                                                                                                         | 
|Item 1:
Legal Proceedings                                                                                |  | 41  
|                                                                                                         | 
|Item 2:
Changes in Securities and Use of Proceeds                                                        |  | 41  
|                                                                                                         | 
|Item 6:
Exhibits and Reports on Form 8-K                                                                 |  | 41  
|                                                                                                         | 
|SIGNATURE                                                                                                |  | 43  
|                                                                                                         | 
|EXHIBIT INDEX                                                                                            |  | 44  



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##### Table of Contents

PART IFINANCIAL INFORMATION



|Item 1: |  | Financial Statements
|------- |  | --------------------



APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)



|                                                                                                                                                                                |  | June 30,2003 |           |   | September 30,2002 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | --------- | - | ----------------- | -
|ASSETS                                                                                                                                                                          |  |              |           |   |                   |  
|Current assets:                                                                                                                                                                 |  |              |           |   |                   |  
|Cash and cash equivalents                                                                                                                                                       |  | $            | 86,150    |   |                   | $
|Accounts receivable (less allowance for doubtful accounts of $4,008 and $5,723 respectively)                                                                                    |  |              | 174,945   |   |                   |  
|Inventories                                                                                                                                                                     |  |              | 213,367   |   |                   |  
|Deferred income taxes                                                                                                                                                           |  |              | 14,127    |   |                   |  
|Prepaid expenses and other current assets                                                                                                                                       |  |              | 18,957    |   |                   |  
|Assets of discontinued operationsheld for sale                                                                                                                                 |  |              | 51,442    |   |                   |  
|                                                                                                                                                                                |  |              |           |   |                   |  
|Total current assets                                                                                                                                                            |  |              | 558,988   |   |                   |  
|Available for sale security                                                                                                                                                     |  |              | 62,727    |   |                   |  
|Property, plant and equipment, net                                                                                                                                              |  |              | 274,958   |   |                   |  
|Intangible assets, net                                                                                                                                                          |  |              | 1,173,866 |   |                   |  
|Other assets                                                                                                                                                                    |  |              | 19,414    |   |                   |  
|                                                                                                                                                                                |  |              |           |   |                   |  
|Total assets                                                                                                                                                                    |  | $            | 2,089,953 |   |                   | $
|                                                                                                                                                                                |  |              |           |   |                   |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                            |  |              |           |   |                   |  
|Current liabilities:                                                                                                                                                            |  |              |           |   |                   |  
|Short-term debt and overdrafts                                                                                                                                                  |  | $            | 14,006    |   |                   | $
|Current portion of long-term debt                                                                                                                                               |  |              | 2,204     |   |                   |  
|Accounts payable                                                                                                                                                                |  |              | 45,512    |   |                   |  
|Income taxes payable                                                                                                                                                            |  |              | 46,975    |   |                   |  
|Accrued payroll and employee benefits                                                                                                                                           |  |              | 31,056    |   |                   |  
|Accrued interest expense                                                                                                                                                        |  |              | 9,341     |   |                   |  
|Restructuring reserve                                                                                                                                                           |  |              | 1,250     |   |                   |  
|Other current liabilities                                                                                                                                                       |  |              | 29,415    |   |                   |  
|Liabilities of discontinued operations                                                                                                                                          |  |              | 5,497     |   |                   |  
|                                                                                                                                                                                |  |              |           |   |                   |  
|Total current liabilities                                                                                                                                                       |  |              | 185,256   |   |                   |  
|Long-term debt, less current portion                                                                                                                                            |  |              | 884,717   |   |                   |  
|Securities lending agreement                                                                                                                                                    |  |              | 62,727    |   |                   |  
|Deferred income taxes                                                                                                                                                           |  |              | 144,090   |   |                   |  
|Other liabilities                                                                                                                                                               |  |              | 17,522    |   |                   |  
|Commitments and contingent liabilities                                                                                                                                          |  |              |          |   |                   |  
|                                                                                                                                                                                |  |             
|Shareholders equity:                                                                                                                                                           |  |              |           |   |                   |  
|Preferred stock, $0.01 par value; authorized 20,000,000 shares                                                                                                                  |  |              |          |   |                   |  
|Common stock, $0.01 par value; authorized 250,000,000 shares issued 107,019,535 and 106,976,877 shares respectively; outstanding
93,698,339 and 105,967,853 shares respectively |  |              | 1,070     |   |                   |  
|Equity rights, 50 rights at $1.09 per right                                                                                                                                     |  |              |          |   |                   |  
|Additional paid-in capital                                                                                                                                                      |  |              | 270,591   |   |                   |  
|Retained earnings                                                                                                                                                               |  |              | 756,658   |   |                   |  
|Accumulated other comprehensive income (loss)                                                                                                                                   |  |              | 8,100     |   |                   |  
|Treasury common stock, 13,321,196 and 1,009,024 shares at cost                                                                                                                  |  |              | (240,778  | ) |                   |  
|                                                                                                                                                                                |  |              |           |   |                   |  
|Total shareholders equity                                                                                                                                                      |  |              | 795,641   |   |                   |  
|                                                                                                                                                                                |  |              |           |   |                   |  
|Total liabilities and shareholders equity                                                                                                                                      |  | $            | 2,089,953 |   |                   | $
|                                                                                                                                                                                |  |              |           |   |                   |  



See accompanying notes
to the unaudited consolidated financial statements.



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)



|                                                             |  | Three Months EndedJune 30, |         |   | Nine Months EndedJune 30, |  
|------------------------------------------------------------ |  | -------------------------- | ------- | - | ------------------------- | -
|                                                             |  | 2003                       |         |   | 2002                      |  
|Net sales                                                    |  | $                          | 278,478 |   |                           | $
|                                                             |  |                            |         |  
|Cost of sales:                                               |  |                            |         |   |                           |  
|Cost of products sold                                        |  |                            | 143,839 |   |                           |  
|Restructuring charges                                        |  |                            | 955     |   |                           |  
|                                                             |  |                            |         |   |                           |  
|Total cost of sales                                          |  |                            | 144,794 |   |                           |  
|                                                             |  |                            |         |   |                           |  
|Gross profit                                                 |  |                            | 133,684 |   |                           |  
|                                                             |  |                            |         |  
|Selling, general and administrative expenses                 |  |                            | 69,923  |   |                           |  
|Restructuring charges                                        |  |                            | 475     |   |                           |  
|                                                             |  |                            |         |   |                           |  
|Total selling, general and administrative expenses           |  |                            | 70,398  |   |                           |  
|                                                             |  |                            |         |   |                           |  
|Operating income                                             |  |                            | 63,286  |   |                           |  
|                                                             |  |                            |         |  
|Other income (expense):                                      |  |                            |         |   |                           |  
|Interest expense                                             |  |                            | (11,635 | ) |                           |  
|Amortization of deferred financing fees                      |  |                            | (1,006  | ) |                           |  
|Other, net                                                   |  |                            | 163     |   |                           |  
|                                                             |  |                            |         |   |                           |  
|Income from continuing operations before income taxes        |  |                            | 50,808  |   |                           |  
|Income taxes                                                 |  |                            | 15,104  |   |                           |  
|                                                             |  |                            |         |   |                           |  
|Income from continuing operations                            |  |                            | 35,704  |   |                           |  
|Discontinued operations, net of tax                          |  |                            | (188    | ) |                           |  
|                                                             |  |                            |         |   |                           |  
|Net income                                                   |  | $                          | 35,516  |   |                           | $
|                                                             |  |                            |         |   |                           |  
|Basic earnings per common share from continuing operations   |  | $                          | 0.36    |   |                           | $
|Discontinued operations                                      |  |                            | (0.00   | ) |                           |  
|                                                             |  |                            |         |   |                           |  
|Basic earnings per common share                              |  | $                          | 0.36    |   |                           | $
|                                                             |  |                            |         |   |                           |  
|Diluted earnings per common share from continuing operations |  | $                          | 0.36    |   |                           | $
|Discontinued operations                                      |  | $                          | (0.00   | ) |                           |  
|                                                             |  |                            |         |   |                           |  
|Diluted earnings per common share                            |  | $                          | 0.35    |   |                           | $
|                                                             |  |                            |         |   |                           |  
|Weighted average basic shares outstanding                    |  |                            | 99,486  |   |                           |  
|Weighted average diluted shares outstanding                  |  |                            | 100,526 |   |                           |  



See accompanying notes
to the unaudited consolidated financial statements.



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY

For the Nine Months Ended June 30, 2003

(in thousands)

(unaudited)



|                                                                     |  | CommonStock |       | EquityRights |   | AdditionalPaid - InCapital |  |   | RetainedEarnings |   | AccumulatedOtherComprehensiveIncome (Loss) |   |         | TreasuryCommonStock |   |         | TotalShareholdersEquity | 
|-------------------------------------------------------------------- |  | ----------- | ----- | ------------ | - | -------------------------- |  | - | ---------------- | - | ------------------------------------------ | - | ------- | ------------------- | - | ------- | ------------------------ | 
|Balance at September 30, 2002                                        |  | $           | 1,070 |              | $ |                           |  | $ | 271,682          |   |                                            | $ | 748,791 |                     | $ | (26,419 | )                        | 
|Comprehensive income:                                                |  |             |       |              |   |                            |  |   |                  |   |                                            |   |         |                     |   |         |                          | 
|Net income                                                           |  |             |      |              |   |                           |  |   |                 |   |                                            |   | 7,867   |                     |   |        |                          | 
|Translation adjustment                                               |  |             |      |              |   |                           |  |   |                 |   |                                            |   |        |                     |   | 32,993  |                          | 
|Unrealized gain on security available for sale, net of tax of $1,018 |  |             |      |              |   |                           |  |   |                 |   |                                            |   |        |                     |   | 1,526   |                          | 
|                                                                     |  |             |       |              |   |                            |  |   |                  |   |                                            |   |         |                     |   |         |                          | 
|Total comprehensive income                                           |  |             |      |              |   |                           |  |   |                 |   |                                            |   | 7,867   |                     |   | 34,519  |                          | 
|Treasury shares purchased                                            |  |             |      |              |   |                           |  |   |                 |   |                                            |   |        |                     |   |        |                          | 
|Shares issued in connection with stock options                       |  |             |      |              |   |                           |  |   | (3,013           | ) |                                            |   |        |                     |   |        |                          | 
|Shares issued in connection with employee stock purchase program     |  |             |      |              |   |                           |  |   | 927              |   |                                            |   |        |                     |   |        |                          | 
|Tax benefit related to stock options                                 |  |             |      |              |   |                           |  |   | 995              |   |                                            |   |        |                     |   |        |                          | 
|                                                                     |  |             |       |              |   |                            |  |   |                  |   |                                            |   |         |                     |   |         |                          | 
|Balance at June 30, 2003                                             |  | $           | 1,070 |              | $ |                           |  | $ | 270,591          |   |                                            | $ | 756,658 |                     | $ | 8,100   |                          | 
|                                                                     |  |             |       |              |   |                            |  |   |                  |   |                                            |   |         |                     |   |         |                          | 



See accompanying notes
to the unaudited consolidated financial statements.



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



|                                                                                  |  | Nine Months EndedJune 30, |         
|--------------------------------------------------------------------------------- |  | ------------------------- | --------
|                                                                                  |  | 2003                      |         
|Cash flows from operating activities:                                             |  |                           |         
|Net income                                                                        |  | $                         | 7,867   
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                           |         
|Discontinued operations                                                           |  |                           | 87,516  
|Depreciation                                                                      |  |                           | 31,819  
|Amortization                                                                      |  |                           | 14,377  
|Gain on sale of property, plant and equipment                                     |  |                           | 244     
|Provision for losses on doubtful accounts                                         |  |                           | (808    
|Inventory provisions                                                              |  |                           | 982     
|Deferred income taxes                                                             |  |                           | 10,252  
|Changes in assets and liabilities, net of effects of businesses acquired:         |  |                           |         
|Decrease in accounts receivable                                                   |  |                           | 3,312   
|Increase in inventories                                                           |  |                           | (12,092 
|Increase in prepaid expenses and other current assets                             |  |                           | (3,376  
|Decrease in accounts payable                                                      |  |                           | (6,956  
|Increase (decrease) in income taxes payable                                       |  |                           | (6,604  
|Decrease in accrued payroll and employee benefits                                 |  |                           | (1,372  
|Decrease in accrued interest expense                                              |  |                           | (7,290  
|Increase (decrease) in restructuring reserve                                      |  |                           | (298    
|Increase (decrease) in other current liabilities                                  |  |                           | 2,842   
|Net change in other assets and liabilities                                        |  |                           | (4,970  
|                                                                                  |  |                           |         
|Net cash provided by operating activities                                         |  |                           | 115,445 
|                                                                                  |  |                           |         
|Cash flows from investing activities:                                             |  |                           |         
|Capital expenditures                                                              |  |                           | (37,684 
|Proceeds from sales of property, plant and equipment                              |  |                           | 1,221   
|Net payments for businesses acquired                                              |  |                           | (21,654 
|Other investing activities                                                        |  |                           | 1,546   
|                                                                                  |  |                           |         
|Net cash used in investing activities                                             |  |                           | (56,571 
|                                                                                  |  |                           |         
|Cash flows from financing activities:                                             |  |                           |         
|Proceeds from revolving credit facility                                           |  |                           | 469,400 
|Principal payments on revolving credit facility                                   |  |                           | (469,400
|Proceeds from long-term debt                                                      |  |                           | 250,000 
|Principal payments on long-term debt                                              |  |                           | (23,408 
|Proceeds from the exercise of stock options                                       |  |                           | 2,543   
|Proceeds from employee stock purchase program                                     |  |                           | 927     
|Purchase of treasury stock                                                        |  |                           | (226,348
|Financing fees paid                                                               |  |                           | (9,168  
|Other financing activities                                                        |  |                           | 2,510   
|                                                                                  |  |                           |         
|Net cash provided by (used in) financing activities                               |  |                           | (2,944  
|                                                                                  |  |                           |         
|Effect of exchange rate changes on cash and cash equivalents                      |  |                           | 13,893  
|                                                                                  |  |                           |         
|Net increase in cash and cash equivalents                                         |  |                           | 69,823  
|Cash and cash equivalents at beginning of period                                  |  |                           | 16,327  
|                                                                                  |  |                           |         
|Cash and cash equivalents at end of period                                        |  | $                         | 86,150  
|                                                                                  |  |                           |         
|Supplemental disclosures of cash flow information:                                |  |                           |         
|Cash paid during the period for:                                                  |  |                           |         
|Interest                                                                          |  | $                         | 39,467  
|                                                                                  |  |                           |         
|Income taxes                                                                      |  | $                         | 39,720  
|                                                                                  |  |                           |         
|Capital lease obligations incurred                                                |  | $                         | 102     
|                                                                                  |  |                           |         



See accompanying notes
to the unaudited consolidated financial statements.



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data, or when specified in millions)



1.  Basis of Presentation



In the opinion of management, all adjustments that are necessary for a fair
statement of the results for the interim periods presented have been included, and are of a normal recurring nature. The results for the three and nine month periods ended June 30, 2003 are not necessarily indicative of the results to be expected
for the full fiscal year. The financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles in the United
States. These statements should be read in conjunction with the Companys annual report on Form 10-K for the fiscal year ended September 30, 2002 and the Companys current report on Form 8-K filed May 13, 2003, containing financial
statements that have been restated for discontinued operations and the realignment of our business segments.



During the second quarter of fiscal 2003, we realigned our lines of business for financial reporting purposes. Our three former business segments
(clinical diagnostics, labware and life sciences, and laboratory equipment) have been reclassified into two business segments: clinical group and research group. The clinical group business segment is the former clinical diagnostics business
segment. The research group business segment is composed of the former labware and life sciences and laboratory equipment business segments.



Historical financial information has been restated to reflect the discontinuance of the businesses conducted by the Companys Applied Biotech Inc.,
BioRobotics Group Ltd., and Vacuum Process Technology, Inc. subsidiaries.



Certain reclassifications to prior year balances have been made to conform with current year presentations.



2.  Recent Accounting Pronouncements



In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46). FIN 46
clarifies situations in which entities will be subject to consolidation. FIN 46 is effective for all variable interest entities created after January 31, 2003. The Company is evaluating the impact of FIN 46 on its financial position and results of
operations.



On May 15, 2003, the Financial Accounting
Standards Board issued Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. The Statement requires issuers to classify as liabilities (or assets in some circumstance) three classes of
freestanding financial instruments that embody obligations for the issuer. Generally, the Statement is effective for financial instruments entered into or modified after May 31, 2003 and is otherwise effective at the beginning of the first interim
period beginning after June 15, 2003. The Company adopted the provisions of the Statement on July 1, 2003. The Company did not enter into any financial instruments within the scope of the Statement during June 2003 and its adoption did not have an
impact on any existing financial instruments entered into on or before May 31, 2003.



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



3.  Fair Value of Stock Options



The Company has adopted the disclosure provisions of SFAS No. 148, Accounting for Stock-Based
CompensationTransition and Disclosure, which is an amendment of SFAS No. 123, Accounting for Stock-Based Compensation, and continues to apply Accounting Principles Board Opinion No. 25 and related interpretations in
accounting for its stock plans. If the Company had elected to recognize compensation cost for all of the plans based upon the fair value at the grant dates for awards under those plans, consistent with the method prescribed by SFAS 123, net income
and earnings per share would have been changed to the pro forma amounts indicated below:



|                                         |  | Three Months EndedJune 30, |        | Nine Months EndedJune 30,
|---------------------------------------- |  | -------------------------- | ------ | -------------------------
|                                         |  | 2003                       |        | 2002                     
|Net income  as reported                 |  | $                          | 35,516 |                          
|                                         |  |                            |        |                          
|Pro forma net income                     |  | $                          | 32,525 |                          
|                                         |  |                            |        |                          
|Basic earnings per share  as reported   |  | $                          | 0.36   |                          
|                                         |  |                            |        |                          
|Basic earnings per share  pro forma     |  | $                          | 0.33   |                          
|                                         |  |                            |        |                          
|Diluted earnings per share  as reported |  | $                          | 0.35   |                          
|                                         |  |                            |        |                          
|Diluted earnings per share  pro forma   |  | $                          | 0.33   |                          
|                                         |  |                            |        |                          



The fair value of the
Companys stock options used to compute pro forma net income and earnings per share disclosures is the estimated present value at grant date using the Black-Scholes option pricing model with the following weighted average assumptions:



|                        |  | Three Months EndedJune 30, |   |  | Nine Months EndedJune 30, |  
|----------------------- |  | -------------------------- | - |  | ------------------------- | -
|                        |  | 2003                       |   |  | 2002                      |  
|Volatility              |  | 32.26                      | % |  | 35.80                     | %
|Risk-free rate          |  | 2.50                       | % |  | 5.66                      | %
|Expected holding period |  | 8.0 years                  |   |  | 7.8 years                 |  
|Dividend yield          |  | 0.00                       | % |  | 0.00                      | %



The Black-Scholes
option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions,
including the expected stock price volatility. Because the Companys options have characteristics significantly different from traded options, and because changes in the subjective input assumptions can materially affect the fair value
estimate, in the opinion of management, the existing models do not necessarily provide a reliable single value of its options and may not be representative of the future effects on reported net income or the future stock price of the Company.



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



4.  Inventories



Inventories at June 30, 2003 and September 30, 2002 consisted of the following:



|                           |  | June 30, 2002 |         | September 30, 2003
|-------------------------- |  | ------------- | ------- | ------------------
|Raw materials and supplies |  | $             | 71,930  |                   
|Work in process            |  |               | 21,798  |                   
|Finished goods             |  |               | 119,639 |                   
|                           |  |               |         |                   
|                           |  | $             | 213,367 |                   
|                           |  |               |         |                   



5.  Intangible Assets



As a result of current year acquisitions and subsequent
payments made in relation to prior year acquisitions, the Company added approximately $27.0 million to goodwill and intangible assets between September 30, 2002 and June 30, 2003 (approximately $13.0 million to goodwill and $14.0 million to
amortizable intangible assets). The Company is currently assessing the final allocation of purchase price premium to the various tangible and intangible assets for these acquisitions. Deferred financing fees, changes in foreign currency rates and
final adjustments to purchase price of companies acquired during fiscal 2002 increased goodwill and intangible assets by an additional $35.9 million during the first nine months of fiscal 2003. In addition, during the second quarter of fiscal 2003,
the Company recorded a write-off of $101.7 million of goodwill and intangible assets related to the discontinuance of two of its businesses, the lateral flow, rapid diagnostic test business conducted by Applied Biotech, Inc. (together with its
wholly-owned subsidiary, Forefront Diagnostic, Inc., ABI) and the micro-array equipment business conducted by BioRobotics Group Ltd (BioRobotics). See Note 7Discontinued Operations. Unamortizable intangible assets
(goodwill) were approximately $980.7 million as of June 30, 2003.



Intangible assets are as follows:



|                                           |  | June 30,2003 |           |   | September 30,2002 |  
|------------------------------------------ |  | ------------ | --------- | - | ----------------- | -
|Amortizable intangible assets              |  |              |           |   |                   |  
|Proprietary technology                     |  | $            | 75,772    |   |                   | $
|Trademarks                                 |  |              | 80,269    |   |                   |  
|Patents                                    |  |              | 36,284    |   |                   |  
|Licenses                                   |  |              | 11,879    |   |                   |  
|Drawings                                   |  |              | 11,804    |   |                   |  
|Non-compete agreements                     |  |              | 12,817    |   |                   |  
|Other                                      |  |              | 46,269    |   |                   |  
|Less: Accumulated amortization             |  |              | (81,952   | ) |                   |  
|                                           |  |              |           |   |                   |  
|Net amortizable intangible assets          |  |              | 193,142   |   |                   |  
|Unamortizable intangible assets (goodwill) |  |              | 980,724   |   |                   |  
|                                           |  |              |           |   |                   |  
|                                           |  | $            | 1,173,866 |   |                   | $
|                                           |  |              |           |   |                   |  



7



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



5.  Intangible Assets (Continued)



Intangible assets at June 30, 2003 by business segment are as follows:



|                                                      |  | ClinicalGroup |         |   | ResearchGroup |   |         | Consolidated | 
|----------------------------------------------------- |  | ------------- | ------- | - | ------------- | - | ------- | ------------ | 
|Proprietary technology                                |  | $             | 60,661  |   |               | $ | 15,111  |              | 
|Less: Accumulated amortization                        |  |               | (19,818 | ) |               |   | (6,208  | )            | 
|                                                      |  |               |         |   |               |   |         |              | 
|Net proprietary technology                            |  |               | 40,843  |   |               |   | 8,903   |              | 
|                                                      |  |               |         |   |               |   |         |              | 
|Trademarks                                            |  |               | 18,450  |   |               |   | 61,819  |              | 
|Less: Accumulated amortization                        |  |               | (1,918  | ) |               |   | (16,081 | )            | 
|                                                      |  |               |         |   |               |   |         |              | 
|Net trademarks                                        |  |               | 16,532  |   |               |   | 45,738  |              | 
|                                                      |  |               |         |   |               |   |         |              | 
|Patents                                               |  |               | 20,310  |   |               |   | 15,974  |              | 
|Less: Accumulated amortization                        |  |               | (4,616  | ) |               |   | (4,141  | )            | 
|                                                      |  |               |         |   |               |   |         |              | 
|Net patents                                           |  |               | 15,694  |   |               |   | 11,833  |              | 
|                                                      |  |               |         |   |               |   |         |              | 
|Licenses                                              |  |               | 9,488   |   |               |   | 2,391   |              | 
|Less: Accumulated amortization                        |  |               | (3,137  | ) |               |   | (264    | )            | 
|                                                      |  |               |         |   |               |   |         |              | 
|Net licenses                                          |  |               | 6,351   |   |               |   | 2,127   |              | 
|                                                      |  |               |         |   |               |   |         |              | 
|Drawings                                              |  |               |        |   |               |   | 11,804  |              | 
|Less: Accumulated amortization                        |  |               |        |   |               |   | (6,144  | )            | 
|                                                      |  |               |         |   |               |   |         |              | 
|Net drawings                                          |  |               |        |   |               |   | 5,660   |              | 
|                                                      |  |               |         |   |               |   |         |              | 
|Non-compete agreements                                |  |               | 5,288   |   |               |   | 7,529   |              | 
|Less: Accumulated amortization                        |  |               | (3,304  | ) |               |   | (5,267  | )            | 
|                                                      |  |               |         |   |               |   |         |              | 
|Net non-compete agreements                            |  |               | 1,984   |   |               |   | 2,262   |              | 
|                                                      |  |               |         |   |               |   |         |              | 
|Other identifiable intangible assets (a)              |  |               | 7,462   |   |               |   | 13,033  |              | 
|Less: Accumulated amortization                        |  |               | (674    | ) |               |   | (2,963  | )            | 
|                                                      |  |               |         |   |               |   |         |              | 
|Net other identifiable intangibles (a)                |  |               | 6,788   |   |               |   | 10,070  |              | 
|                                                      |  |               |         |   |               |   |         |              | 
|Net amortizable intangible assets (a)                 |  | $             | 88,192  |   |               | $ | 86,593  |              | 
|                                                      |  |               |         |   |               |   |         |              | 
|Excess cost over net asset values acquired (goodwill) |  |               | 513,110 |   |               |   | 467,614 |              | 
|                                                      |  |               |         |   |               |   |         |              | 
|Unamortizable intangible assets                       |  | $             | 513,110 |   |               | $ | 467,614 |              | 
|                                                      |  |               |         |   |               |   |         |              | 

---

Note (a):  At June 30,
2003, Apogent Corporate Office had $25,774 of amortizable other identifiable intangible assets and $7,417 of related accumulated amortization that were not allocated to either of the business segments and are not included in the consolidated totals
in the above table.



Amortization of intangible assets,
including deferred financing fees, was $4,818 and $5,173 for the three months ended June 30, 2003 and 2002, respectively, and $14,377 and $12,272 for the nine months ended June 30, 2003 and 2002, respectively. Amortization expense relating to
the existing identifiable intangible assets for each of the next five years (beginning with fiscal 2003) is expected to be $18,837, $18,458, $15,107, $14,097, and $13,551, respectively.



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



5.  Intangible Assets (Continued)



The changes in the carrying amount of goodwill for the nine months ended June 30, 2003 are as
follows:



|                                                                |  | Clinical Group |         |   | Research Group |   |         | Consolidated | 
|--------------------------------------------------------------- |  | -------------- | ------- | - | -------------- | - | ------- | ------------ | 
|Balance at September 30, 2002                                   |  | $              | 549,039 |   |                | $ | 480,552 |              | 
|Goodwill acquired during the period                             |  |                | 13,025  |   |                |   |        |              | 
|Goodwill written off related to disposal of ABI and BioRobotics |  |                | (54,421 | ) |                |   | (30,827 | )            | 
|Change in purchase price of prior year acquisition              |  |                | 5,025   |   |                |   | (1,058  | )            | 
|Effect of change in foreign currencies                          |  |                | 442     |   |                |   | 18,947  |              | 
|                                                                |  |                |         |   |                |   |         |              | 
|Balance at June 30, 2003                                        |  | $              | 513,110 |   |                | $ | 467,614 |              | 
|                                                                |  |                |         |   |                |   |         |              | 



6.  Acquisitions



During the nine months ended June 30, 2003, the Company
completed three acquisitions for cash. The aggregate purchase price for these acquisitions, net of cash acquired, was approximately $21.7 million. None of the acquisitions was considered individually significant. The total goodwill and identifiable
intangible assets for the acquired companies was approximately $27.0 million (allocated approximately $13.0 million to goodwill and $14.0 million to amortizable intangible assets). The intangible assets will be amortized over their expected lives
ranging from 5 to 20 years. The following table outlines the sales, operating income, and total assets for the most recent available twelve-month period prior to each cash acquisition.



Business Segment:



|Company Acquired      |  | Acquisition Date |  | Sales |       | Operating Income |   | Total Assets |  | Type of Acquisition
|--------------------- |  | ---------------- |  | ----- | ----- | ---------------- | - | ------------ |  | -------------------
|Clinical Group:       |  |                  |  |       |       |                  |   |              |  |                    
|NeoMarkers, Inc.      |  | 10/1/02          |  | $     | 4,000 |                  | $ | 1,900        |  | $                  
|Opus Diagnostics Inc. |  | 10/9/02          |  |       | 2,100 |                  |   | 1,200        |  |                    
|Research Group:       |  |                  |  |       |       |                  |   |              |  |                    
|Tempyrox, Inc.        |  | 1/03/03          |  |       | 582   |                  |   | 24           |  |                    



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



7.  Discontinued Operations



During March 2002, we made the decision to dispose of our vacuum deposition chamber business, Vacuum Process Technology,
Inc. (VPT). The decision was made following a slow-down in the telecommunications industry, in which VPT targeted a majority of its products, and, as a result, the business no longer met the Companys strategic requirements. In the
second quarter of fiscal 2002, in connection with the discontinuance of this business, we incurred a charge of $13,200, net of income tax benefit of $7,600, related to the write-down of net assets to their estimated fair value less costs to sell.
During the second quarter of fiscal 2003, the Company completed the sale of VPT and, as a result, incurred an additional charge of $2,800, net of income tax benefit of $1,600. The decision to sell VPT represented a disposal of long-lived assets and
disposal group under Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Accordingly, results of this business have been classified as discontinued operations. For
business reporting purposes, VPT was previously classified in the clinical group business segment. Operating results from VPT for the three and nine months ended June 30, 2003 and 2002 were as follows:



|             |  | Three Months Ended June 30, |   |      | Nine Months Ended June 30, |      
|------------ |  | --------------------------- | - | ---- | -------------------------- | -----
|             |  | 2003                        |   | 2002 |                            |      
|Net Sales    |  | $                           |  |      | $                          | 1,208
|Gross Profit |  |                             |  |      |                            | 166  
|Pretax loss  |  |                             |  |      |                            | (159 
|Income taxes |  |                             |  |      |                            | (58  
|Net loss     |  |                             |  |      |                            | (101 



Assets and liabilities
of VPT were as follows:



|                                   |  | September 30, 2002
|---------------------------------- |  | ------------------
|Current assets                     |  | $                 
|Property, plant and equipment, net |  |                   
|Intangible assets                  |  |                   
|Total assets                       |  |                   
|Current liabilities                |  |                   
|Total liabilities                  |  |                   



On March 25, 2003, the
Company made the decision to dispose of two of its businesses: the lateral flow rapid diagnostic test business (on-site rapid tests used in the detection of pregnancy, drugs of abuse, and infectious diseases) as conducted by ABI; and the manufacture
and sale of automated microarray instrumentation for the genomics market as conducted by BioRobotics. The decision was based in part on the Companys ongoing strategy of strengthening the market positions of our leading brands and focusing on
sales of our consumable laboratory products that have more stable growth expectations. As a result, these businesses no longer met the Companys strategic requirements. During the first nine months of fiscal 2003, in connection with the
discontinuance of these businesses, we incurred charges of approximately $87,400, net of income tax benefit of $22,400, related to the write-down of net assets to their estimated fair value less costs to sell. The decision to sell these companies
represents a disposal of long-lived assets and disposal group under SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Accordingly, results of these businesses have been classified as discontinued operations,
and prior periods have been restated to reflect this reclassification. In July 2003, the Company entered into an agreement with Inverness Medical Innovations, Inc. (Inverness), whereby Inverness agreed to acquire ABI for 692,506 shares
of Inverness common stock and either $13.4 million in cash, or $5 million in cash and a one-year $8.4 million subordinated promissory note. The



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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



7.  Discontinued Operations (Continued)



transaction is expected to close in August 2003, subject to Inverness first obtaining the consent of its lenders and the satisfaction of other customary
closing conditions. The Company is also actively pursuing the sale of the BioRobotics business and anticipates disposal within the next nine months. In the event the Company ultimately disposes of ABI and BioRobotics for an amount less than the
carrying value of the businesses, additional charges will be recognized upon disposal. For business reporting purposes, ABI was previously classified in the clinical group business segment, and BioRobotics was classified in the research group
business segment.



Operating results from ABI for the three and
nine months ended June 30, 2003 and 2002 were as follows:



|                     |  | Three Months Ended June 30, |        | Nine Months Ended June 30,
|-------------------- |  | --------------------------- | ------ | --------------------------
|                     |  | 2003                        |        |                           
|Net Sales            |  | $                           | 7,319  |                           
|Gross Profit         |  |                             | 2,359  |                           
|Pretax income (loss) |  |                             | (1,543 | )                         
|Income taxes         |  |                             | (515   | )                         
|Net income (loss)    |  |                             | (1,028 | )                         



Operating results from
BioRobotics for the three and nine months ended June 30, 2003 and 2002 were as follows:



|                     |  | Three Months Ended June 30, |       |   | Nine Months Ended June 30, |  
|-------------------- |  | --------------------------- | ----- | - | -------------------------- | -
|                     |  | 2003                        |       |   | 2002                       |  
|Net Sales            |  | $                           | 1,534 |   |                            | $
|Gross Profit         |  |                             | 1,106 |   |                            |  
|Pretax income (loss) |  |                             | 609   |   |                            |  
|Income taxes         |  |                             | (231  | ) |                            |  
|Net income (loss)    |  |                             | 840   |   |                            |  



Assets and liabilities
of ABI were as follows:



|                                   |  | June 30, 2003 |        | September 30, 2002
|---------------------------------- |  | ------------- | ------ | ------------------
|Current assets                     |  | $             | 16,256 |                   
|Property, plant and equipment, net |  |               | 5,679  |                   
|Intangible assets                  |  |               | 19,920 |                   
|Total assets                       |  |               | 33,419 |                   
|Current liabilities                |  |               | 4,979  |                   
|Total liabilities                  |  |               | 4,979  |                   



Assets and liabilities
of BioRobotics were as follows:



|                                   |  | June 30, 2003 |        | September 30,2002
|---------------------------------- |  | ------------- | ------ | -----------------
|Current assets                     |  | $             | 16,906 |                  
|Property, plant and equipment, net |  |               | 687    |                  
|Intangible assets                  |  |               | 428    |                  
|Total assets                       |  |               | 18,023 |                  
|Current liabilities                |  |               | 518    |                  
|Total liabilities                  |  |               | 518    |                  



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



8.  Long-Term Debt



On June 2, 2003, the Company issued $250 million aggregate principal amount of 61/2% senior subordinated notes due 2013. Interest is fixed at an annual rate of 6.5% and is payable on May 15 and
November 15 of each year, beginning on November 15, 2003. Interest will accrue from June 2, 2003. We may redeem some or all of the notes at any time on or after May 15, 2008. After May 15, 2008, the notes are redeemable at 103.250%, 102.167%,
101.083%, and 100.000% of their principal amount plus accrued interest and any liquidated damages, if redeemed during the twelve-month period beginning on May 15 of 2008, 2009, 2010, and 2011 and thereafter, respectively. Prior to May 15, 2006 and
subject to satisfaction of specified conditions, we may redeem up to 35% of the aggregate principal amount of the notes with the net cash proceeds of certain equity offerings at a redemption price of 106.5% plus accrued and unpaid interest and other
charges. The holders may require the Company to purchase all or a portion of their notes at 101% upon a change of control event. The notes are Apogent Technologies Inc.s general unsecured obligations and are guaranteed on a senior subordinated
basis by our domestic subsidiaries that have guaranteed, and our subsidiaries that will in the future guarantee, obligations under our revolving credit facility. The notes and the guarantees rank junior in right of payment to all of the
Companys and each subsidiary guarantors existing and future senior debt and rank pari passuin right of payment with all of the Companys and each subsidiary guarantors senior subordinated debt.



9.  Restructuring



During fiscal 2003, the Company recorded restructuring charges of
approximately $1.8 million (approximately $1.1 million net of tax) for the consolidation of certain facilities and discontinuance of certain product lines due to product rationalizations. The restructuring charges were classified as components of
cost of sales and selling, general, and administrative expenses. The cost of sales component of approximately $1.0 million related to the write-off of inventory and severance associated with employees in production activities. The selling, general
and administrative component of approximately $800 related to severance associated with non-production employees and other shutdown costs.



Restructuring activities for these actions are as follows:



|                                 |  | Severance(a) |       |   | Inventory(b) |   |      | FixedAssets |  | FacilityClosure Costs |   | Other |   |   | Total |  
|-------------------------------- |  | ------------ | ----- | - | ------------ | - | ---- | ----------- |  | --------------------- | - | ----- | - | - | ----- | -
|Fiscal 2003 Restructuring charge |  | $            | 1,524 |   |              | $ | 210  |             |  | $                     |  |       | $ |  |       | $
|Fiscal 2003 Cash payments        |  |              | (901  | ) |              |   |     |             |  |                       |  |       |   |  |       |  
|Fiscal 2003 Non-cash charges     |  |              |      |   |              |   | (210 | )           |  |                       |  |       |   |  |       |  
|                                 |  |              |       |   |              |   |      |             |  |                       |   |       |   |   |       |  
|June 30, 2003 balance            |  | $            | 623   |   |              | $ |     |             |  | $                     |  |       | $ |  |       | $
|                                 |  |              |       |   |              |   |      |             |  |                       |   |       |   |   |       |  

---

|(a) |  | Amount represents severance and termination costs for 81 terminated employees (primarily sales and marketing personnel).
|--- |  | ------------------------------------------------------------------------------------------------------------------------

|(b) |  | Amount represents write-offs of inventory and fixed assets associated with discontinued product lines.
|--- |  | ------------------------------------------------------------------------------------------------------



During fiscal 2002, the Company recorded restructuring charges of approximately $7.1 million (approximately $4.4 million net
of tax) for the consolidation of certain facilities and discontinuance of certain product lines due to product rationalizations. The restructuring charges were classified as components of cost of sales and selling, general and administrative
expenses. The cost of sales component of approximately $5.1 million related to the write-off of inventory, write-offs of fixed assets, certain lease terminations, and severance



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



9.  Restructuring (Continued)



associated with employees in production activities. The selling, general and administrative component of approximately $2.0 million related to severance
associated with non-production employees as well as certain lease terminations and other shutdown costs.



Restructuring activities for these actions are as follows:



|                                 |  | Severance(a) |       |   | Inventory(b) |   |        | FixedAssets(b) |  |   | FacilityClosure Costs(c) |   |  | Other |       |   | Total |  
|-------------------------------- |  | ------------ | ----- | - | ------------ | - | ------ | -------------- |  | - | ------------------------ | - |  | ----- | ----- | - | ----- | -
|Fiscal 2002 Restructuring charge |  | $            | 1,466 |   |              | $ | 3,709  |                |  | $ | 353                      |   |  | $     | 1,409 |   |       | $
|Fiscal 2002 Cash payments        |  |              | (989  | ) |              |   |       |                |  |   |                         |   |  |       | (682  | ) |       |  
|Fiscal 2002 Non-cash charges     |  |              |      |   |              |   | (3,709 | )              |  |   | (353                     | ) |  |       |      |   |       |  
|                                 |  |              |       |   |              |   |        |                |  |   |                          |   |  |       |       |   |       |  
|September 30, 2002 balance       |  | $            | 477   |   |              | $ |       |                |  | $ |                         |   |  | $     | 727   |   |       | $
|Fiscal 2003 Cash payments        |  |              | (477  | ) |              |   |       |                |  |   |                         |   |  |       | (100  | ) |       |  
|                                 |  |              |       |   |              |   |        |                |  |   |                          |   |  |       |       |   |       |  
|June 30, 2003 balance            |  | $            |      |   |              | $ |       |                |  | $ |                         |   |  | $     | 627   |   |       | $
|                                 |  |              |       |   |              |   |        |                |  |   |                          |   |  |       |       |   |       |  

---

|(a) |  | Amount represents severance and termination costs for 126 terminated employees (primarily sales, marketing and manufacturing personnel).
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | Amount represents write-offs of inventory and fixed assets associated with discontinued product lines.
|--- |  | ------------------------------------------------------------------------------------------------------

|(c) |  | Amount represents lease payments and other facility closure costs on exited operations.
|--- |  | ---------------------------------------------------------------------------------------



The Company expects to make future cash payments of approximately $1,150 associated with the above restructuring actions
during the remainder of fiscal 2003 and approximately $100 in fiscal 2004 and beyond.



10.  Capital Stock



On May 21, 2003,
the Company completed a modified Dutch Auction tender offer to purchase shares of its common stock by accepting approximately 6.0 million tendered shares of common stock, representing approximately 5.9% of all then outstanding shares, at
a purchase price of $17.50 per share. The aggregate purchase price of the shares purchased through the tender offer, including fees and expenses associated with the tender offer, was approximately $106.0 million. During our current fiscal year,
through June 30, 2003, in addition to the shares repurchased pursuant to the tender offer, we have purchased approximately 6.9 million additional shares. The purchase price for these additional purchases during our current fiscal year has totaled
approximately $120 million, or an average of approximately $18.28 per share.



11.  Earnings Per Common Share



Basic earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding in the period presented. Diluted earnings per common share is calculated by dividing net income by the weighted
average number of common shares outstanding plus the dilutive effects of potential common shares outstanding during the period. A reconciliation of shares used in calculating basic and diluted earnings per share follows (in thousands):



|                                                       |  | Three Months EndedJune 30, |  | Nine Months EndedJune 30,
|------------------------------------------------------ |  | -------------------------- |  | -------------------------
|                                                       |  | 2003                       |  | 2002                     
|Basic                                                  |  | 99,486                     |  | 106,816                  
|Effect of assumed conversion of employee stock options |  | 1,040                      |  | 2,194                    
|                                                       |  |                            |  |                          
|Diluted                                                |  | 100,526                    |  | 109,010                  
|                                                       |  |                            |  |                          



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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



11.  Earnings Per Common Share (Continued)



Excluded from the shares used in calculating the diluted earnings per common share in the above table
are options to purchase 9,759 and 4,609 shares of common stock for the three months ended June 30, 2003 and 2002, respectively, and 9,759 and 2,277 shares of common stock for the nine months ended June 30, 2003 and 2002, respectively, as their
effects would have been anti-dilutive. Also excluded from the shares used in calculating the diluted earnings per common share are approximately 9,839 shares of common stock issuable upon the conversion of our senior convertible contingent debt
securities (CODES), based on a conversion price of $30.49 per share.



12.  Subsequent Events



On July 29,
2003, the Company and three of its domestic subsidiaries, as co-borrowers, entered into a new $500 million revolving credit facility that matures on July 29, 2008, and terminated our former revolving credit facility, as amended, that was scheduled
to mature on December 1, 2005. The new revolving credit facility contains essentially the same terms and conditions as our prior credit facility, as amended. However, unlike the old credit facility, the new credit facility includes subsidiary
co-borrowers. The new credit facility also permits us to make restricted payments, including dividends and stock repurchases under our stock repurchase program, subject to a limit on restricted payments made from and after July 29, 2003 of $200
million plus an amount equal to 50% of the Companys quarterly consolidated net income for the fiscal quarters ending June 30, 2003 and thereafter. In addition, the new credit facility provides for a $200 million limit on foreign currency
loans, compared to the $100 million foreign currency borrowing limit under the old revolving credit facility.



On August 1, 2003, Molecular BioProducts, which is part of the Companys research group, acquired Porex Bio Products, Inc., a manufacturer of
injection-molded, plastic consumable products, including pipete tips, used in life-science, clinical, research, and pharmaceutical applications. In July 2003, subsidiaries within the Companys clinical group acquired the PathoDx® line of immunoflourescent and latex agglutination
diagnostic assays from Diagnostic Products Corporation, and a portion of the glassware consumables business conducted by Meteor Glass Corporation. The acquisitions were not considered individually significant.



13.  Segment Information



During the second quarter of fiscal 2003, we realigned our lines of business
for financial reporting purposes. Our three former business segments (clinical diagnostics, labware and life sciences, and laboratory equipment) have been reclassified into two business segments: clinical group and research group. The clinical group
business segment is the former clinical diagnostics business segment. The research group business segment is composed of the former labware and life sciences and laboratory equipment business segments.



The Companys operating subsidiaries are engaged primarily in the
manufacture and sale of laboratory products in the United States and other countries. A description of the business segments follows.



Clinical Group



Our clinical group manufactures and sells products primarily to clinical and commercial laboratories and to scientific research and industrial customers.
These products are used in a number of diagnostic applications, including specimen collection, specimen transportation, drug testing, therapeutic drug monitoring, infectious disease detection, and glucose tolerance testing. Other applications
include anatomical pathology (histology and cytology) and immunohistochemistry, with an emphasis on cancer applications. Clinical group products include:



| |  |  | microscope slides, cover glass, and glass tubes and vials;
| | - |  | ----------------------------------------------------------



| |  |  | stains and reagents;
| | - |  | --------------------



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



13.  Segment Information (Continued)



| |  |  | histology and immunochemistry instrumentation;
| | - |  | ----------------------------------------------



| |  |  | diagnostic test kits;
| | - |  | ---------------------



| |  |  | sample vials used in diagnostic testing;
| | - |  | ----------------------------------------



| |  |  | culture media;
| | - |  | --------------



| |  |  | diagnostic reagents; and
| | - |  | ------------------------



| |  |  | other products used in detecting causes of various infectious diseases, conditions, and therapeutic drugs or drugs of abuse.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



Research Group



Our research group manufactures, distributes, and sells products primarily
to the research and clinical life sciences industries. Applications of these products include general everyday laboratory uses as well as genomics, proteomics, high-throughput screening for drug discovery, combinatorial chemistry, cell culture,
filtration, and liquid handling. In addition, this segment manufactures, distributes, and sells basic laboratory equipment used by medical, pharmaceutical, and scientific laboratories. Research group products include:



| |  |  | reusable plastic and glass products (e.g., bottles, carboys, graduated ware, beakers, flasks, and plastic bottles for consumer use);
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | disposable plastic and glass products;
| | - |  | --------------------------------------



| |  |  | products for critical packaging applications;
| | - |  | ---------------------------------------------



| |  |  | environmental and safety containers;
| | - |  | ------------------------------------



| |  |  | liquid handling automation products;
| | - |  | ------------------------------------



| |  |  | autosampler vials and seals used in chromatography analysis;
| | - |  | ------------------------------------------------------------



| |  |  | various consumable products for use in applications of cell culture, filtration, molecular biology, cryopreservation, immunology, electrophoresis, liquid handling, genomics, and
high-throughput screening for pharmaceutical drug discovery; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | heating, cooling, shaking, stirring, mixing, and temperature control instruments.
| | - |  | ---------------------------------------------------------------------------------



The costs of some corporate functions are allocated to the business segments at predetermined rates that approximate cost.
Information on these business segments is summarized as follows (unaudited):



|                                   |  | ClinicalGroup |           | ResearchGroup |   | Eliminations |  |   | Total 
|---------------------------------- |  | ------------- | --------- | ------------- | - | ------------ |  | - | ------
|Three Months Ended June 30, 2003   |  |               |           |               |   |              |  |   |       
|Revenues:                          |  |               |           |               |   |              |  |   |       
|External customer                  |  | $             | 127,818   |               | $ | 150,660      |  | $ |      
|Intersegment                       |  |               | 2,685     |               |   | 160          |  |   | (2,845
|                                   |  |               |           |               |   |              |  |   |       
|Total revenues                     |  |               | 130,503   |               |   | 150,820      |  |   | (2,845
|Gross profit                       |  |               | 61,319    |               |   | 72,365       |  |   |      
|Selling general and administrative |  |               | 28,857    |               |   | 41,541       |  |   |      
|Operating income                   |  |               | 32,462    |               |   | 30,824       |  |   |      
|Segment assets                     |  |               | 1,016,924 |               |   | 1,073,029    |  |   |      



15



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



13.  Segment Information (Continued)



|                                   |  | ClinicalGroup |         | ResearchGroup |   | Eliminations |  |   | Total 
|---------------------------------- |  | ------------- | ------- | ------------- | - | ------------ |  | - | ------
|                                   |  |               |         |              
|Three Months Ended June 30, 2002   |  |               |         |               |   |              |  |   |       
|Revenues:                          |  |               |         |               |   |              |  |   |       
|External customer                  |  | $             | 122,754 |               | $ | 144,438      |  | $ |      
|Intersegment                       |  |               | 1,801   |               |   | 50           |  |   | (1,851
|                                   |  |               |         |               |   |              |  |   |       
|Total revenues                     |  |               | 124,555 |               |   | 144,488      |  |   | (1,851
|Gross profit                       |  |               | 58,318  |               |   | 72,130       |  |   |      
|Selling general and administrative |  |               | 26,544  |               |   | 40,111       |  |   |      
|Operating income                   |  |               | 31,774  |               |   | 32,019       |  |   |      
|                                   |  |               |         |              
|Nine Months Ended June 30, 2003    |  |               |         |               |   |              |  |   |       
|Revenues:                          |  |               |         |               |   |              |  |   |       
|External customer                  |  | $             | 379,747 |               | $ | 433,167      |  | $ |      
|Intersegment                       |  |               | 7,795   |               |   | 442          |  |   | (8,237
|                                   |  |               |         |               |   |              |  |   |       
|Total revenues                     |  |               | 387,542 |               |   | 433,609      |  |   | (8,237
|Gross profit                       |  |               | 179,186 |               |   | 210,568      |  |   |      
|Selling general and administrative |  |               | 87,145  |               |   | 123,525      |  |   |      
|Operating income                   |  |               | 92,041  |               |   | 87,043       |  |   |      
|                                   |  |               |         |              
|Nine Months Ended June 30, 2002    |  |               |         |               |   |              |  |   |       
|Revenues:                          |  |               |         |               |   |              |  |   |       
|External customer                  |  | $             | 351,137 |               | $ | 405,117      |  | $ |      
|Intersegment                       |  |               | 4,733   |               |   | 466          |  |   | (5,199
|                                   |  |               |         |               |   |              |  |   |       
|Total revenues                     |  |               | 355,870 |               |   | 405,583      |  |   | (5,199
|Gross profit                       |  |               | 168,553 |               |   | 200,838      |  |   |      
|Selling general and administrative |  |               | 78,522  |               |   | 111,669      |  |   |      
|Operating income                   |  |               | 90,031  |               |   | 89,169       |  |   |      



14.  Condensed
Consolidating Financial Statements



The Companys
material U.S. subsidiaries are guarantors for its revolving credit facility, 8% senior notes, and the 61/2%
senior subordinated notes. Each of the subsidiary guarantors is 100% owned by the Company. The guarantees are full and unconditional as well as joint and several.



Below are the condensed consolidating balance sheets as of June 30, 2003 and September 30, 2002, statements of operations
for the three and nine months ended June 30, 2003 and 2002, and statements of cash flows for the nine months ended June 30, 2003 and 2002, of the Company and its subsidiaries, reflecting the subsidiary guarantors for the revolving credit facility,
8% senior notes, and 61/2% senior subordinated notes. For guarantors acquired during the period, the results of
operations are included from the date of acquisition.



Certain general corporate expenses have not been allocated to the subsidiaries, and are included under the Apogent Technologies heading. As a matter of course, the Company retains certain assets and liabilities at the corporate level that
are not allocated to the subsidiaries including, but not limited to, certain employee benefit, insurance, and tax liabilities. Income tax provisions for the subsidiaries are typically recorded using an estimate and finalized in total with an
adjustment recorded at the corporate level. Certain debt under which Apogent is listed as the debtor has been allocated to the Guarantor subsidiaries. Intercompany balances include receivables/payables incurred in the normal course of business in
addition to investments and loans transacted between subsidiaries or with Apogent.



16



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



Condensed Consolidating Balance Sheets



|                                                      |  | As of June 30, 2003 |          
|----------------------------------------------------- |  | ------------------- | ---------
|                                                      |  | ApogentTechnologies |          
|Assets                                                |  |                     |          
|Current assets:                                       |  |                     |          
|Cash and cash equivalents                             |  | $                   | 82,119   
|Accounts receivable, net                              |  |                     |         
|Inventories, net                                      |  |                     | 1,263    
|Other current assets                                  |  |                     | 66,060   
|                                                      |  |                     |          
|Total current assets                                  |  |                     | 149,442  
|Property, plant and equipment, net                    |  |                     | 12,020   
|Intangible assets, net                                |  |                     | 18,357   
|Investment in subsidiaries                            |  |                     | 2,032,725
|Other assets                                          |  |                     | 71,546   
|                                                      |  |                     |          
|Total assets                                          |  | $                   | 2,284,090
|                                                      |  |                     |          
|Liabilities and Shareholders Equity                  |  |                     |          
|Current liabilities:                                  |  |                     |          
|Accounts payable                                      |  | $                   | 801      
|Short-term debt and current portion of long-term debt |  |                     |         
|Income taxes payable                                  |  |                     | (19,662  
|Accrued expenses and other current liabilities        |  |                     | 22,345   
|                                                      |  |                     |          
|Total current liabilities                             |  |                     | 3,484    
|                                                      |  |                     |          
|Long-term debt, less current portion                  |  |                     |         
|Securities lending agreement                          |  |                     | 62,727   
|Deferred income taxes                                 |  |                     | 121,885  
|Other liabilities                                     |  |                     | 13,547   
|Net intercompany payable/(receivable)                 |  |                     | 983,240  
|Commitments and contingent liabilities                |  |                     |         
|Shareholders equity                                  |  |                     |          
|Preferred stock                                       |  |                     |         
|Common stock                                          |  |                     | 1,070    
|Equity rights                                         |  |                     |         
|Additional paid-in-capital                            |  |                     | 250,119  
|Retained earnings (deficit)                           |  |                     | 1,020,706
|Accumulated other comprehensive income (loss)         |  |                     | (7,160   
|Treasury stock (at cost)                              |  |                     | (165,528 
|                                                      |  |                     |          
|Total shareholders equity                            |  |                     | 1,099,207
|                                                      |  |                     |          
|Total liabilities and shareholders equity            |  | $                   | 2,284,090
|                                                      |  |                     |          



17



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



Condensed Consolidating Balance SheetsContinued



|                                                      |  | As of September 30, 2002 |          
|----------------------------------------------------- |  | ------------------------ | ---------
|                                                      |  | Apogent Technologies     |          
|Assets                                                |  |                          |          
|Current assets:                                       |  |                          |          
|Cash and cash equivalents                             |  | $                        | 19,889   
|Accounts receivable, net                              |  |                          |         
|Inventories, net                                      |  |                          | 1,263    
|Other current assets                                  |  |                          | 20,703   
|                                                      |  |                          |          
|Total current assets                                  |  |                          | 41,855   
|Property, plant and equipment, net                    |  |                          | 12,592   
|Intangible assets, net                                |  |                          | 12,025   
|Investment in subsidiaries                            |  |                          | 2,090,958
|Other assets                                          |  |                          | 64,018   
|                                                      |  |                          |          
|Total assets                                          |  | $                        | 2,221,448
|                                                      |  |                          |          
|Liabilities and Shareholders Equity                  |  |                          |          
|Current liabilities:                                  |  |                          |          
|Accounts payable                                      |  | $                        | 316      
|Short-term debt and current portion of long-term debt |  |                          |         
|Income taxes payable                                  |  |                          | 45,102   
|Accrued expenses and other current liabilities        |  |                          | 32,603   
|                                                      |  |                          |          
|Total current liabilities                             |  |                          | 78,021   
|                                                      |  |                          |          
|Long-term debt, less current portion                  |  |                          |         
|Securities lending agreement                          |  |                          | 60,183   
|Deferred income taxes                                 |  |                          | 116,568  
|Other liabilities                                     |  |                          | 12,525   
|Net intercompany payable/(receivable)                 |  |                          | 748,402  
|Commitments and contingent liabilities                |  |                          |         
|Shareholders equity                                  |  |                          |          
|Preferred stock                                       |  |                          |         
|Common stock                                          |  |                          | 1,070    
|Equity rights                                         |  |                          |         
|Additional paid-in-capital                            |  |                          | 251,210  
|Retained earnings (deficit)                           |  |                          | 991,114  
|Accumulated other comprehensive income (loss)         |  |                          | (17,659  
|Treasury stock (at cost)                              |  |                          | (19,986  
|                                                      |  |                          |          
|Total shareholders equity                            |  |                          | 1,205,749
|                                                      |  |                          |          
|Total liabilities and shareholders equity            |  | $                        | 2,221,448
|                                                      |  |                          |          



18



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



Condensed Consolidating Statements of Operations



|                                                       |  | For the Three Months Ended June 30, 2003 |        
|------------------------------------------------------ |  | ---------------------------------------- | -------
|                                                       |  | Apogent Technologies                     |        
|Net sales                                              |  | $                                        |       
|Cost of sales                                          |  |                                          |       
|                                                       |  |                                          |        
|Gross profit                                           |  |                                          |       
|Selling, general and administrative expenses           |  |                                          | 7,010  
|                                                       |  |                                          |        
|Operating income                                       |  |                                          | (7,010 
|Other income (expense):                                |  |                                          |        
|Interest expense                                       |  |                                          |       
|Other, net                                             |  |                                          |       
|                                                       |  |                                          |        
|Income before income taxes and discontinued operations |  |                                          | (7,010 
|Income taxes                                           |  |                                          | (5,710 
|                                                       |  |                                          |        
|Income from continuing operations                      |  |                                          | (1,300 
|Income from discontinued operations, net of tax        |  |                                          |       
|                                                       |  |                                          |        
|Net income (loss)                                      |  | $                                        | (1,300 
|                                                       |  |                                          |        
|                                                       | 
|                                                       |  | For the Nine Months Ended June 30, 2003  |        
|                                                       |  | Apogent Technologies                     |        
|Net sales                                              |  | $                                        |       
|Cost of sales                                          |  |                                          |       
|                                                       |  |                                          |        
|Gross profit                                           |  |                                          |       
|Selling, general and administrative expenses           |  |                                          | 23,334 
|                                                       |  |                                          |        
|Operating income                                       |  |                                          | (23,334
|Other income (expense):                                |  |                                          |        
|Interest expense                                       |  |                                          |       
|Other, net                                             |  |                                          |       
|                                                       |  |                                          |        
|Income before income taxes and discontinued operations |  |                                          | (23,334
|Income taxes                                           |  |                                          | (12,219
|                                                       |  |                                          |        
|Income from continuing operations                      |  |                                          | (11,115
|Loss from discontinued operations, net of tax          |  |                                          |       
|                                                       |  |                                          |        
|Net income (loss)                                      |  | $                                        | (11,115
|                                                       |  |                                          |        



19



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



Condensed Consolidating Statements of OperationsContinued



|                                                       |  | For the Three Months Ended June 30, 2002 |        
|------------------------------------------------------ |  | ---------------------------------------- | -------
|                                                       |  | Apogent Technologies                     |        
|Net sales                                              |  | $                                        |       
|Cost of sales                                          |  |                                          |       
|                                                       |  |                                          |        
|Gross profit                                           |  |                                          |       
|Selling, general and administrative expenses           |  |                                          | 6,580  
|                                                       |  |                                          |        
|Operating income                                       |  |                                          | (6,580 
|Other income (expense):                                |  |                                          |        
|Interest expense                                       |  |                                          |       
|Other, net                                             |  |                                          | (2     
|                                                       |  |                                          |        
|Income before income taxes and discontinued operations |  |                                          | (6,582 
|Income taxes                                           |  |                                          | (5,014 
|                                                       |  |                                          |        
|Income from continuing operations                      |  |                                          | (1,568 
|Income (loss) from discontinued operations, net of tax |  |                                          |       
|                                                       |  |                                          |        
|Net income (loss)                                      |  | $                                        | (1,568 
|                                                       |  |                                          |        
|                                                       | 
|                                                       |  | For the Nine Months Ended June 30, 2002  |        
|                                                       |  | Apogent Technologies                     |        
|Net sales                                              |  | $                                        |       
|Cost of sales                                          |  |                                          |       
|                                                       |  |                                          |        
|Gross profit                                           |  |                                          |       
|Selling, general and administrative expenses           |  |                                          | 21,521 
|                                                       |  |                                          |        
|Operating income                                       |  |                                          | (21,521
|Other income (expense):                                |  |                                          |        
|Interest expense                                       |  |                                          |       
|Other, net                                             |  |                                          | (3     
|                                                       |  |                                          |        
|Income before income taxes and discontinued operations |  |                                          | (21,524
|Income taxes                                           |  |                                          | (10,944
|                                                       |  |                                          |        
|Income from continuing operations                      |  |                                          | (10,580
|Loss from discontinued operations, net of tax          |  |                                          |       
|                                                       |  |                                          |        
|Net income (loss)                                      |  | $                                        | (10,580
|                                                       |  |                                          |        



20



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



Condensed Consolidating Statements of Cash Flows



|                                                                       |  | For the Nine Months Ended June 30, 2003 |         
|---------------------------------------------------------------------- |  | --------------------------------------- | --------
|                                                                       |  | Apogent Technologies                    |         
|Cash flows provided by (used in) operating activities:                 |  | $                                       | 217,536 
|                                                                       |  |                                         |         
|Cash flows from investing activities:                                  |  |                                         |         
|Capital expenditures                                                   |  |                                         | (1,092  
|Proceeds from sales of property, plant and equipment                   |  |                                         |        
|Net payments for businesses acquired                                   |  |                                         |        
|Other investing activities                                             |  |                                         |        
|                                                                       |  |                                         |         
|Net cash used in investing activities                                  |  |                                         | (1,092  
|                                                                       |  |                                         |         
|Cash flows from financing activities:                                  |  |                                         |         
|Proceeds from long-term debt                                           |  |                                         |        
|Principal payments on long-term debt                                   |  |                                         |        
|Proceeds from the exercise of stock options and stock purchase program |  |                                         | 3,470   
|Purchase of treasury stock                                             |  |                                         | (151,098
|Other                                                                  |  |                                         | (6,658  
|                                                                       |  |                                         |         
|Net cash provided by (used in) financing activities                    |  |                                         | (154,286
|Effect of exchange rate on cash and cash equivalents                   |  |                                         |        
|                                                                       |  |                                         |         
|Net increase in cash and cash equivalents                              |  |                                         | 62,158  
|Cash and cash equivalents at beginning of year                         |  |                                         | 19,889  
|                                                                       |  |                                         |         
|Cash and cash equivalents at end of year                               |  | $                                       | 82,047  
|                                                                       |  |                                         |         
|Supplemental disclosures of cash flow information                      |  |                                         |         
|Cash paid during the year for:                                         |  |                                         |         
|Interest                                                               |  | $                                       |        
|                                                                       |  |                                         |         
|Income taxes                                                           |  | $                                       | 31,390  
|                                                                       |  |                                         |         
|Capital lease obligations incurred                                     |  | $                                       |        
|                                                                       |  |                                         |         



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(In thousands, except per share data, or when specified in millions)



Condensed Consolidating Statements of Cash FlowsContinued



|                                                     | 
|---------------------------------------------------- | 
|                                                     | 
|                                                     | 
|Cash flows provided by operating activities:         | 
|                                                     | 
|Cash flows from investing activities:                | 
|Capital expenditures                                 | 
|Proceeds from sales of property, plant and equipment | 
|Net payments for businesses acquired                 | 
|                                                     | 
|Net cash used in investing activities                | 
|                                                     | 
|Cash flows from financing activities:                | 
|Proceeds from long-term debt                         | 
|Principal payments on long-term debt                 | 
|Proceeds from the exercise of stock options          | 
|Other                                                | 
|                                                     | 
|Net cash provided by (used in) financing activities  | 
|Effect of exchange rate on cash and cash equivalents | 
|                                                     | 
|Net increase (decrease) in cash and cash equivalents | 
|Cash and cash equivalents at beginning of year       | 
|                                                     | 
|Cash and cash equivalents at end of year             | 
|                                                     | 
|Supplemental disclosures of cash flow information    | 
|Cash paid during the year for:                       | 
|Interest                                             | 
|                                                     | 
|Income taxes                                         | 
|                                                     | 
|Capital lease obligations incurred                   | 
|                                                     | 



A majority of the
Companys material U.S. subsidiaries are guarantors for its CODES. However, certain newly established subsidiaries are guarantors under the revolving credit facility, 8% senior notes, and the 61/2% senior subordinated notes but are currently not guarantors under the CODES. This variation in guarantors may continue intermittently while our resale
registration statement for the CODES remains effective with the Securities and Exchange Commission. Each of the subsidiary guarantors is 100% owned by the Company. The guarantees are full and unconditional as well as joint and several.



22



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##### Table of Contents

Below is the condensed consolidating balance sheet as of June 30, 2003 reflecting the subsidiary
guarantors for the CODES. The newly established subsidiaries referred to in the prior paragraph have no operations and therefore no impact on the statements of operations and cash flows for any period. The condensed consolidating balance sheet as of
September 30, 2002 has not been presented because the newly established subsidiaries did not exist on that date.



Certain general corporate expenses have not been allocated to the subsidiaries, and are included under the Apogent Technologies heading. As a matter of
course, the Company retains certain assets and liabilities at the corporate level that are not allocated to the subsidiaries including, but not limited to, certain employee benefit, insurance, and tax liabilities. Income tax provisions for the
subsidiaries are typically recorded using an estimate and finalized in total with an adjustment recorded at the corporate level. Certain debt under which Apogent is listed as the debtor has been allocated to the guarantor subsidiaries. Intercompany
balances include receivables/payables incurred in the normal course of business in addition to investments and loans transacted between subsidiaries or with Apogent.



|                                                      |  | As of June 30, 2003 |          
|----------------------------------------------------- |  | ------------------- | ---------
|                                                      |  | ApogentTechnologies |          
|Assets                                                |  |                     |          
|Current assets:                                       |  |                     |          
|Cash and cash equivalents                             |  | $                   | 82,119   
|Accounts receivable, net                              |  |                     |         
|Inventories, net                                      |  |                     | 1,263    
|Other current assets                                  |  |                     | 66,060   
|                                                      |  |                     |          
|Total current assets                                  |  |                     | 149,442  
|Property, plant and equipment, net                    |  |                     | 12,020   
|Intangible assets, net                                |  |                     | 18,357   
|Investment in subsidiaries                            |  |                     | 2,241,596
|Other assets                                          |  |                     | 71,546   
|                                                      |  |                     |          
|Total assets                                          |  | $                   | 2,492,961
|                                                      |  |                     |          
|                                                      |  |                     |          
|Liabilities and Shareholders Equity                  |  |                     |          
|Current liabilities:                                  |  |                     |          
|Accounts payable                                      |  | $                   | 801      
|Short-term debt and current portion of long-term debt |  |                     |         
|Income taxes payable                                  |  |                     | (19,662  
|Accrued expenses and other current liabilities        |  |                     | 22,345   
|                                                      |  |                     |          
|Total current liabilities                             |  |                     | 3,484    
|                                                      |  |                     |          
|Long-term debt, less current portion                  |  |                     |         
|Securities lending agreement                          |  |                     | 62,727   
|Deferred income taxes                                 |  |                     | 121,885  
|Other liabilities                                     |  |                     | 13,547   
|Net intercompany payable/(receivable)                 |  |                     | 1,192,111
|Commitments and contingent liabilities                |  |                     |         
|Shareholders equity                                  |  |                     |          
|Preferred stock                                       |  |                     |         
|Common stock                                          |  |                     | 1,070    
|Equity rights                                         |  |                     |         
|Additional paid-in-capital                            |  |                     | 250,119  
|Retained earnings (deficit)                           |  |                     | 1,020,706
|Accumulated other comprehensive income (loss)         |  |                     | (7,160   
|Treasury stock (at cost)                              |  |                     | (165,528 
|                                                      |  |                     |          
|Total shareholders equity                            |  |                     | 1,099,207
|                                                      |  |                     |          
|Total liabilities and shareholders equity            |  | $                   | 2,492,961
|                                                      |  |                     |          



23



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##### Table of Contents

|Item 2: |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- |  | -------------------------------------------------------------------------------------



General



The subsidiaries of Apogent are leading manufacturers of value-added products for the clinical and research markets in the United States and abroad.
During the second quarter of fiscal 2003, we realigned our lines of business for financial reporting purposes. Our three former business segments (clinical diagnostics, labware and life sciences, and laboratory equipment) have been reclassified into
two business segments: clinical group and research group. The clinical group business segment is the former clinical diagnostics business segment. The research group business segment is composed of the former labware and life sciences and laboratory
equipment business segments.



The primary subsidiaries in each
of our business segments are as follows:



|Clinical Group                                     |  | Research Group                                  
|-------------------------------------------------- |  | ------------------------------------------------
|Capitol Vial, Inc.                                 |  | ABgene Inc. f/k/a MarshBio Products, Inc.       
|Chase Scientific Glass, Inc.                       |  | Advanced Biotechnologies Ltd.                   
|Erie Electroverre S.A.                             |  | Barnstead Thermolyne Corporation                
|Erie Scientific Company                            |  | Chromacol Limited                               
|Gerhard Menzel GlasbearbeitungswerkGmbH & Co. K.G. |  | Electrothermal Engineering, Ltd. Genevac Limited
|Lab Vision Corporation                             |  | Lab-Line Instruments, Inc.                      
|Microgenics Corporation                            |  | Matrix Technologies Corporation                 
|Microm International GmbH                          |  | Molecular BioProducts, Inc.                     
|Neomarkers, Inc.                                   |  | Nalge Nunc International Corporation            
|The Naugatuck Glass Company                        |  | Nalge Nunc International K.K.                   
|Remel Inc.                                         |  | National Scientific Company                     
|Richard-Allan Scientific Company                   |  | Nunc A/S                                        
|Samco Scientific Corporation                       |  |                                                 
|Seradyn Inc.                                       |  |                                                 



When we use the terms
we or our in this report, we are referring to Apogent Technologies Inc. and its subsidiaries. Our fiscal year ends on September 30, and, accordingly, all references to quarters refer to our fiscal quarters. The quarters ended
June 30, 2003 and 2002 are the Companys third quarters of fiscal 2003 and 2002, respectively. This Managements Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the
Companys annual report on Form 10-K for the fiscal year ended September 30, 2002 and the Companys current report on Form 8-K filed May 13, 2003 containing restated financial statements.



Results of Operations



Summary



Net sales for the three months ended June 30, 2003 were $278.5 million, an increase of $11.3 million, or 4.2%, from $267.2 million for the same period of
fiscal 2002. The increase in net sales for the three months ended June 30, 2003 was the result of foreign currency fluctuations, increases in price, and to a lesser extent sales of products from acquired companies. Net sales for the nine months
ended June 30, 2003 were $812.9 million, an increase of $56.6 million, or 7.5%, from $756.3 million for the same period of fiscal 2002. The increase in net sales for the nine months ended June 30, 2003 was primarily the result of sales of products
from acquired companies, and to a lesser extent foreign currency fluctuations and net sales of clinical consumable and research consumable products.



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(Continued)



Gross profit for the three months ended June 30, 2003 was $133.7 million, or 48.0% of net sales, as
compared to $130.4 million, or 48.8% of net sales, for the same period of fiscal 2002. Gross profit for the nine months ended June 30, 2003 was $389.8 million, or 47.9% of net sales, as compared to $369.4 million, or 48.8% of net sales, for the same
period of fiscal 2002. The decrease in gross margins is primarily attributable to higher operating costs and product mix.



Selling, general and administrative expenses for the three months ended June 30, 2003 were $70.4 million, as compared to $66.7 million for the same period
of fiscal 2002. Selling, general and administrative expenses for the nine months ended June 30, 2003 were $210.7 million, as compared to $190.2 million for the same period of fiscal 2002. The increases in selling, general and administrative expenses
are primarily related to the costs of relocating our Murex production from a shared facility to a new state-of-the-art manufacturing facility as well as increases in pension and other employee-related expenses and the impact of foreign currency
fluctuations.



Operating income for the three months ended June
30, 2003 was $63.3 million, as compared to $63.8 million for the same period of fiscal 2002. Operating income for the nine months ended June 30, 2003 was $179.1 million, as compared to $179.2 million for the same period of fiscal 2002.



Net income for the three months ended June 30, 2003 was $35.5 million, as
compared to $36.1 million for the same period of fiscal 2002. Net income for the nine months ended June 30, 2003 was $7.9 million, as compared to $85.0 million for the same period of fiscal 2002. The decrease in net income for the nine months ended
June 30, 2003 compared to the same period of fiscal 2002 was primarily due to our write-down on discontinued operations of $87.5 million, as described below.



On March 25, 2003, the Company made the decision to dispose of two of its businesses: the lateral flow rapid diagnostic test business (on-site rapid tests
used in the detection of pregnancy, drugs of abuse, and infectious diseases) as conducted by our Applied Biotech, Inc. subsidiary (together with its wholly-owned subsidiary, Forefront Diagnostic, Inc., ABI); and the manufacture and sale
of automated microarray instrumentation for the genomics market as conducted by our BioRobotics Group Ltd. (BioRobotics) subsidiary. The decision was based in part on the Companys ongoing strategy of strengthening the market
positions of our leading brands and focusing on sales of our consumable laboratory products that have more stable growth expectations. As a result, these businesses no longer met the Companys strategic requirements. During the first nine
months of fiscal 2003, in connection with the discontinuance of these businesses, we incurred a charge of approximately $87.4 million, net of income tax benefit of $22.4 million, related to the write-down of net assets to their estimated fair value
less costs to sell. In July 2003, we entered into an agreement with Inverness Medical Innovations, Inc. (Inverness), whereby Inverness agreed to acquire ABI for 692,506 shares of Inverness common stock and either $13.4 million in cash,
or $5 million in cash and a one-year $8.4 million subordinated promissory note. The transaction is expected to close in August 2003, subject to Inverness first obtaining the consent of its lenders and the satisfaction of other customary closing
conditions. In addition, during the second quarter of fiscal 2003, the Company completed the sale of Vacuum Process Technology, Inc. (VPT), and, as a result, incurred an additional charge of $2.8 million, net of income tax benefit of
$1.6 million. The decision to sell these companies represented a disposal of long-lived assets and disposal group under SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(Continued)



Three Months Ended June 30, 2003 Compared to the Three Months Ended June 30, 2002



Net Sales



|                |  | Three Months EndedJune 30, |         | DollarChange |   | PercentChange | 
|--------------- |  | -------------------------- | ------- | ------------ | - | ------------- | 
|                |  | 2003                       |         | 2002         |   |              
|                |  | (dollars in thousands)     |         |              |  
|Sales           |  |                            |         |              |   |               | 
|Clinical Group  |  | $                          | 127,818 |              | $ | 122,754       | 
|Research Group  |  |                            | 150,660 |              |   | 144,438       | 
|                |  |                            |         |              |   |               | 
|Total Net Sales |  | $                          | 278,478 |              | $ | 267,192       | 
|                |  |                            |         |              |   |               | 



Overall
Company.    Net sales for the three months ended June 30, 2003 were $278.5 million, an increase of $11.3 million or 4.2% over the same period of fiscal 2002.



Clinical Group.    Increased net sales in the clinical group resulted primarily from: (a) price
increases (approximately $3.9million), (b) increased net sales of new products developed by us (approximately $3.3 million), (c) foreign currency fluctuations (approximately $2.6 million), and (d) net sales of products of acquired companies
(approximately $0.6 million). Net sales were partially reduced due to a decrease in net sales of existing products (approximately $5.3 million).



Research Group.    Increased net sales in the research group resulted primarily from: (a) increased net sales of new products
developed by us (approximately $6.9 million), (b) foreign currency fluctuations (approximately $4.3 million), (c) net sales of products of acquired companies (approximately $1.5 million), and (d) price increases (approximately $1.1 million). Net
sales were partially reduced by a decrease in net sales of existing products (approximately $7.6 million).



Gross Profit



|                   |  | Three Months Ended June 30, |         |                 | DollarChange |   | PercentChange |  
|------------------ |  | --------------------------- | ------- | --------------- | ------------ | - | ------------- | -
|                   |  | 2003                        |         | Percentof Sales |              |   | 2002          |  
|                   |  | (dollars in thousands)      |         |                 |             
|Gross Profit       |  |                             |         |                 |              |   |               |  
|Clinical Group     |  | $                           | 61,319  |                 | 48.0         | % |               | $
|Research Group     |  |                             | 72,365  |                 | 48.0         | % |               |  
|                   |  |                             |         |                 |              |   |               |  
|Total Gross Profit |  | $                           | 133,684 |                 | 48.0         | % |               | $
|                   |  |                             |         |                 |              |   |               |  



Overall
Company.    Gross profit for the three months ended June 30, 2003 was $133.7 million, or 48.0% of net sales, as compared to $130.4 million, or 48.8% of net sales for the same period during fiscal 2002.



Clinical Group.    Increased gross profit in the
clinical group resulted primarily from: (a) price increases (approximately $3.9 million), (b) the effects of new products (approximately $1.8 million), (c) foreign currency fluctuations (approximately $1.7 million), (d) the effects of acquired
companies (approximately $1.2 million), and (e) product mix (approximately $0.6 million). Gross profit was partially reduced by: (a) decreases in volume (approximately $3.0 million), (b) increased manufacturing overhead (approximately $2.1 million),
(c) higher inventory write-downs (approximately $1.0 million), and (d) increases in restructuring charges (approximately $0.1 million).



26



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(Continued)



Research Group.    Increased gross profit in the research group resulted
primarily from: (a) the effects of new products (approximately $5.0 million), (b) foreign currency fluctuations (approximately $1.6 million), (c) reductions in manufacturing overhead (approximately $1.2 million), (d) price increases (approximately
$1.1 million), (e) the effects of acquired companies (approximately $0.6 million), (e) decreases in restructuring charges (approximately $0.3 million), and (f) product mix (approximately $0.1 million). Gross profit was partially reduced by: (a)
decreases in volume (approximately $8.5 million) and (b) higher inventory write-downs (approximately $1.2 million).



Selling, General and Administrative Expenses



|                                                   |  | Three Months EndedJune 30, |        | DollarChange |   | PercentChange | 
|-------------------------------------------------- |  | -------------------------- | ------ | ------------ | - | ------------- | 
|                                                   |  | 2003                       |        | 2002         |   |              
|                                                   |  | (dollars in thousands)     |        |              |  
|Selling, General and Administrative Expenses       |  |                            |        |              |   |               | 
|Clinical Group                                     |  | $                          | 28,857 |              | $ | 26,544        | 
|Research Group                                     |  |                            | 41,541 |              |   | 40,111        | 
|                                                   |  |                            |        |              |   |               | 
|Total Selling, General and Administrative Expenses |  | $                          | 70,398 |              | $ | 66,655        | 
|                                                   |  |                            |        |              |   |               | 



Overall
Company.    Selling, general and administrative expenses for the three months ended June 30, 2003 were $70.4 million, an increase of $3.7 million, or 5.6%, over the same period of fiscal 2002.



Clinical Group.    Increased selling, general and
administrative expenses in the clinical group resulted primarily from: (a) foreign currency fluctuations (approximately $0.9 million), (b) sales and marketing expenses (approximately $0.9 million), (c) expenses of acquired businesses (approximately
$0.2 million), (d) research and development expenses (approximately $0.2 million), and (e) general and administrative expenses (approximately $0.1 million).



Research Group.    Increased selling, general and administrative expenses in the research group resulted primarily from: (a)
foreign currency fluctuations (approximately $0.7 million), (b) higher restructuring expenses (approximately $0.6 million), (c) amortization expenses ($0.2 million), (d) expenses of acquired businesses (approximately $0.1 million), and (e) research
and development expenses (approximately $0.1 million). Selling, general and administrative expenses were partially decreased by (a) lower sales and marketing expenses (approximately $0.2 million) and (b) general and administrative expenses
(approximately $0.1 million).



Operating Income



|                       |  | Three Months EndedJune 30, |        | DollarChange |   |        | PercentChange |  
|---------------------- |  | -------------------------- | ------ | ------------ | - | ------ | ------------- | -
|                       |  | 2003                       |        | 2002         |   |       
|                       |  | (dollars in thousands)     |        |              |   |       
|Operating Income       |  |                            |        |              |   |        |               |  
|Clinical Group         |  | $                          | 32,462 |              | $ | 31,774 |               | $
|Research Group         |  |                            | 30,824 |              |   | 32,019 |               |  
|                       |  |                            |        |              |   |        |               |  
|Total Operating Income |  | $                          | 63,286 |              | $ | 63,793 |               | $
|                       |  |                            |        |              |   |        |               |  



Operating income for
the three months ended June 30, 2003 was $63.3 million, a decrease of $0.5 million, or 0.8%, compared to $63.8 million for the same period of fiscal 2002.



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(Continued)



Interest Expense



Interest expense was $11.6 million for the three months ended June 30, 2003, as compared to $10.3 million for the same
period of fiscal 2002. The increase in interest expense is primarily the result of interest paid on the 61/2%
senior subordinated notes issued by the Company in June 2003.



Other Income



Other income was $0.2 million
for the three months ended June 30, 2003, as compared to other income of $1.0 million in the same period of fiscal 2002. This decrease of $0.8 million is primarily due to the reduction of income from an equity investment in a joint venture.



Income Taxes



Taxes on income from continuing operations for the three months ended June
30, 2003 were $15.1 million, a decrease of $4.5 million from the same period of fiscal 2002. The decrease primarily resulted from the utilization of additional foreign tax credits on the Companys prior year tax returns filed this quarter, as
well as the cumulative effect of the decrease in the fiscal 2003 tax rate change to 36.0% from 36.5%.



Income from Continuing Operations



Income from continuing operations for the three months ended June 30, 2003 was $35.7 million, an increase of $1.8 million, or 5.3%, from $33.9 million for
the same period of fiscal 2002.



Discontinued Operations



The loss from the discontinued operations, net of tax,
for the three months ended June 30, 2003 was $0.2 million as compared to income of $2.1 million for the same period of fiscal 2002.



Net Income



Net income for the three months ended June 30, 2003 was $35.5 million, as compared to $36.1 million for the same period of fiscal 2002.



Nine Months Ended June 30, 2003 Compared to the Nine Months Ended June 30, 2002



|                |  | Nine Months EndedJune 30, |         | DollarChange |   | Percent Change | 
|--------------- |  | ------------------------- | ------- | ------------ | - | -------------- | 
|                |  | 2003                      |         | 2002         |   |               
|                |  | (dollars in thousands)    |         |              |  
|Sales           |  |                           |         |              |   |                | 
|Clinical Group  |  | $                         | 379,747 |              | $ | 351,137        | 
|Research Group  |  |                           | 433,167 |              |   | 405,117        | 
|                |  |                           |         |              |   |                | 
|Total Net Sales |  | $                         | 812,914 |              | $ | 756,254        | 
|                |  |                           |         |              |   |                | 



Net Sales



Overall Company.    Net sales
for the nine months ended June 30, 2003 were $812.9 million, an increase of $56.7 million or 7.5% over the same period of fiscal 2002.



28



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(Continued)



Clinical Group.    Increased net sales in the clinical group resulted
primarily from: (a) net sales of products of acquired companies (approximately $13.2 million), (b) foreign currency fluctuations (approximately $6.8 million), (c) increased net sales of new products developed by us (approximately $6.2 million), and
(d) price increases (approximately $0.8 million).



Research
Group.    Increased net sales in the research group resulted primarily from: (a) increased net sales of new products developed by us (approximately $16.3 million), (b) foreign currency fluctuations (approximately $11.3
million), (c) net sales of products of acquired companies (approximately $10.7 million), and (d) price increases (approximately $2.6 million). Net sales were partially reduced by a decrease in net sales of existing products (approximately $12.9
million).



Gross Profit



|                   |  | Nine Months EndedJune 30, |         |                 | DollarChange |   | PercentChange |  
|------------------ |  | ------------------------- | ------- | --------------- | ------------ | - | ------------- | -
|                   |  | 2003                      |         | Percentof Sales |              |   | 2002          |  
|                   |  | (dollars in thousands)    |         |                 |             
|Gross Profit       |  |                           |         |                 |              |   |               |  
|Clinical Group     |  | $                         | 179,186 |                 | 47.2         | % |               | $
|Research Group     |  |                           | 210,568 |                 | 48.6         | % |               |  
|                   |  |                           |         |                 |              |   |               |  
|Total Gross Profit |  | $                         | 389,754 |                 | 47.9         | % |               | $
|                   |  |                           |         |                 |              |   |               |  



Overall
Company.    Gross profit for the nine months ended June 30, 2003 was $389.8 million, or 47.9% of net sales, as compared to $369.4 million, or 48.8% of net sales, for the same period of fiscal 2002.



Clinical Group.    Increased gross profit in the
clinical group resulted primarily from: (a) the effects of acquired companies (approximately $6.7 million), (b) foreign currency fluctuations (approximately $3.3 million), (c) product mix (approximately $2.8 million), (d) the effects of new products
developed by us (approximately $2.7 million), (e) price increases (approximately $0.8 million), and (f) decreases in restructuring charges (approximately $0.2 million). Gross profit was partially reduced by: (a) increased manufacturing overhead
(approximately $3.4 million), (b) decreases in volume (approximately $0.9 million), and (c) higher inventory write-downs (approximately $1.8 million).



Research Group.    Increased gross profit in the research group resulted primarily from: (a) foreign currency fluctuations
(approximately $4.7 million), (b) the effects of new products developed by us (approximately $10.2 million), (c) the effects of acquired companies (approximately $4.3 million), (d) decreases in restructuring charges (approximately $3.1 million), and
(e) price increases (approximately $2.6 million). Gross profit was partially reduced by: (a) decreases in volume (approximately $10.9 million), (b) increased manufacturing overhead (approximately $2.2 million), (c) product mix (approximately $1.3
million), and (d) higher inventory write-downs (approximately $0.8 million).



Selling, General and Administrative Expenses



|                                                   |  | Nine Months EndedJune 30, |         | DollarChange |   | PercentChange | 
|-------------------------------------------------- |  | ------------------------- | ------- | ------------ | - | ------------- | 
|                                                   |  | 2003                      |         | 2002         |   |              
|                                                   |  | (dollars in thousands)    |         |              |  
|Selling, General and Administrative Expenses       |  |                           |         |              |   |               | 
|Clinical Group                                     |  | $                         | 87,145  |              | $ | 78,522        | 
|Research Group                                     |  |                           | 123,525 |              |   | 111,669       | 
|                                                   |  |                           |         |              |   |               | 
|Total Selling, General and Administrative Expenses |  | $                         | 210,670 |              | $ | 190,191       | 
|                                                   |  |                           |         |              |   |               | 



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(Continued)



Overall Company.    Selling, general and administrative expenses for the
nine months ended June 30, 2003 were $210.7 million, an increase of $20.5 million, or 10.8%, over the same period of fiscal 2002.



Clinical Group.    Increased selling, general and administrative expenses in the clinical group resulted primarily from: (a)
expenses of acquired businesses (approximately $2.5 million), (b) foreign currency fluctuations (approximately $2.0 million), (c) sales and marketing expenses (approximately $1.7 million), (d) general and administrative expenses (approximately
$1.6 million), (e) increased amortization expense (approximately $0.9 million), and (f) research and development expenses (approximately $0.5 million). Selling, general and administrative expenses were partially decreased by lower restructuring
expenses (approximately $0.7 million).



Research
Group.    Increased selling, general and administrative expenses in the research group resulted primarily from: (a) foreign currency fluctuations (approximately $3.7 million), (b) expenses of acquired businesses
(approximately $3.3 million), (c) general and administrative expenses (approximately $2.9 million), (d) sales and marketing expenses (approximately $0.9 million), (e) increased amortization expense (approximately $0.5 million), (f) research and
development expenses (approximately $0.4 million), and (g) higher restructuring expenses (approximately $0.1 million).



Operating Income



|                       |  | Nine Months EndedJune 30, |         | DollarChange |   |         | PercentChange |  
|---------------------- |  | ------------------------- | ------- | ------------ | - | ------- | ------------- | -
|                       |  | 2003                      |         | 2002         |   |        
|                       |  | (dollars in thousands)    |         |              |   |        
|Operating Income       |  |                           |         |              |   |         |               |  
|Clinical Group         |  | $                         | 92,041  |              | $ | 90,031  |               | $
|Research Group         |  |                           | 87,043  |              |   | 89,169  |               |  
|                       |  |                           |         |              |   |         |               |  
|Total Operating Income |  | $                         | 179,084 |              | $ | 179,200 |               | $
|                       |  |                           |         |              |   |         |               |  



Operating income for
the nine months ended June 30, 2003 was $179.1 million, a decrease of $0.1 million, or 0.1%, compared to $179.2 million for the same period of fiscal 2002.



Interest Expense



Interest expense was $32.4 million for the nine months ended June 30, 2003, as compared to $30.9 million for the same period of fiscal 2002. The increase
in interest expense is primarily the result of interest paid on the 61/2% senior subordinated notes issued by
the Company in June 2003.



Other Income



Other income was $0.9 million for the nine months ended
June 30, 2003, as compared to other income of $3.3 million in the same period of fiscal 2002. This decrease of $2.4 million is primarily due to the reduction of income from an equity investment in a joint venture.



Income Taxes



Taxes on income from continuing operations for the nine months ended June
30, 2003 were $49.4 million, a decrease of $5.1 million from the same period of fiscal 2002. The decrease primarily resulted from the utilization of additional foreign tax credits on the Companys prior year tax returns filed this quarter, as
well as the cumulative effect of the decrease in the fiscal 2003 tax rate change to 36.0% from 36.5% and, to a lesser extent, decrease in taxable income.



30



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(Continued)



Income from Continuing Operations



Income from continuing operations for the nine months ended June 30, 2003
was $95.4 million, an increase of $1.0 million, or 1.1%, from $94.4 million for the same period of fiscal 2002.



Discontinued Operations



The loss from discontinued operations, net of tax, for the nine months ended June 30, 2003 was $87.5 million as compared to a loss of $9.4 million for the
same period of fiscal 2002. The loss from discontinued operations consisted of an $87.4 million write-down of net assets to their estimated fair value less costs to sell related to the discontinuance of ABI and BioRobotics and a $2.8 million
additional charge related to the disposal of VPT. These amounts were offset by $2.6 million of income from the operations of discontinued businesses.



Net Income



Net income for the nine months ended June 30, 2003 was $7.9 million, as compared to $85.0 million for the same period of fiscal 2002.



Liquidity and Capital Resources



Our capital requirements arise principally from indebtedness incurred in
connection with our working capital needs, primarily related to inventory and accounts receivable, our capital expenditures, primarily related to purchases of machinery and molds, our stock repurchase program, the purchase of various businesses and
product lines in execution of our acquisition strategy, the periodic expansion and/or acquisition of physical facilities, and our obligation to pay rent under the sale/leaseback facility.



Net cash provided by operating activities was $115.4 million for the nine months ended June 30, 2003 as compared to $118.8
million for the same period in fiscal 2002. The cash outflow resulting from the net change in working capital, net of the effects of acquisitions and divestitures, was $36.8 million for the first nine months of fiscal 2003. This cash outflow was
primarily the result of increases in inventories ($12.1 million), and prepaid expenses and other current assets ($3.4 million) and decreases in accounts payable ($6.9 million), income taxes payable ($6.6 million), accrued payroll and employee
benefits ($1.4 million), accrued interest ($7.3 million), the restructuring reserve ($0.3 million), and net changes in other assets and liabilities ($5.0 million). The cash outflows were partially offset by decreases in accounts receivable ($3.3
million) and an increase in other current liabilities ($2.8 million).



Net cash used in investing activities was $56.6 million for the nine months ended June 30, 2003, as compared to $172.4 million for the same period in fiscal 2002. Net cash used in investing activities for the nine months ended June 30, 2003
primarily reflects the net payment for businesses acquired of $21.7 million, capital expenditures of $37.7 million, and earnings of $1.5 million from an equity investment in a joint venture. Net cash used in investing activities for the nine months
ended June 30, 2002 primarily reflects payment for businesses acquired of $142.1 million and capital expenditures of $31.4 million. Apogent has no current material commitments but does expect to incur approximately $60.0 million for capital
expenditures during the next twelve months.



Net cash used in
financing activities was $2.9 million for the nine months ended June 30, 2003, as compared to cash provided by financing activities of $74.5 million for the same period in fiscal 2002. The net cash used in



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(Continued)



financing activities for the nine months ended June 30, 2003 primarily resulted from $226.3 million in treasury stock purchases and the repayment of $23.4
million of sellers notes, partially offset by $250 million in gross proceeds received on the issuance of 61/2% senior subordinated notes. In fiscal 2003, financing fees were paid in connection with the issuance of the 61/2% senior subordinated notes and the amendment of our revolving credit facility. The net cash provided by financing activities for the nine months ended June 30, 2002 was primarily related to gross proceeds from our CODES offering of
$300.0 million (see below) and revolving credit facility of $285.2 million. These amounts were partially offset by payments made on the revolving credit facility of $465.3 million. Financing fees of $8.0 million were paid in connection with the
CODES offering.



On April 4, 2001, we issued
$325.0 million of unsecured 8% senior notes in a private placement with registration rights, and in August 2001, we completed a registered exchange of the privately placed notes for similar notes that had been registered with the Securities and
Exchange Commission. The notes were offered at a discount of approximately $1.5 million. They will mature on April 1, 2011. Interest is fixed at an annual rate of 8% and is payable on April 1 and October 1 of each year, beginning on October 1, 2001.
The notes are redeemable by us at any time in whole, or from time to time in part, at a price equal to the greater of (i) 100% of the principal amount of the notes to be redeemed or (ii) the sum of the present values of the remaining scheduled
payments of principal and interest thereon (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on a semiannual basis at the applicable Treasury Yield (as defined in the bond agreement) plus 35 basis points,
plus accrued interest to the date of redemption. The notes are guaranteed by the Companys material U.S. subsidiaries, which also guarantee our obligations under our revolving credit facility, the CODES, and the 61/2% senior subordinated notes. The notes and the guarantees rank pari passu in right of payment with all of the
Companys and each subsidiary guarantors existing and future unsecured senior debt and rank senior in right of payment to all of the Companys and each subsidiary guarantors subordinated debt.



On October 10, 2001, the Company issued $300.0 million of senior convertible
contingent debt securities (CODES). The CODES have a fixed interest rate of 2.25% per annum. Interest is payable on April 15 and October 15 of each year. The Company will also pay contingent interest during any six-month period if the average
trading price of the CODES during a specified period of five trading days preceding the relevant six-month period is above specified levels. The CODES will mature on October 15, 2021. The CODES are convertible, subject to certain conditions (based
on specified factors including but not limited to the sale price of the Companys common stock, trading prices of the CODES, maintenance of the Companys credit ratings, and the occurrence of specified corporate transactions, including
certain repurchases by the Company of its common stock), into common stock of the Company, currently at a price of approximately $30.49 per share. The Company may redeem some or all of the CODES on or after October 20, 2004. The holders may require
the Company to purchase all or a portion of the CODES on October 20, 2004 and on October 15, 2006, 2011, and 2016, or, subject to specified exceptions, upon a change of control event. The CODES are guaranteed by the Companys material U.S.
subsidiaries, which also guarantee our obligations under our revolving credit facility, 8% senior notes, and the 61/2% senior subordinated notes.



On June 2,
2003, the Company issued $250 million aggregate principal amount of 6.5% senior subordinated notes due 2013. Interest is fixed at an annual rate of 61/2% and is payable on May 15 and November 15 of each year, beginning on November 15, 2003. We may redeem some or all of the notes at any time on or after May 15, 2008. After May 15, 2008, the notes are
redeemable at 103.250%, 102.167%, 101.083%, and 100.000% of their principal amounts, plus accrued interest and any liquidated damages, if redeemed during the twelve-month period beginning on May 15 of 2008, 2009, 2010, and 2011 and thereafter,
respectively. Prior to May 15, 2006 and subject to satisfaction of specified conditions, we may redeem up to 35% of the aggregate principal amount of the notes with the net cash proceeds of certain equity offerings at a redemption price of 106.5%
plus accrued and unpaid interest and other charges. The holders may require the Company to purchase all or a portion of their notes at 101% upon a change in control event. The notes are the Companys general unsecured obligations and



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(Continued)



guaranteed on a senior subordinated basis by our domestic subsidiaries that have guaranteed, and our subsidiaries that will in the future guarantee,
obligations under our revolving credit facility. The notes and the guarantees rank junior in right of payment to all of the Companys and each subsidiary guarantors existing and future senior debt and rank pari passuin right of
payment with all of the Companys and each subsidiary guarantors senior subordinated debt.



On July 29, 2003, the Company and three of its domestic subsidiaries, as co-borrowers, entered into a new $500 million revolving credit facility that
matures on July 29, 2008, and terminated our former revolving credit facility, as amended, that was scheduled to mature on December 1, 2005. The new revolving credit facility contains essentially the same terms and conditions as our prior credit
facility, as amended. However, unlike the old credit facility, the new credit facility includes subsidiary co-borrowers. The new credit facility also permits us to make restricted payments, including dividends and stock repurchases under our stock
repurchase program, subject to a limit on restricted payments made from and after July 29, 2003 of $200 million plus an amount equal to 50% of the Companys quarterly consolidated net income for the fiscal quarters ending June 30, 2003 and
thereafter. In addition, the new credit facility provides for a $200 million limit on foreign currency loans, compared to the $100 million foreign currency borrowing limit under the old revolving credit facility. The new revolving credit facility
provides for an annual interest rate equal to, at our option, either: (a) ABR (a floating rate-based interest calculation) plus 0% to 0.625% (the Revolving Loan ABR Margin), or (b) the Eurodollar Rates plus 0.625% to 1.625% (the
Revolving Eurodollar Rate Margin). We also pay a facility fee of 0.125% to 0.375% for all commitments from the lenders, whether drawn or undrawn, and a utilization fee of 0.25% per annum if more than 50% of the facility is drawn. The
rate applicable with regard to each of the Revolving Loan ABR Margin, the Revolving Loan Eurodollar Margin, and the facility fee depend upon our senior, unsecured long-term credit rating from S&P and Moodys. Based upon our current credit
rating, the Revolving Loan ABR Margin, the Revolving Loan Eurodollar Margin, and the facility fee would be 0.25%, 1.25%, and 0.25%, respectively. As noted, our new revolving credit facility also provides for a multi-currency sub-facility providing
up to $200 million in sub-commitments in non-dollar currencies. Terms and conditions on the multi-currency subfacility are to be agreed upon between JPMorgan Chase and the lenders providing funding under such subfacility. We may not exceed a total
of $500 million in dollar and non-dollar commitments under this facility. Our new revolving credit facility also provides for the issuance of letters of credit, for the benefit of the Company or its subsidiaries, as required in the ordinary course
of business as part of the working capital line. The outstanding balance under the old revolving credit facility as of June 30, 2003 was $6.51 million, which was composed entirely of letter of credit obligations. These letters of credit rolled over
and continued under the new revolving credit facility as of July 29, 2003.



The 61/2% senior subordinated notes, CODES, 8% senior notes, and the revolving
credit facility all contain certain cross default provisions. The revolving credit facility includes financial and operating covenants which, if not met, could result in acceleration of payments on outstanding balances. In addition, the 61/2% senior subordinated notes, CODES, 8% senior notes, and/or the revolving credit facility contain covenants which,
among other things, restrict investments, loans, and advances, require that the Company maintain certain financial ratios, require that the Company maintain certain credit ratings, restrict the Companys and its subsidiaries ability to
create or permit liens or to pay dividends or make other restricted payments (as defined), and limit the Companys incurrence of additional indebtedness. The Company is not aware of any violations of these covenants and does not anticipate any
such violations in light of current business conditions.



During our fiscal quarter ended September 30, 2002, we purchased approximately 1 million shares of our common stock on the open market. On May 21, 2003, the Company completed a modified Dutch Auction tender offer to purchase
shares of its common stock by accepting 6,022,952 tendered shares of common stock, representing approximately 5.9% of outstanding shares, at a purchase price of $17.50 per share. The aggregate purchase price of the shares purchased by the Company
through the tender offer, including fees and expenses associated with the tender offer, was approximately $106 million. During our current fiscal year, through June 30, 2003, in addition to the shares we repurchased in the tender offer, we have
purchased approximately



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(Continued)



6.9 million additional shares. The purchase price for these additional purchases during our current fiscal year has totaled approximately $120 million,
or an average of approximately $18.28 per share. Our board of directors has authorized the repurchase of up to 13.4 million additional shares during the period ending October 1, 2005. Shares may be repurchased at times and prices deemed appropriate
to the Company. The Company may use cash generated from operations as well as available credit facilities in order to finance the repurchase of these shares.



On May 2, 2003, we entered into an amendment of our revolving credit facility which allowed us to consummate the tender offer. On July 29, 2003, we
entered into the new $500 million revolving credit facility described above.



We believe that loans under our revolving credit facility, proceeds from the sale of the 61/2% senior subordinated notes, and currently available cash and short term investments, along with cash generated from operations, will be sufficient to meet our working capital needs, as well as our capital expenditures, special
charges, and business development needs.



We may, in the
future, depending on business and market conditions, refinance our debt or replace all or a portion of the cash used to purchase shares with proceeds from the sale of new debt or equity securities or such other financing as we deem appropriate.



Application of Critical Accounting Policies



The preparation of the financial statements contained within this report
requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, management evaluates these
estimates and judgments. Certain of the Companys accounting policies represent a selection among acceptable alternatives under GAAP; however, management believes the policies used best represent the underlying transactions reflected in the
financial statements. The Company believes the following critical accounting policies affect its more significant estimates and judgments used in the preparation of its consolidated financial statements.



The Company recognizes revenue upon shipment of products when persuasive
evidence of a sales arrangement exists, the price to the buyer is fixed and determinable, and collectibility of the sales price is reasonably assured. Large portions of the Companys sales are sold through distributors. Revenues associated with
sales to distributors are also recognized upon shipment of products when all risks and rewards of ownership of the product have passed.



In connection with annual impairment tests for SFAS No. 142, fair market valuations are performed for each of the reporting units. These valuations
require certain assumptions from management regarding future operating performance as well as various industry trends. Fluctuations in these assumptions could have a material impact on the values ascribed to the reporting units and could result in
an indication of impairment. These assumptions include, but are not limited to, estimated future cash flows, estimated sales growth, and weighted average cost of capital for each of the reporting units. In order to make informed assumptions,
management relies on certain public information and statistical and industry information as well as internal forecasts to determine the various assumptions. In the event that industry, general economic, and Company trends change, these assumptions
will change and impact the calculated fair market values.



Through its acquisition program, the Company has accumulated a large number of intangible assets. The allocation of purchase price premiums to intangible assets, tangible assets, and goodwill involves estimates based on fair value
assumptions. Estimated lives assigned to the tangible and intangible assets acquired in a business purchase also involve the use of estimates. These matters that are subject to judgments and estimates are inherently uncertain, and different amounts
could be reported using different methodologies. Management uses its best estimate in determining the appropriate values and estimated lives to reflect in the financial statements,



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AND RESULTS OF OPERATIONS(Continued)



using historical experience, market data, and all other available information. In most instances, the Company uses outside valuation firms to recommend
purchase price allocations and estimated lives after an acquisition is completed.



The Company has three defined benefit pension plans covering a significant number of domestic employees. Accounting for these plans requires the use of actuarial assumptions, including estimates of the expected
long-term rate of return on assets and discount rates. In order to make informed assumptions, management relies on outside actuarial firms as well as public market data and general economic information. If changes in any of these assumptions occur,
they may materially affect certain amounts reported on the Companys balance sheet. In particular, a decrease in the expected long-term rate of return on plan assets could result in an increase in the Companys pension liability and a
charge to equity.



The Company records a valuation allowance to
reduce its deferred tax assets to an amount that management estimates is more likely than not to be realized. While management has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for
the valuation allowance, should management determine that the Company would be able to realize its deferred assets in the future in excess of the net recorded amount, an adjustment to the deferred tax asset would increase income in the period such
determination was made. However, should management determine that it would not be able to realize all or part of the net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such a
determination was made.



Recent Accounting Pronouncements



In January 2003, the FASB issued FASB Interpretation No. 46,
Consolidation of Variable Interest Entities (FIN 46). FIN 46 clarifies situations in which entities will be subject to consolidation. FIN 46 is effective for all variable interest entities created after January 31, 2003. The
Company is evaluating the impact of FIN 46 on its financial position and results of operations.



On May 15, 2003, the Financial Accounting Standards Board issued Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of
Both Liabilities and Equity. The Statement requires issuers to classify as liabilities (or assets in some circumstances) three classes of freestanding financial instruments that embody obligations for the issuer. Generally, the Statement is
effective for financial instruments entered into or modified after May 31, 2003 and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The Company adopted the provisions of the Statement on July 1,
2003. The Company did not enter into any financial instruments within the scope of the Statement during June 2003 and its adoption did not have an impact on any existing financial instruments entered into on or before May 31, 2003.



Off-Balance Sheet Arrangements



The Company holds a minority interest in an unconsolidated joint venture
that is accounted for as an equity investment. The Company owns less than 50% of the underlying joint venture. As of June 30, 2003, the equity investment in this entity, included in Other Assets, was approximately $8.8 million. Net
income from the joint venture for the three and nine months ended June 30, 2003 was approximately $0.5 million and $1.5 million, respectively, and is included in Other Income. The joint venture is limited to the extent it can incur any
debt other than trade payables arising out of its business activities and does not hold any assets other than inventory and trade receivables. As of June 30, 2003, the joint venture did not have any debt other than trade payables arising out of its
business activities.



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(Continued)



Disclosures About Contractual Obligations and Commercial Commitments



In its day-to-day business activities, the Company incurs certain
obligations and commitments to make future payments under contracts such as debt and lease agreements. Maturities of these obligations are set forth in the following table as of June 30, 2003 (in millions):



|Contractual Obligations            |  | Total                 |       |            | Payments Due by Period                    
|---------------------------------- |  | --------------------- | ----- | ---------- | ------------------------------------------
|                                   |  | Less than 1Year       |       | 1  3Years |                                           
|Long-Term Debt                     |  | $                     | 900.4 |            |                                           
|Capital Lease Obligations          |  |                       | 0.5   |            |                                           
|Operating Leases                   |  |                       | 70.1  |            |                                           
|Unconditional Purchase Obligations |  |                       | 15.6  |            |                                           
|Other Long-Term Obligations        |  |                       | None  |            |                                           
|Total Contractual Cash Obligations |  | $                     | 986.6 |            |                                           
|                                   |  |                      
|Other Commercial Commitments       |  | TotalAmountsCommitted |       |            | Amount of Commitment Expiration Per Period
|                                   |  | Less Than1 Year       |       | 1  3Years |                                           
|Lines of Credit                    |  | $                     |      |            |                                           
|Standby Letters of Credit          |  |                       | 6.5   |            |                                           
|Guarantees                         |  |                       | None  | (1)        |                                           
|Standby Repurchase Obligations     |  |                       | None  |            |                                           
|Other Commercial Commitments       |  |                       | None  |            |                                           
|Total Commercial Commitments       |  | $                     | 6.5   |            |                                           

---

|(1) |  | Certain of the Companys domestic subsidiaries are guarantors under the Companys revolving credit facility, 8% senior notes, CODES, and 6.5 % senior subordinated notes.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Cautionary Factors



This report
contains various forward-looking statements concerning our prospects that are based on the current expectations and beliefs of management. We may also make forward-looking statements from time to time in other reports and documents as well as oral
presentations. When used in written documents or oral statements, the words anticipate, believe, continue, estimate, goal, expect, objective, outlook and
similar expressions are intended to identify forward-looking statements. The statements contained herein and such future statements involve or may involve certain assumptions, risks and uncertainties, many of which are beyond our control, that could
cause our actual results and performance to differ materially from what is expected. In addition to the assumptions and other factors referenced specifically in connection with such statements, the following factors could impact our business and
financial prospects and affect our future results of operations and financial condition:



Our ability to service our indebtedness depends on our receipt of funds from our subsidiaries. Restrictions on their ability to loan or distribute funds to us could adversely affect our ability to service our
indebtedness.



We are organized as a holding company, with
all of our net sales generated through our subsidiaries. Consequently, our operating cash flow and ability to service indebtedness depend in part upon the operating cash flow of our subsidiaries, including foreign subsidiaries, and the payment of
funds by them to us in the form of



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AND RESULTS OF OPERATIONS(Continued)



loans, dividends or otherwise. Their ability to pay dividends and make loans, advances and other payments to us depends upon any statutory or other
contractual restrictions that apply, which may include requirements to maintain minimum levels of working capital and other assets.



A significant portion of our revenue is generated from foreign activities; changes in exchange rates and other changes in world events could have an adverse effect on
our business.



We have significant operations outside the
United States. Approximately 22% of our net sales and 6% of our operating cash flow for 2002 were from foreign subsidiaries. We are therefore subject to risks affecting our international operations, including relevant foreign currency exchange
rates, which can affect the cost of our products or the ability to sell our products in foreign markets, and the value in U.S. dollars of sales made in foreign currencies. Our net sales were increased by $2.9 million in 2002 and reduced by $10.1
million in 2001 by the impact of currency fluctuations. Other factors include our ability to obtain effective hedges against fluctuations in currency exchange rates; foreign trade, monetary and fiscal policies; laws, regulations and other activities
of foreign governments, agencies and similar organizations; risks associated with having major manufacturing facilities located in countries that have historically been less stable than the United States in several respects, including fiscal and
political stability; and risks associated with an economic downturn in other countries.



In addition, world events can increase the volatility of the currency markets, and such volatility could affect our financial results. In particular, the September 11, 2001 attacks in New York and Washington, D.C.
disrupted commerce throughout the United States and other parts of the world. The continued threat of similar attacks throughout the world and military action taken and to be taken by the United States and other nations in Iraq and elsewhere, as
well as the threat of military confrontation on the Korean peninsula, may cause significant disruption to commerce throughout the world. In addition, severe acute respiratory syndrome (SARS) has caused disruption in commerce in East Asia and may
cause significant disruption to commerce throughout the world. To the extent that such disruptions further slow the global economy or, more particularly, result in delays or cancellation of purchase orders, our business and results of operations
could be materially and adversely affected. We are unable to predict whether the threat of new epidemics or attacks or the responses thereto will result in any long-term commercial disruptions or if such activities or responses will have a long-term
material adverse effect on our business, results of operations, or financial condition.



The operating and financial restrictions imposed by our debt agreements limit our ability to finance operations and capital needs or engage in other business activities.



Our debt agreements contain covenants that restrict our ability to: incur additional indebtedness (including guarantees);
incur liens; dispose of assets; make some acquisitions; pay dividends and make other restricted payments; issue some types of preferred stock; enter into sale and leaseback transactions; make loans and investments; enter into new lines of business;
enter into some leases; and engage in some transactions with affiliates.



In addition, our credit facilities require us to comply with specified financial covenants including minimum interest coverage ratios, maximum leverage ratios, minimum fixed charge coverage ratios, and minimum net
worth requirements.



Our ability to meet these covenants and
requirements in the future may be affected by events beyond our control, including prevailing economic, financial and industry conditions. Our breach or failure to comply with any of these covenants could result in a default under our debt
agreements.



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(Continued)



Our failure to keep pace with the technological demands of our customers or with the products and services offered
by our competitors could significantly harm our business.



Some of the industries served by our products are characterized by rapid technological changes and new product introductions. Some of our competitors may invest more heavily in research or product development than we do. Successful new
product offerings depend upon a number of factors, including our ability to: accurately anticipate customer needs; innovate and develop new technologies and applications; successfully commercialize new products in a timely manner; price our products
competitively and manufacture and deliver our products in sufficient volumes and on time; and differentiate our offerings from those of our competitors.



If we do not introduce new products in a timely manner and make enhancements to meet the changing needs of our customers, some of our products could
become obsolete over time, in which case our customer relationships, revenue, and operating results would suffer.



Our operating results may suffer if the industries into which we sell our products are in downward cycles.



Some of the industries and markets into which we sell our products are
cyclical. Any further downturn in our customers markets or in general economic conditions could result in reduced demand for our products and could harm our business.



Acquisitions have been an important part of our growth strategy; failure to successfully integrate acquisitions could adversely impact
our results.



A significant portion of our growth over the
past several years has been achieved through our acquisition program. Although we have reduced our emphasis on acquisitions, our ability to grow our business through acquisitions is subject to various factors including the cost of the capital, the
availability of suitable acquisition candidates at reasonable prices, competition for appropriate acquisition candidates, our ability to realize the synergies expected to result from acquisitions, our ability to retain key personnel in connection
with acquisitions, and the ability of our existing personnel to efficiently handle increased transitional responsibilities resulting from acquisitions.



We may incur restructuring or impairment charges that would reduce our earnings.



We have in the past and may in the future restructure some of our operations. In such circumstances, we may take actions
that would result in a charge and reduce our earnings, including as a result of our inability to dispose of discontinued operations or risks associated with discontinued operations. These restructurings have or may be undertaken to realign our
subsidiaries, eliminate duplicative functions, rationalize our operating facilities and products, and reduce our staff. These restructurings may be implemented to improve the operations of recently acquired subsidiaries as well as subsidiaries that
have been part of our operations for many years. For a discussion of our recent restructuring activities, see Note 9 to the Notes to Unaudited Consolidated Financial Statements. Additionally, on October 1, 2001 we adopted SFAS No. 142,
Goodwill and Other Intangible Assets, which requires that goodwill and intangible assets that have an indefinite useful life be tested at least annually for impairment. We carry a very significant amount of goodwill and intangible assets
and SFAS No. 142 requires us to perform an annual assessment for possible impairment.



We rely heavily upon sales to key distributors and original equipment manufacturers, and could lose sales if any of them stop doing business with us.



Our three most significant distributors represent a significant portion of our revenues. For example, sales to Fisher
Scientific, VWR, and Allegiance Corporation accounted for approximately 14%, 11%, and 7% of revenues in fiscal 2002, respectively. Our reliance on major independent distributors for a substantial portion of



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(Continued)



our sales subjects our sales performance to volatility in demand from distributors. We can experience volatility when distributors merge or consolidate, when
inventories are not managed to end-user demand, or when distributors experience softness in their sales. We rely primarily upon the long-standing and mutually beneficial nature of our relationships with our key distributors, rather than on
contractual rights, to protect these relationships. Volatility in end-user demand can also arise with large OEM and private label customers to whom we sell directly, particularly when our customers fail to manage inventories to end-user demand,
discontinue product lines, or switch business to other manufacturers. Sales to our OEM customers are sometimes unpredictable and wide variances sometimes occur quarter to quarter.



We rely heavily on manufacturing operations to produce the products we sell, and we could be injured by disruptions of our manufacturing
operations.



We rely upon our manufacturing operations to
produce most of the products we sell. Any significant disruption of those operations for any reason, such as strikes, labor disputes, or other labor unrest, power interruptions, fire, war, or other force majeure, could adversely affect our sales and
customer relationships and therefore adversely affect our business. In particular, nearly all of the white glass used in our Clinical Groups worldwide manufacturing operations is produced in our glass manufacturing facility in Switzerland.
Disruption in this supply can result from delays encountered in connection with the periodic rebuilding of the sheet glass furnace or furnace malfunctions. Although most of our raw materials are available from a number of potential suppliers, our
operations also depend upon our ability to obtain raw materials at reasonable prices.



The success of many of our products depends on the effectiveness of our patents, trademarks, and licenses to defend our intellectual property rights. If we fail to adequately defend our intellectual property rights, competitors may
produce and market products similar to ours.



Our success
with many of our products depends, in part, on our ability to protect our current and future innovative products and to defend our intellectual property rights. Our subsidiaries products are sold under a variety of trademarks and trade names.
They own or license all of the trademarks and trade names we believe to be material to the operation of their businesses. We also rely upon a combination of non-disclosure and other contractual agreements and trade secret, copyright, patent, and
trademark laws to protect our intellectual property rights. Disputes may arise concerning the ownership of intellectual property or the applicability of confidentiality agreements. If we fail to adequately protect our intellectual property,
competitors may manufacture and market products similar to ours.



We are
subject to risk of product liability and other litigation which could adversely affect our business.



We are subject to the risks of claims involving our products (including those of businesses we no longer own) and other legal and administrative
proceedings, including the expense of investigating, litigating, and settling any claims. Although we currently maintain insurance against some of these risks, uninsured losses, which may be material, could occur.



Our business is subject to regulatory risks, and changes in regulation could adversely
affect our business.



Our ability to continue
manufacturing and selling those of our products that are subject to regulation by the United States Food and Drug Administration or other domestic or foreign governments or agencies is subject to a number of risks. In the future, some of our
products may be affected by the passage of stricter laws or regulations, reclassification of our products into categories subject to more stringent requirements, or the withdrawal of approvals needed to sell one or more of our products.
Additionally, violations of any environmental, health and safety laws or regulations, or the release of toxic or hazardous materials used in our operations into the environment could expose us to significant liability. Similarly, third party
lawsuits relating to environmental and workplace safety issues could result in substantial liability.



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS(Continued)



Demand for and pricing of some of our products are affected by general levels of insurance and reimbursement and
changes in the levels of insurance or reimbursement could affect the demand for such products or the prices we are able to charge.



The demand for and pricing of some of our products can be affected by changing levels of public and private health care budgets, including reimbursement
by private or governmental insurance programs.



We could be harmed by the
loss of key management.



The success of our operations
depends in significant part upon the experience and expertise of our management team, both within Apogent and in our operating subsidiaries. Any loss of these key personnel could harm our business.



Our separation from Sybron Dental Specialties poses a potential tax sharing and
indemnification risk.



In December 2000, we spun off our
dental businesses which are now owned by Sybron Dental Specialties, Inc. (SDS). We and SDS each agreed to indemnify the other with respect to certain indebtedness, liabilities, and obligations, including potential tax liabilities if
future transactions change the tax treatment of the spin-off. Our ability to collect on these indemnities from SDS, if applicable, depends upon the future financial strength of SDS.



Our business is subject to quarterly variations in operating results due to factors outside of our control.



Our business is subject to quarterly variation in operating results caused
by a number of factors, including business and industry conditions, timing of acquisitions, distribution and OEM customer issues, and other factors listed here. All these factors make it difficult to predict operating results for any particular
period.



We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise.



|Item 3: |  | Quantitative and Qualitative Disclosures About Market Risk
|------- |  | ----------------------------------------------------------



We believe that there has been no substantial change in market risk to the Company since September 30, 2002, the end of our prior fiscal year.



|Item 4: |  | Controls and Procedures
|------- |  | -----------------------



Disclosure Controls and Procedures: The Companys management, with the participation of the Companys Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of the Companys disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange
Act)), as of the end of the period covered by this report. Based on such evaluation, the Companys Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Companys disclosure
controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.



Internal Control Over Financial Reporting: The Companys management,
with the participation of the Companys Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of the Companys internal control over financial reporting to determine whether any changes occurred during the
quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting. Based on that evaluation, there has been no such change during the period
covered by this report.



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##### Table of Contents

PART IIOTHER INFORMATION



|Item 1: |  | Legal Proceedings
|------- |  | -----------------



The following report of recent developments in previously reported legal proceedings should be read in conjunction with Item 3, Legal Proceedings, in the
Companys annual report on Form 10-K for the fiscal year ended September 30, 2002.



Applied Biotech, Inc. (ABI), a subsidiary within our clinical group, formerly manufactured and supplied immunoassay pregnancy tests to Warner Lambert Co. (now part of Pfizer Inc.). Warner Lambert sold the
tests to retailers who sell them over-the-counter to consumers. ABI supplied the pregnancy test product to Warner Lambert pursuant to a supply agreement that Warner Lambert claims requires ABI to defend and indemnify Warner Lambert with respect to
any liability arising out of claims that the product infringes any patents held by third parties. On January 8, 1999, Conopco, Inc. d/b/a Unipath Diagnostics Company filed a lawsuit against Warner Lambert in the U.S. District Court for the District
of New Jersey. The Unipath Diagnostics business, along with this lawsuit, were subsequently sold to Inverness Medical Switzerland GmbH (Inverness). In the Conopco litigation and in two other cases, Inverness claimed that the Warner
Lambert pregnancy test supplied by ABI infringes certain patents owned by Inverness. ABI agreed to defend in two of these lawsuits on behalf of Warner Lambert. These cases were settled as to Pfizer/Warner Lambert in July 2003 without payment of
damages.



On October 15, 2002, Armkel, LLC sued Pfizer in the
U.S. District Court for the District of New Jersey for patent infringement with respect to these same pregnancy products. In July 2003, Pfizer filed a lawsuit against ABI to enforce the alleged obligation of ABI to indemnify and defend Pfizer with
regard to the Armkel litigation. Under the ABI sale agreement entered into in July 2003 with and Inverness, the Company agreed to retain liability of ABI for claims arising from the Armkel litigation. The Company does not believe that ABI has an
obligation to defend and indemnify Pfizer with respect to the Armkel lawsuit, and the Company also believes there are meritorious defenses to the patent claims. We believe that the resolution of this lawsuit will not have a material adverse effect
on the Companys results of operations or financial condition.



|Item 2: |  | Changes in Securities and Use of Proceeds
|------- |  | -----------------------------------------



Our 61/2%
senior subordinated notes issued in June 2003, CODES, 8% senior notes, and/or the new revolving credit facility entered into in July 2003 contain covenants which, among other things, restrict our ability to pay dividends. For further information
please see Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources in Item 2 of Part 1 of this report.



|Item 6: |  | Exhibits and Reports on Form 8-K
|------- |  | --------------------------------



(a) Exhibits:



See Exhibit Index following the Signature page in this report, which is incorporated herein by reference.



(b) Reports on Form 8-K:



Apogent filed on April 23, 2003 a Current Report on Form 8-K reporting
public disclosure of second quarter and year-to-date results, the initiation of an issuer tender offer, and a notice pursuant to Rule 135c under the Securities Act of 1933 with respect to a proposed private offering of $250 million of senior
subordinated notes due 2013.



Apogent filed on May 13, 2003 a
Current Report on Form 8-K filing restated financial statements and other financial information and reporting an amendment to the credit facility.



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Apogent filed on May 22, 2003 a Current Report on Form 8-K reporting the pricing of a private placement
of $250 million of senior subordinated notes due 2013.



Apogent
filed on June 3, 2003 a Current Report on Form 8-K reporting the closing of its previously announced private placement of senior subordinated notes.



Apogent filed on July 23, 2003 a Current Report on Form 8-K furnishing the public disclosure of third quarter and year-to-date results.



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##### Table of Contents

SIGNATURE



Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.



|                      |  |  |  | APOGENT TECHNOLOGIES INC.
|--------------------- |  |  |  | -------------------------
|                      |  | 
|                      |  |  |  | (Registrant)             
|                      |  | 
|Date: August 13, 2003 |  |  |  | /s/ DENNIS B. BROWN      
|                      |  |  |  |                          

---

* Executing as both
the principal financial officer and a duly authorized officer of the Company



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##### Table of Contents

APOGENT TECHNOLOGIES INC.

(Commission File No. 1-11091)



EXHIBIT INDEX

to

QUARTERLY REPORT ON FORM 10-Q FOR

THE QUARTERLY PERIOD ENDED JUNE 30, 2003



|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | Incorporated Herein By Reference To                                             |  | Filed or Submitted Herewith
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------- |  | ---------------------------
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|10.1           |  | First Amendment, dated as of May 2, 2003, to Credit Agreement dated as of December 1, 2000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | Exhibit 10.1 to the Registrants Form 10-Q for the quarter ended March 31, 2003 |  |                            
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|10.2           |  | Credit Agreement, dated as of July 29, 2003, among Apogent Technologies Inc., Erie Scientific Company, Nalge Nunc International Corporation, and Remel Inc., each as a Subsidiary
Borrower, the several lenders from time to time parties thereto (the Lenders), Fleet National Bank, as Syndication Agent, JPMorgan Chase Bank, as Administrative Agent for the Lenders, ABN AMRO Bank N.V., Bank of America N.A. and SunTrust
Bank, as Co-Documentation Agents, and J.P. Morgan Securities Inc. and Fleet Securities, Inc., as Joint Lead Arrangers and Joint Bookrunners. |  |                                                                                 |  | X                          
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|10.3           |  | Form of Employment Agreement with the executive officers of the Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |                                                                                 |  | X                          
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|10.4           |  | Schedule of executive officers who are a party to Employment Agreement Filed as Exhibit 10.3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                 |  | X                          
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|10.5           |  | Form of Indemnification Agreement with each of the executive officers and directors of the Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                                                                                 |  | X                          
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|10.6           |  | Schedule of executive officers and directors who are a party to the Indemnification Agreement filed as Exhibit 10.5                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                                                                                 |  | X                          
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|12.1           |  | Computation of Ratio of Earnings to Fixed Charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                                                                                 |  | X                          
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|31.1           |  | Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CEO)                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                                                                                 |  | X                          
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|31.2           |  | Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CFO)                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                                                                                 |  | X                          
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|32.1           |  | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CEO)                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                 |  | X                          
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
|32.2           |  | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CFO)                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                 |  | X                          



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