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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended December 31, 2002



Commission File Number 001-11091



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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)



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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 January 31, 2003, there were 105,199,912 shares of the Registrants Common Stock, par value $0.01 per share, outstanding.



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##### Table of Contents



APOGENT
TECHNOLOGIES INC. AND SUBSIDIARIES

FORM 10-Q

QUARTER ENDED DECEMBER 31, 2002



TABLE OF CONTENTS



|                             |  |                                                                                                         |  | Page
|---------------------------- |  | ------------------------------------------------------------------------------------------------------- |  | ----
|                            
|PART IFINANCIAL INFORMATION |  |                                                                                                        
|                            
|Item 1:                      |  | Financial Statements                                                                                    |  |     
|                            
|                             |  | Consolidated Balance Sheets as of December 31, 2002 (unaudited) and September 30, 2002                  |  | 1   
|                            
|                             |  | Consolidated Statements of Income for the Three Months Ended December 31, 2002 and 2001 (unaudited)     |  | 2   
|                            
|                             |  | Consolidated Statement of Stockholders Equity for the Three Months Ended December 31, 2002 (unaudited) |  | 3   
|                            
|                             |  | Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2002 and 2001 (unaudited) |  | 4   
|                            
|                             |  | Notes to Unaudited Consolidated Financial Statements                                                    |  | 5   
|                            
|Item 2:                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                   |  | 17  
|                            
|                             |  | Cautionary Factors                                                                                      |  | 25  
|                            
|Item 3:                      |  | Quantitative and Qualitative Disclosures About Market Risk                                              |  | 29  
|                            
|Item 4:                      |  | Controls and Procedures                                                                                 |  | 29  
|                            
|PART IIOTHER INFORMATION    |  |                                                                                                        
|                            
|Item 4:                      |  | Submission of Matters to a Vote of Security Holders                                                     |  | 29  
|                            
|Item 5:                      |  | Other Information                                                                                       |  | 30  
|                            
|Item 6:                      |  | Exhibits and Reports on Form 8-K                                                                        |  | 30  
|                            
|                             |  | Signature                                                                                               |  | 30  
|                            
|                             |  | Certifications                                                                                          |  | 31  
|                            
|                             |  | Exhibit Index                                                                                           |  | 33  





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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)



|                                                                                                                                                                                 |  | December 31, 2002 |           |   | September 30, 2002 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | - | ------------------ | -
|                                                                                                                                                                                 |  | (unaudited)       |           |   |                    |  
|Assets                                                                                                                                                                           |  |                   |           |   |                    |  
|Current assets:                                                                                                                                                                  |  |                   |           |   |                    |  
|Cash and cash equivalents                                                                                                                                                        |  | $                 | 15,755    |   |                    | $
|Accounts receivable (less allowance for doubtful accounts of $4,940 and $5,723,
respectively)                                                                                    |  |                   | 170,068   |   |                    |  
|Inventories                                                                                                                                                                      |  |                   | 219,582   |   |                    |  
|Deferred income taxes                                                                                                                                                            |  |                   | 14,127    |   |                    |  
|Prepaid expenses and other current assets                                                                                                                                        |  |                   | 19,502    |   |                    |  
|Assets of Vacuum Process Technology, Inc. (VPT) avail. for
sale                                                                                                                |  |                   | 5,880     |   |                    |  
|                                                                                                                                                                                 |  |                   |           |   |                    |  
|Total current assets                                                                                                                                                             |  |                   | 444,914   |   |                    |  
|Available for sale security                                                                                                                                                      |  |                   | 59,592    |   |                    |  
|Property, plant and equipment, net                                                                                                                                               |  |                   | 272,375   |   |                    |  
|Intangible assets                                                                                                                                                                |  |                   | 1,268,550 |   |                    |  
|Other assets                                                                                                                                                                     |  |                   | 14,155    |   |                    |  
|                                                                                                                                                                                 |  |                   |           |   |                    |  
|Total assets                                                                                                                                                                     |  | $                 | 2,059,586 |   |                    | $
|                                                                                                                                                                                 |  |                   |           |   |                    |  
|                                                                                                                                                                                
|Liabilities and Shareholders'
Equity                                                                                                                                             |  |                   |           |   |                    |  
|Current liabilities:                                                                                                                                                             |  |                   |           |   |                    |  
|Short-term debt and overdrafts                                                                                                                                                   |  | $                 | 13,539    |   |                    | $
|Accounts payable                                                                                                                                                                 |  |                   | 46,566    |   |                    |  
|Current portion of long-term debt                                                                                                                                                |  |                   | 25,348    |   |                    |  
|Income taxes payable                                                                                                                                                             |  |                   | 50,394    |   |                    |  
|Accrued payroll and employee benefits                                                                                                                                            |  |                   | 28,271    |   |                    |  
|Accrued interest expense                                                                                                                                                         |  |                   | 8,187     |   |                    |  
|Restructuring reserve                                                                                                                                                            |  |                   | 886       |   |                    |  
|Other current liabilities                                                                                                                                                        |  |                   | 29,195    |   |                    |  
|Liabilities of Vacuum Process Technology, Inc.                                                                                                                                   |  |                   | 293       |   |                    |  
|                                                                                                                                                                                 |  |                   |           |   |                    |  
|Total current liabilities                                                                                                                                                        |  |                   | 202,679   |   |                    |  
|Long-term debt                                                                                                                                                                   |  |                   | 650,618   |   |                    |  
|Securities lending agreement                                                                                                                                                     |  |                   | 59,592    |   |                    |  
|Deferred income taxes                                                                                                                                                            |  |                   | 134,904   |   |                    |  
|Other liabilities                                                                                                                                                                |  |                   | 17,244    |   |                    |  
|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 106,985,276 and
106,976,877 shares respectively; outstanding 105,139,332 and 105,967,853 shares respectively |  |                   | 1,070     |   |                    |  
|Equity rights, 50 rights at $1.09 per right                                                                                                                                      |  |                   |          |   |                    |  
|Additional paid-in capital                                                                                                                                                       |  |                   | 272,427   |   |                    |  
|Retained earnings                                                                                                                                                                |  |                   | 777,526   |   |                    |  
|Accumulated other comprehensive income (loss)                                                                                                                                    |  |                   | (18,383   | ) |                    |  
|Treasury common stock, 1,845,944 and 1,009,024 shares at cost                                                                                                                    |  |                   | (38,091   | ) |                    |  
|                                                                                                                                                                                 |  |                   |           |   |                    |  
|Total shareholders equity                                                                                                                                                       |  |                   | 994,549   |   |                    |  
|                                                                                                                                                                                 |  |                   |           |   |                    |  
|Total liabilities and shareholders' equity                                                                                                                                       |  | $                 | 2,059,586 |   |                    | $
|                                                                                                                                                                                 |  |                   |           |   |                    |  



See
the accompanying notes to the unaudited consolidated financial statements



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##### Table of Contents



APOGENT
TECHNOLOGIES INC. AND SUBSIDIARIES

Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)



|                                                                                                              |  | Three Months Ended December 31, |        
|------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | -------
|                                                                                                              |  | 2002                            |        
|Net sales                                                                                                     |  | $                               | 266,537
|Cost of sales                                                                                                 |  |                                 | 138,064
|                                                                                                              |  |                                 |        
|Gross profit                                                                                                  |  |                                 | 128,473
|Selling, general and administrative expenses                                                                  |  |                                 | 72,151 
|                                                                                                              |  |                                 |        
|Operating income                                                                                              |  |                                 | 56,322 
|Other income (expense):                                                                                       |  |                                 |        
|Interest expense                                                                                              |  |                                 | (10,399
|Amortization of deferred financing fees                                                                       |  |                                 | (912   
|Other, net                                                                                                    |  |                                 | 497    
|                                                                                                              |  |                                 |        
|Income from continuing operations before income taxes                                                         |  |                                 | 45,508 
|Income taxes                                                                                                  |  |                                 | 16,610 
|                                                                                                              |  |                                 |        
|Income from continuing operations                                                                             |  |                                 | 28,898 
|Discontinued operations (loss from operations of VPT, net of income tax benefit of $89
and $82, respectively) |  |                                 | (163   
|                                                                                                              |  |                                 |        
|Net income                                                                                                    |  | $                               | 28,735 
|                                                                                                              |  |                                 |        
|Basic earnings per common share from continuing operations                                                    |  | $                               | 0.27   
|Discontinued operations                                                                                       |  |                                 |       
|                                                                                                              |  |                                 |        
|Basic earnings per common share                                                                               |  | $                               | 0.27   
|                                                                                                              |  |                                 |        
|Diluted earning per common share from continuing operations                                                   |  | $                               | 0.27   
|Discontinued operations                                                                                       |  |                                 |       
|                                                                                                              |  |                                 |        
|Diluted earnings per common share                                                                             |  | $                               | 0.27   
|                                                                                                              |  |                                 |        
|Weighted average basic shares outstanding                                                                     |  |                                 | 105,719
|Weighted average diluted shares outstanding                                                                   |  |                                 | 107,010



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 Three Months Ended December 31, 2002

(In thousands)

(Unaudited)



|                                                                   |  | Common Stock |       | Equity
      Rights |   | Additional Paid-In Capital |  | Retained Earnings |         | Accumulated Other Comprehensive Income |   |         | Treasury Common Stock |   |         | Total Shareholders' Equity | 
|------------------------------------------------------------------ |  | ------------ | ----- | ------------------- | - | -------------------------- |  | ----------------- | ------- | -------------------------------------- | - | ------- | --------------------- | - | ------- | -------------------------- | 
|Balance at September 30, 2002                                      |  | $            | 1,070 |                     | $ |                           |  | $                 | 271,682 |                                        | $ | 748,791 |                       | $ | (26,419 | )                          | 
|Comprehensive income:                                              |  |              |       |                     |   |                            |  |                   |         |                                        |   |         |                       |   |         |                            | 
|Net income                                                         |  |              |      |                     |   |                           |  |                   |        |                                        |   | 28,735  |                       |   |        |                            | 
|Translation adjustment                                             |  |              |      |                     |   |                           |  |                   |        |                                        |   |        |                       |   | 8,390   |                            | 
|Unrealized loss on security available for sale, net of tax of $203 |  |              |      |                     |   |                           |  |                   |        |                                        |   |        |                       |   | (354    | )                          | 
|                                                                   |  |              |       |                     |   |                            |  |                   |         |                                        |   |         |                       |   |         |                            | 
|Total comprehensive income                                         |  |              |      |                     |   |                           |  |                   |        |                                        |   | 28,735  |                       |   | 8,036   |                            | 
|Treasury shares purchased                                          |  |              |      |                     |   |                           |  |                   |        |                                        |   |        |                       |   |        |                            | 
|Shares issued in connection with stock options                     |  |              |      |                     |   |                           |  |                   | 109     |                                        |   |        |                       |   |        |                            | 
|Tax benefit related to stock options                               |  |              |      |                     |   |                           |  |                   | 636     |                                        |   |        |                       |   |        |                            | 
|                                                                   |  |              |       |                     |   |                            |  |                   |         |                                        |   |         |                       |   |         |                            | 
|Balance at December 31, 2002                                       |  | $            | 1,070 |                     | $ |                           |  | $                 | 272,427 |                                        | $ | 777,526 |                       | $ | (18,383 | )                          | 
|                                                                   |  |              |       |                     |   |                            |  |                   |         |                                        |   |         |                       |   |         |                            | 



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)



|                                                                                 |  | Three Months Ended December 31, |         
|-------------------------------------------------------------------------------- |  | ------------------------------- | --------
|                                                                                 |  | 2002                            |         
|Cash flows from operating activities:                                            |  |                                 |         
|Net income                                                                       |  | $                               | 28,735  
|Adjustments to reconcile net income to net cash provided by operating
activities |  |                                 |         
|Discontinued operations                                                          |  |                                 | 163     
|Depreciation                                                                     |  |                                 | 10,838  
|Amortization                                                                     |  |                                 | 6,014   
|Gain (loss) on sale of property, plant and equipment                             |  |                                 | (36     
|Provision for losses on doubtful accounts                                        |  |                                 | (620    
|Inventory provisions                                                             |  |                                 | 299     
|Changes in assets and liabilities, net of effects of businesses
acquired:        |  |                                 |         
|Decrease in accounts receivable                                                  |  |                                 | 18,864  
|Increase in inventories                                                          |  |                                 | (14,082 
|(Increase) decrease in prepaid expenses and other current assets                 |  |                                 | 296     
|Decrease in accounts payable                                                     |  |                                 | (7,727  
|Increase (decrease) in income taxes payable                                      |  |                                 | (3,181  
|Decrease in accrued payroll and employee benefits                                |  |                                 | (3,888  
|Decrease in accrued interest expense                                             |  |                                 | (8,443  
|Decrease in restructuring reserve                                                |  |                                 | (451    
|Increase (decrease) in other current liabilities                                 |  |                                 | 1,286   
|Net change in other assets and liabilities                                       |  |                                 | (291    
|                                                                                 |  |                                 |         
|Net cash provided by operating activities                                        |  |                                 | 27,776  
|                                                                                 |  |                                 |         
|Cash flows from investing activities:                                            |  |                                 |         
|Capital expenditures                                                             |  |                                 | (10,410 
|Proceeds from sales of property, plant and equipment                             |  |                                 | 254     
|Net payment for businesses acquired                                              |  |                                 | (20,834 
|Other investing activities                                                       |  |                                 | 2,070   
|                                                                                 |  |                                 |         
|Net cash used in investing activities                                            |  |                                 | (28,920 
|                                                                                 |  |                                 |         
|Cash flows from financing activities:                                            |  |                                 |         
|Proceeds from revolving credit facility                                          |  |                                 | 117,800 
|Principal payments on revolving credit facility                                  |  |                                 | (102,100
|Proceeds from long-term debt                                                     |  |                                 |        
|Proceeds from the exercise of stock options                                      |  |                                 | 1,734   
|Purchase of treasury stock                                                       |  |                                 | (19,730 
|Financing fees paid                                                              |  |                                 |        
|Other financing activities                                                       |  |                                 | (1,941  
|                                                                                 |  |                                 |         
|Net cash provided by (used in) financing activities                              |  |                                 | (4,237  
|                                                                                 |  |                                 |         
|Effect of exchange rate changes on cash and cash equivalents                     |  |                                 | 4,809   
|                                                                                 |  |                                 |         
|Net increase (decrease) in cash and cash equivalents                             |  |                                 | (572    
|Cash and cash equivalents at beginning of period                                 |  |                                 | 16,327  
|                                                                                 |  |                                 |         
|Cash and cash equivalents at end of period                                       |  | $                               | 15,755  
|                                                                                 |  |                                 |         
|Supplemental disclosures of cash flow information:                               |  |                                 |         
|Cash paid during the period for:                                                 |  |                                 |         
|Interest                                                                         |  | $                               | 18,746  
|                                                                                 |  |                                 |         
|Income taxes                                                                     |  | $                               | 18,748  
|                                                                                 |  |                                 |         
|Capital lease obligations incurred                                               |  | $                               | 44      
|                                                                                 |  |                                 |         



See
accompanying notes to unaudited consolidated financial statements.



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##### Table of Contents

APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

(dollars 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-month period ended December 31, 2002 are not necessarily
indicative of the results to be expected for the full 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.



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



2. Inventories



Inventories at December 31, 2002 and September 30, 2002
consist of the following:



|                           |  | December 31, 2002 |         | September 30, 2002
|-------------------------- |  | ----------------- | ------- | ------------------
|                           |  | (unaudited)       |         |                   
|Raw materials and supplies |  | $                 | 76,308  |                   
|Work in process            |  |                   | 21,042  |                   
|Finished goods             |  |                   | 122,232 |                   
|                           |  |                   |         |                   
|                           |  | $                 | 219,582 |                   
|                           |  |                   |         |                   



3. Intangible Assets



As a result of current year acquisitions and
subsequent payments made in relation to prior year acquisitions, the Company added approximately $23.2 million to intangibles and goodwill since September 30, 2002 (approximately $13.0 million to goodwill and $10.2 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. Changes in foreign currency rates increased goodwill and intangible assets by an
additional $8.3 million during the first quarter of fiscal 2003. Unamortizable intangible assets (goodwill) were approximately $1,047.6 million as of December 31, 2002.



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##### Table of Contents

APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial StatementsContinued

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





Intangible
assets are as follows:



|                                           |  | December 31, 2002 |           |   | September 30, 2002 |  
|------------------------------------------ |  | ----------------- | --------- | - | ------------------ | -
|                                           |  | (unaudited)       |           |   |                    |  
|Amortizable intangible assets              |  |                   |           |   |                    |  
|Proprietary technology                     |  | $                 | 97,949    |   |                    | $
|Trademarks                                 |  |                   | 83,631    |   |                    |  
|Patents                                    |  |                   | 35,903    |   |                    |  
|Licenses                                   |  |                   | 19,580    |   |                    |  
|Drawings                                   |  |                   | 11,765    |   |                    |  
|Non-compete agreements                     |  |                   | 16,550    |   |                    |  
|Other                                      |  |                   | 37,039    |   |                    |  
|Less: Accumulated amortization             |  |                   | (81,487   | ) |                    |  
|                                           |  |                   |           |   |                    |  
|Net amortizable intangible assets          |  |                   | 220,930   |   |                    |  
|Unamortizable intangible assets (goodwill) |  |                   | 1,047,620 |   |                    |  
|                                           |  |                   |           |   |                    |  
|                                           |  | $                 | 1,268,550 |   |                    | $
|                                           |  |                   |           |   |                    |  



Intangible assets at December 31, 2002 by business segment are as follows (unaudited):



|                                                      |  | Clinical Diagnostics |         |   | Labware & Life Science |   |         | Laboratory Equipment |  |   | Consolidated |  
|----------------------------------------------------- |  | -------------------- | ------- | - | ---------------------- | - | ------- | -------------------- |  | - | ------------ | -
|Proprietary technology                                |  | $                    | 74,764  |   |                        | $ | 13,394  |                      |  | $ | 9,791        |  
|Less: Accumulated amortization                        |  |                      | (21,609 | ) |                        |   | (5,378  | )                    |  |   | (2,331       | )
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  
|Net proprietary technology                            |  |                      | 53,155  |   |                        |   | 8,016   |                      |  |   | 7,460        |  
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  
|                                                     
|Trademarks                                            |  |                      | 19,003  |   |                        |   | 53,358  |                      |  |   | 11,270       |  
|Less: Accumulated amortization                        |  |                      | (1,560  | ) |                        |   | (10,696 | )                    |  |   | (4,064       | )
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  
|Net trademarks                                        |  |                      | 17,443  |   |                        |   | 42,662  |                      |  |   | 7,206        |  
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  
|                                                     
|Patents                                               |  |                      | 20,422  |   |                        |   | 13,750  |                      |  |   | 1,731        |  
|Less: Accumulated amortization                        |  |                      | (3,951  | ) |                        |   | (3,396  | )                    |  |   | (702         | )
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  
|Net patents                                           |  |                      | 16,471  |   |                        |   | 10,354  |                      |  |   | 1,029        |  
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  
|Licenses                                              |  |                      | 17,241  |   |                        |   | 2,339   |                      |  |   |             |  
|Less: Accumulated amortization                        |  |                      | (4,221  | ) |                        |   | (198    | )                    |  |   |             |  
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  
|Net licenses                                          |  |                      | 13,020  |   |                        |   | 2,141   |                      |  |   |             |  
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  
|                                                     
|Drawings                                              |  |                      |        |   |                        |   | 465     |                      |  |   | 11,300       |  
|Less: Accumulated amortization                        |  |                      |        |   |                        |   | (171    | )                    |  |   | (5,744       | )
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  
|Net drawings                                          |  |                      |        |   |                        |   | 294     |                      |  |   | 5,556        |  
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  
|                                                     
|Non-compete agreements                                |  |                      | 8,610   |   |                        |   | 7,733   |                      |  |   | 207          |  
|Less: Accumulated amortization                        |  |                      | (4,586  | ) |                        |   | (4,198  | )                    |  |   | (176         | )
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  
|Net non-compete agreements                            |  |                      | 4,024   |   |                        |   | 3,535   |                      |  |   | 31           |  
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  
|                                                     
|Other identifiable intangible assets (a)              |  |                      | 7,441   |   |                        |   | 12,991  |                      |  |   |             |  
|Less: Accumulated amortization                        |  |                      | (396    | ) |                        |   | (2,609  | )                    |  |   |             |  
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  
|Net other identifiable intangibles (a)                |  |                      | 7,045   |   |                        |   | 10,382  |                      |  |   |             |  
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  
|                                                     
|Net amortizable intangible assets (a)                 |  | $                    | 111,158 |   |                        | $ | 77,384  |                      |  | $ | 21,282       |  
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  
|                                                     
|Excess cost over net asset values acquired (goodwill) |  | $                    | 562,438 |   |                        | $ | 398,810 |                      |  | $ | 86,372       |  
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  
|Unamortizable intangible assets                       |  | $                    | 562,438 |   |                        | $ | 398,810 |                      |  | $ | 86,372       |  
|                                                      |  |                      |         |   |                        |   |         |                      |  |   |              |  



6



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial StatementsContinued

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





Note (a):
At December 31, 2002, Apogent Corporate Office had $16,607 of amortizable other identifiable intangible assets and $5,501 of related accumulated amortization that was not allocated to any of the business segments.



Amortization of intangible assets was $6,014 and $4,831 for
the three months ended December 31, 2002 and 2001, respectively. Amortization expense relating to the existing identifiable intangible assets for each of the next five years is expected to be $22,750, $21,437, $16,880, $15,007, and $14,168,
respectively.



4. Acquisitions



During the three months ended December 31, 2002, the Company
completed two acquisitions for cash. The aggregate purchase price for these acquisitions, net of cash acquired, was approximately $23.5 million. Neither of the acquisitions was considered individually significant. The total goodwill and identifiable
intangibles assets for the acquired companies was approximately $23.2 million (allocated approximately $13.0 million to goodwill and $10.2 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 Diagnostics:              |  |                  |  |       |       |                  |   |              |  |                    
|NeoMarkers, Inc.                   |  | 10/1/02          |  | $     | 4,000 |                  | $ | 1,900        |  | $                  
|Opus Diagnostics Inc.              |  | 10/9/02          |  |       | 2,100 |                  |   | 1,200        |  |                    



5. 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 targets a majority of its products, and as
a result, the business no longer meets the Companys strategic requirements. In connection with the discontinuance of this business we incurred a one-time charge of $13,200, net of income tax benefit of $7,600, related to the write-down of net
assets to their estimated realizable value. The decision to sell VPT represents a disposal of long-lived assets and disposal group under Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets. Accordingly, results of this business have been classified as discontinued operations, and prior periods have been restated. In the event the Company ultimately disposes of VPT for an amount less than the carrying value of the business, an
additional charge will be recognized upon disposal. For business reporting purposes, VPT was previously classified in the clinical diagnostics business segment. Operating results from VPT for the three months December 31, 2002 and 2001 were as
follows:



|                   |  | Three Months Ended December 31, |     
|------------------ |  | ------------------------------- | ----
|                   | 
|                   |  | 2002                            |     
|                   |  | (unaudited)                     |     
|Net Sales          |  | $                               | 617 
|Gross Profit       |  |                                 | 610 
|Pretax loss        |  |                                 | (252
|Income tax benefit |  |                                 | 89  
|Net loss           |  |                                 | (163



7



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial StatementsContinued

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





Assets and
liabilities of VPT were as follows:



|                                   |  | December 31, 2002 |            |   | September 30, 2002
|---------------------------------- |  | ----------------- | ---------- | - | ------------------
|                                   |  |                   | (unaudited | ) |                   
|Current assets                     |  | $                 | 4,245      |   |                   
|Property, plant and equipment, net |  |                   | 781        |   |                   
|Intangible assets                  |  |                   |           |   |                   
|Total assets                       |  |                   | 5,880      |   |                   
|Current liabilities                |  |                   | 293        |   |                   
|Total liabilities                  |  |                   | 293        |   |                   



6. Restructuring



During fiscal 2002, the Company recorded
restructuring charges of approximately $7.1 million (approximately $4.5 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 $5.5 million related to the write-off of inventory, write-offs of fixed assets, certain lease terminations, and
severance associated with employees in production activities. The selling, general and administrative component of approximately $1.5 million related to severance associated with non-production employees as well as certain lease terminations and
other shutdown costs.



Restructuring activity is
as follows (unaudited):





|                                 |  | Severance (a) |       |   | Inventory (b) |   |        | Fixed Assets (b) |  |   | Facility Closure Costs (c) |   |  | Other |       |   | Total |  
|-------------------------------- |  | ------------- | ----- | - | ------------- | - | ------ | ---------------- |  | - | -------------------------- | - |  | ----- | ----- | - | ----- | -
|Fiscal 2002 Restructuring charge |  | $             | 1,466 |   |               | $ | 3,709  |                  |  | $ | 353                        |   |  | $     | 1,409 |   |       | $
|Fiscal 2002 Cash payments        |  |               | (970  | ) |               |   |       |                  |  |   |                           |   |  |       | (357  | ) |       |  
|Fiscal 2002 Non-cash charges     |  |               |      |   |               |   | (3,709 | )                |  |   | (353                       | ) |  |       |      |   |       |  
|                                 |  |               |       |   |               |   |        |                  |  |   |                            |   |  |       |       |   |       |  
|September 30, 2002 balance       |  | $             | 496   |   |               | $ |       |                  |  | $ |                           |   |  | $     | 1,052 |   |       | $
|Fiscal 2003 Cash payments        |  |               | (477  | ) |               |   |       |                  |  |   |                           |   |  |       | (185  | ) |       |  
|                                 |  |               |       |   |               |   |        |                  |  |   |                            |   |  |       |       |   |       |  
|December 31, 2002 balance        |  | $             | 19    |   |               | $ |       |                  |  | $ |                           |   |  | $     | 867   |   |       | $
|                                 |  |               |       |   |               |   |        |                  |  |   |                            |   |  |       |       |   |       |  



| | (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 $718 during the remainder of fiscal 2003
and $168 in fiscal 2004 and beyond.



8



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial StatementsContinued

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





7. 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 Ended December 31,
|------------------------------------------------------ |  | -------------------------------
|                                                       | 
|                                                       |  | 2002                           
|                                                       |  | (unaudited)                    
|Basic                                                  |  | 105,719                        
|Effect of assumed conversion of employee stock options |  | 1,291                          
|                                                       |  |                                
|Diluted                                                |  | 107,010                        
|                                                       |  |                                





Excluded from the shares used in calculating the diluted earnings per common share in the above table are options to purchase 5,515 and
250 shares of common stock as of December 31, 2002 and 2001, respectively, as their effects would have been anti-dilutive.



8. Fair Value of Stock Options



The Company has adopted the disclosure provisions of Statement of Financial Accounting Standards (SFAS) No. 148,
Accounting for Stock-Based CompensationTransition and Disclosurewhich is an amendment of SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123), 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 Ended December 31,
|-------------------------------------- |  | -------------------------------
|                                       | 
|                                       |  | 2002                           
|                                       |  | (unaudited)                    
|Net incomeas reported                 |  | $                              
|                                       |  |                                
|Pro forma net income                   |  | $                              
|                                       |  |                                
|Basic earnings per shareas reported   |  | $                              
|                                       |  |                                
|Basic earnings per sharepro forma     |  | $                              
|                                       |  |                                
|Diluted earnings per shareas reported |  | $                              
|                                       |  |                                
|Diluted earnings per sharepro forma   |  | $                              
|                                       |  |                                



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:



9



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial StatementsContinued

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



|                        |  | Three Months Ended December 31, |  
|----------------------- |  | ------------------------------- | -
|                        |  | 2002                            |  
|Volatility              |  | 27.29                           | %
|Risk-free rate          |  | 3.69                            | %
|Expected holding period |  | 8.0 years                       |  
|Dividend yield          |  | 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.



9. Segment Information



The Companys operating subsidiaries are engaged in the
manufacture and sale of laboratory products in the United States and other countries. The Companys products are categorized in the business segments of: clinical diagnostics; labware and life sciences; and laboratory equipment. A description
of the business segments follows:



Our clinical
diagnostics business segment 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 proceduresspecimen
collection, specimen transportation, drug testing, therapeutic drug monitoring, infectious disease detection, pregnancy testing, glucose tolerance testing, and clinical diagnostic liquid standards, among others. Diagnostic applications include
anatomical pathology (histology and cytology) and immunohistochemistry, with an emphasis on cancer applications. Products include:



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

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

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

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

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

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

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

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

| |  |  | thin glass for watch crystals, cosmetic mirrors, precision and coated glass used in various optic applications.
| | - |  | ---------------------------------------------------------------------------------------------------------------



Our labware and life sciences business segment 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, a division within this segment manufactures and sells plastic bottles and containers to the consumer market primarily for outdoor sporting uses. Products in this
business segment include:



10



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial StatementsContinued

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





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

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

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

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

| |  |  | instruments used in drug discovery;
| | - |  | -----------------------------------

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

| |  |  | 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.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our laboratory equipment business segment manufactures basic laboratory equipment needed by medical, pharmaceutical, and scientific laboratories. Applications of these products include heating,
cooling, shaking, stirring, mixing, and temperature control as well as precision temperature measurement and water purification and production. The products include:



| |  |  | heating, stirring and temperature control apparatus such as hot plates, stirrers, shakers, heating tapes, muffle furnaces, incubators, dri-baths, bench top
sterilizers, and cryogenic storage apparatus;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | systems for producing ultra pure water;
| | - |  | ---------------------------------------

| |  |  | bottle top dispensers, positive displacement micropipettors, and small mixers used in biomolecular research;
| | - |  | ------------------------------------------------------------------------------------------------------------

| |  |  | solvent evaporation equipment;
| | - |  | ------------------------------

| |  |  | constant temperature equipment including refrigerators/freezers, ovens, water baths, and environmental chambers; and
| | - |  | --------------------------------------------------------------------------------------------------------------------

| |  |  | furnaces and fluorometers, spectrophotometers, and strip chart recorders.
| | - |  | -------------------------------------------------------------------------



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



|                                     |  | Clinical Diagnostics |           | Labware and Life Sciences |   | Laboratory Equipment |  | Eliminations |         |  | Total
|------------------------------------ |  | -------------------- | --------- | ------------------------- | - | -------------------- |  | ------------ | ------- |  | -----
|Three Months Ended December 31,
2002 |  |                      |           |                           |   |                      |  |              |         |  |      
|Revenues:                            |  |                      |           |                           |   |                      |  |              |         |  |      
|External customer                    |  | $                    | 126,700   |                           | $ | 111,251              |  | $            | 28,586  |  | $    
|Intersegment                         |  |                      | 2,576     |                           |   | 254                  |  |              | 43      |  |      
|Total revenues                       |  |                      | 129,276   |                           |   | 111,505              |  |              | 28,629  |  |      
|Gross profit                         |  |                      | 58,894    |                           |   | 57,275               |  |              | 12,304  |  |      
|Selling general and administrative   |  |                      | 30,218    |                           |   | 34,200               |  |              | 7,733   |  |      
|Operating income                     |  |                      | 28,676    |                           |   | 23,075               |  |              | 4,571   |  |      
|Segment assets                       |  |                      | 1,056,996 |                           |   | 821,289              |  |              | 181,301 |  |      
|Three Months Ended December 31,
2001 |  |                      |           |                           |   |                      |  |              |         |  |      
|Revenues:                            |  |                      |           |                           |   |                      |  |              |         |  |      
|External customer                    |  | $                    | 117,520   |                           | $ | 96,105               |  | $            | 29,562  |  | $    
|Intersegment                         |  |                      | 1,341     |                           |   | 165                  |  |              | 244     |  |      
|Total revenues                       |  |                      | 118,861   |                           |   | 96,270               |  |              | 29,806  |  |      
|Gross profit                         |  |                      | 57,047    |                           |   | 49,043               |  |              | 12,643  |  |      
|Selling general and administrative   |  |                      | 26,783    |                           |   | 27,562               |  |              | 7,338   |  |      
|Operating income                     |  |                      | 30,264    |                           |   | 21,481               |  |              | 5,305   |  |      



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial StatementsContinued

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





10. Condensed
Consolidating Financial Statements



The
Companys material U.S. subsidiaries are guarantors to its Revolving Credit Facility, 8% Senior Notes, and senior convertible contingent debt securities (CODES). 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 December 31, 2002 and September 30, 2002, statements of operations for the three months ended December 31, 2002 and 2001, and statements of cash flows for the three months
ended December 31, 2002 and 2001, of Apogent Technologies Inc. and its subsidiaries, reflecting the subsidiary guarantors for the Revolving Credit Facility, 8% Senior Notes, and CODES. 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 Inc. 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 Technologies Inc. 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 Technologies Inc.



12



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial StatementsContinued

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





Condensed Consolidating
Balance Sheets



|                                                      |  | As of December 31, 2002 (unaudited) |          
|----------------------------------------------------- |  | ----------------------------------- | ---------
|(In thousands)                                        |  | Apogent Technologies                |          
|Assets                                                |  |                                     |          
|Current assets:                                       |  |                                     |          
|Cash and cash equivalents                             |  | $                                   | 15,267   
|Accounts receivable, net                              |  |                                     |         
|Inventories, net                                      |  |                                     | 1,263    
|Other current assets                                  |  |                                     | 13,892   
|                                                      |  |                                     |          
|Total current assets                                  |  |                                     | 30,422   
|                                                     
|Property, plant and equipment, net                    |  |                                     | 12,398   
|Intangible assets                                     |  |                                     | 11,107   
|Investment in subsidiaries                            |  |                                     | 2,155,427
|Other assets                                          |  |                                     | 63,797   
|                                                      |  |                                     |          
|Total assets                                          |  | $                                   | 2,273,151
|                                                      |  |                                     |          
|Liabilities and Shareholders'
Equity                  |  |                                     |          
|Current liabilities:                                  |  |                                     |          
|Accounts payable                                      |  | $                                   | 507      
|Short-term debt and current portion of long-term debt |  |                                     |         
|Income taxes payable                                  |  |                                     | 24,515   
|Accrued expenses and other current liabilities        |  |                                     | 10,173   
|                                                      |  |                                     |          
|Total current liabilities                             |  |                                     | 35,195   
|                                                      |  |                                     |          
|                                                     
|Long-term debt                                        |  |                                     |         
|Securities lending agreement                          |  |                                     | 59,592   
|Deferred income taxes                                 |  |                                     | 116,353  
|Other liabilities                                     |  |                                     | 12,881   
|Net intercompany payable/(receivable)                 |  |                                     | 723,556  
|Commitments and contingent liabilities                |  |                                     |         
|Shareholders' equity                                  |  |                                     |          
|Preferred stock                                       |  |                                     |         
|Common stock                                          |  |                                     | 1,070    
|Equity rights                                         |  |                                     |         
|Additional paid-in-capital                            |  |                                     | 251,955  
|Retained earnings (deficit)                           |  |                                     | 1,124,121
|Other comprehensive income                            |  |                                     | (13,481  
|Treasury stock (at cost)                              |  |                                     | (38,091  
|                                                      |  |                                     |          
|Total shareholders' equity                            |  |                                     | 1,325,574
|                                                      |  |                                     |          
|Total liabilities and shareholders' equity            |  | $                                   | 2,273,151
|                                                      |  |                                     |          



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial StatementsContinued

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





Condensed Consolidating
Balance SheetsContinued



|                                                      |  | As of September 30, 2002 |          
|----------------------------------------------------- |  | ------------------------ | ---------
|(In thousands)                                        |  | 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                                     |  |                          | 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                                        |  |                          |         
|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  
|Other comprehensive income                            |  |                          | (17,659  
|Treasury stock (at cost)                              |  |                          | (19,986  
|                                                      |  |                          |          
|Total shareholders equity                            |  |                          | 1,205,749
|                                                      |  |                          |          
|Total liabilities and shareholders equity            |  | $                        | 2,221,448
|                                                      |  |                          |          



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial StatementsContinued

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





Condensed Consolidating
Statements of Operations



|                                                      |  | For the Three Months Ended December 31, 2002 (unaudited) |       
|----------------------------------------------------- |  | -------------------------------------------------------- | ------
|(In thousands)                                        |  | Apogent Technologies                                     |       
|Net sales                                             |  | $                                                        |      
|Cost of sales                                         |  |                                                          |      
|                                                      |  |                                                          |       
|Gross profit                                          |  |                                                          |      
|Selling, general and administrative expenses          |  |                                                          | 7,254 
|                                                      |  |                                                          |       
|Operating income                                      |  |                                                          | (7,254
|Other income (expense):                               |  |                                                          |       
|Interest expense                                      |  |                                                          |      
|Other, net                                            |  |                                                          |      
|                                                      |  |                                                          |       
|Income before income taxes and discontinued operation |  |                                                          | (7,254
|Income taxes                                          |  |                                                          | (3,017
|                                                      |  |                                                          |       
|Income from continuing operations                     |  |                                                          | (4,237
|Loss from discontinued operation                      |  |                                                          |      
|                                                      |  |                                                          |       
|Net income                                            |  | $                                                        | (4,237
|                                                      |  |                                                          |       



|                                                     
|-----------------------------------------------------
|                                                     
|(In thousands)                                       
|Net sales                                            
|Cost of sales                                        
|                                                     
|Gross profit                                         
|Selling, general and administrative expenses         
|                                                     
|Operating income                                     
|Other income (expense):                              
|Interest expense                                     
|Other, net                                           
|                                                     
|Income before income taxes and discontinued operation
|Income taxes                                         
|                                                     
|Income from continuing operations                    
|Loss from discontinued operation                     
|                                                     
|Net income                                           
|                                                     



15



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial StatementsContinued

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





Condensed Consolidating
Statements of Cash Flows



|                                                     |  | For the Three Months Ended December 31, 2002 (unaudited) |        
|---------------------------------------------------- |  | -------------------------------------------------------- | -------
|(In thousands)                                       |  | Apogent Technologies                                     |        
|Cash flows provided by operating activities:         |  | $                                                        | 13,706 
|                                                     |  |                                                          |        
|Cash flows from investing activities:                |  |                                                          |        
|Capital expenditures                                 |  |                                                          | (377   
|Proceeds from sales of property, plant and equipment |  |                                                          |       
|Net payments for businesses acquired                 |  |                                                          |       
|Other investing activities                           |  |                                                          |       
|                                                     |  |                                                          |        
|Net cash used in investing activities                |  |                                                          | (377   
|                                                     |  |                                                          |        
|Cash flows from financing activities:                |  |                                                          |        
|Proceeds from long-term debt                         |  |                                                          |       
|Principal payments on long-term debt                 |  |                                                          |       
|Proceeds from the exercise of stock options          |  |                                                          | 1,373  
|Purchase of treasury stock                           |  |                                                          | (18,733
|Other                                                |  |                                                          | (591   
|                                                     |  |                                                          |        
|Net cash provided by (used in) financing activities  |  |                                                          | (17,951
|Effect of exchange rate on cash and cash equivalents |  |                                                          |       
|                                                     |  |                                                          |        
|Net increase (decrease) in cash and cash equivalents |  |                                                          | (4,622 
|Cash and cash equivalents at beginning of year       |  |                                                          | 19,889 
|                                                     |  |                                                          |        
|Cash and cash equivalents at end of year             |  | $                                                        | 15,267 
|                                                     |  |                                                          |        
|Supplemental disclosures of cash flow information    |  |                                                          |        
|Cash paid during the year for:                       |  |                                                          |        
|Interest                                             |  | $                                                        |       
|                                                     |  |                                                          |        
|Income taxes                                         |  | $                                                        | 15,702 
|                                                     |  |                                                          |        
|Capital lease obligations incurred                   |  | $                                                        |       
|                                                     |  |                                                          |        



|                                                      
|------------------------------------------------------
|                                                      
|(In thousands)                                        
|Cash flows provided by (used in) 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 financing activities             
|Effect of exchange rate on cash and cash equivalents  
|                                                      
|Net increase 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                    
|                                                      



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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 diagnostics, labware and life sciences, and
laboratory equipment markets in the United States and abroad. Apogent provides products under three business segmentsclinical diagnostics, labware and life sciences, and laboratory equipment. The primary subsidiaries in each of our business
segments are as follows:



|Clinical Diagnostics                           |  | Labware and Life Sciences           
|---------------------------------------------- |  | ------------------------------------
|                                              
|Applied Biotech, Inc.                          |  | Advance Biotechnologies Ltd.        
|Capitol Vial, Inc.                             |  | BioRobotics Limited                 
|Chase Scientific Glass, Inc.                   |  | Chromacol Limited                   
|Erie Electroverre S.A.                         |  | Marsh BioProducts                   
|Erie Scientific Company                        |  | Matrix Technologies Corporation     
|Forefront Diagnostics, Inc.                    |  | Molecular BioProducts, Inc.         
|Gerhard Menzel Glasbearbeitungswerk            |  | Nalge Nunc International Corporation
|GmbH & Co. K.G.                                |  | Nalge Nunc International K.K.       
|Lab Vision Corporation Microgenics Corporation |  | National Scientific Company Nunc A/S
|Microm International GmbH                      |  | Robbins Scientific Corporation      
|Neomarkers, Inc.                               |  |                                     
|The Naugatuck Glass Company                    |  | Laboratory Equipment                
|Remel Inc.                                     |  |                                     
|Richard-Allan Scientific Company               |  | Barnstead Thermolyne Corporation    
|Samco Scientific Corporation                   |  | Electrothermal Engineering, Ltd.    
|Seradyn, Inc.                                  |  | Genevac Limited                     
|                                               |  | Lab-Line Instruments, 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 December 31, 2002 and 2001 are the Companys first 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.



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##### Table of Contents



Results of Operations



Summary



Net sales for the first quarter of fiscal 2003 were $266.5
million, an increase of $23.4 million, or 9.6% from $243.2 million for the first quarter of fiscal 2002. The increase in net sales was primarily the result of sales of products from acquired companies and to a lesser extent net sales of clinical
consumable and research consumable products. These increases are partially offset by declines in existing product sales within the laboratory equipment business and continued softness in the demand for drugs-of-abuse, pregnancy, and life science
instrumentation products.



Gross Profit for the
first quarter of fiscal 2003 was $128.5 million, or 48.2% of net sales as compared to $118.7 million, or 48.8% of net sales for the first quarter of fiscal 2002.



Selling, general and administrative expenses for the first quarter of fiscal 2003 were $72.2 million, as
compared to $61.7 million for the first quarter 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.



Operating income for the first quarter of fiscal 2003 was $56.3 million, as compared to $57.1 million for the first quarter of fiscal 2002.



Net income for the first quarter of fiscal 2003 was $28.7 million, as compared to $30.0 million for the first
quarter of fiscal 2002.



Quarter Ended December 31, 2002
Compared to the Quarter Ended December 31, 2001



Net Sales



|                          |  | Three Months Ended December 31,      |         | Dollar Change |   |         | Percent Change |  
|------------------------- |  | ------------------------------------ | ------- | ------------- | - | ------- | -------------- | -
|                          |  | 2002                                 |         | 2001          |   |        
|Net Sales                 |  | (dollars in thousands and unaudited) |         |               |   |         |                |  
|Clinical Diagnostics      |  | $                                    | 126,700 |               | $ | 117,520 |                | $
|Labware and Life Sciences |  |                                      | 111,251 |               |   | 96,105  |                |  
|Laboratory Equipment      |  |                                      | 28,586  |               |   | 29,562  |                |  
|                          |  |                                      |         |               |   |         |                |  
|Total Net Sales           |  | $                                    | 266,537 |               | $ | 243,187 |                | $
|                          |  |                                      |         |               |   |         |                |  



Overall Company. Net sales for the first quarter of fiscal 2003 were $266.5 million, an increase of $23.4 million or 9.6% over the corresponding fiscal 2002 quarter.



Clinical Diagnostics.Increased net sales in the clinical diagnostics segment resulted primarily from:
(a) net sales of products of acquired companies (approximately $9.0 million), (b) foreign currency fluctuations (approximately $1.4 million), and (c) increased net sales of new products developed by us (approximately $1.3 million). Net sales were
partially reduced by: (a) price reductions (approximately $1.5 million) and (b) a decrease in net sales of existing products (approximately $1.0 million).



Labware and Life Sciences. Increased net sales in the labware and life sciences segment resulted primarily from: (a) net sales of
products of acquired companies (approximately $4.6 million), (b) an increase in net sales of existing products (approximately $4.0 million), (c) increased net sales of new products developed by us (approximately $3.5 million), (d) foreign currency
fluctuations (approximately $2.3 million), and (e) price increases (approximately $0.7 million).



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Laboratory
Equipment. Reduced net sales in the laboratory equipment segment resulted primarily from a decrease in net sales of existing products (approximately $3.6 million). Net sales were partially increased by: (a) an increase in net sales of new
products developed by us (approximately $1.8 million), (b) price increases (approximately $0.4 million), and (c) foreign currency fluctuations (approximately $0.4 million).



Gross Profit



|                          |  | Three Months Ended December 31, |         |                                      |      |   |      |   |                 
|------------------------- |  | ------------------------------- | ------- | ------------------------------------ | ---- | - | ---- | - | ----------------
|                          |  | 2002                            |         | Percent of Sales                     |      |   | 2001 |   | Percent of Sales
|Gross Profit              |  |                                 |         | (dollars in thousands and unaudited) |      |   |      |   |                 
|Clinical Diagnostics      |  | $                               | 58,894  |                                      | 46.5 | % |      | $ | 57,047          
|Labware and Life Sciences |  |                                 | 57,275  |                                      | 51.5 | % |      |   | 49,043          
|Laboratory Equipment      |  |                                 | 12,304  |                                      | 43.0 | % |      |   | 12,643          
|                          |  |                                 |         |                                      |      |   |      |   |                 
|Total Gross Profit        |  | $                               | 128,473 |                                      | 48.2 | % |      | $ | 118,733         
|                          |  |                                 |         |                                      |      |   |      |   |                 



Overall Company. Gross profit for the first quarter of fiscal 2003 was $128.5 million, or 48.2% of net sales, as compared to $118.7 million, or 48.8% of net sales for the corresponding fiscal 2002 quarter.



Clinical Diagnostics. Increased gross profit in the
clinical diagnostics segment resulted primarily from: (a) the effects of acquired companies (approximately $4.4 million), (b) reductions in manufacturing overhead (approximately $0.5 million), (c) foreign currency fluctuations (approximately $0.5
million), and (d) the effects of new products (approximately $0.3 million). Gross profit was partially reduced by: (a) product mix (approximately $2.0 million), (b) price reductions (approximately $1.5 million), and (c) higher inventory write-downs
(approximately $0.4 million).



Labware and
Life Sciences. Increased gross profit in the labware and life sciences segment resulted primarily from: (a) the effects of acquired companies (approximately $2.1 million), (b) increased volume (approximately $1.8 million), (c) the effects of new
products (approximately $1.6 million), (d) product mix (approximately $1.2 million), (e) foreign currency fluctuations (approximately $1.0 million), (f) price increases (approximately $0.7 million), and (g) lower inventory write-downs (approximately
$0.6 million). Gross profit was slightly reduced by increased manufacturing overhead (approximately $0.8 million).



Laboratory Equipment. Decreased gross profit in the laboratory equipment segment resulted primarily from: (a) decreased volume
(approximately $1.2 million), (b) the effects of new products (approximately $0.2 million), (c) higher inventory write-downs (approximately $0.1 million), and (d) increased manufacturing overhead (approximately $0.1 million). Gross profit was
partially increased by: (a) the effects of new products (approximately $0.7 million), (b) price increases (approximately $0.4 million), and (c) foreign currency fluctuations (approximately $0.2 million).



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Selling, General and
Administrative Expenses



|                                                   |  | Three Months Ended December 31,      |        | Dollar Change |   | Percent Change | 
|-------------------------------------------------- |  | ------------------------------------ | ------ | ------------- | - | -------------- | 
|                                                   |  | 2002                                 |        | 2001          |   |               
|Selling, General and Administrative Expenses       |  | (dollars in thousands and unaudited) |        |               |   |                | 
|Clinical Diagnostics                               |  | $                                    | 30,218 |               | $ | 26,783         | 
|Labware and Life Sciences                          |  |                                      | 34,200 |               |   | 27,562         | 
|Laboratory Equipment                               |  |                                      | 7,733  |               |   | 7,338          | 
|                                                   |  |                                      |        |               |   |                | 
|Total Selling, General and Administrative Expenses |  | $                                    | 72,151 |               | $ | 61,683         | 
|                                                   |  |                                      |        |               |   |                | 



Overall Company. Selling, general and administrative expenses for the first quarter of fiscal 2003 were $72.2 million, an increase of $10.5 million, or 17.0% over the corresponding fiscal 2002 quarter.



Clinical Diagnostics.Increased selling, general and
administrative expenses in the clinical diagnostics segment resulted primarily from: (a) expenses of acquired businesses (approximately $1.2 million), (b) general and administrative expenses (approximately $0.7 million), (c) an increase in
amortization expense (approximately $0.7 million), (d) foreign currency fluctuations (approximately $0.4 million), (e) marketing expenses (approximately $0.3 million), and (f) research and development expenses (approximately $0.1 million).



Labware and Life Sciences.Increased
selling, general and administrative expenses in the labware and life sciences segment resulted primarily from: (a) general and administrative expenses (approximately $2.0 million), (b) expenses of acquired businesses (approximately $1.6 million),
(c) marketing expenses (approximately $1.3 million), (d) foreign currency fluctuations (approximately $1.1 million), (e) research and development expense (approximately $0.3 million), and (f) increased amortization expense (approximately $0.3
million).



Laboratory Equipment.Increased
selling, general and administrative expenses in the laboratory equipment segment resulted primarily from: (a) marketing expenses (approximately $0.2 million), (b) foreign currency fluctuations (approximately $0.2 million), and (c) general and
administrative expenses (approximately $0.1 million). Selling, general and administrative expenses were partially decreased by research and development expenses (approximately $0.1).



Operating Income



|                          |  | Three Months Ended December 31,      |        | Dollar Change |   |        | Percent Change |  
|------------------------- |  | ------------------------------------ | ------ | ------------- | - | ------ | -------------- | -
|                          |  | 2002                                 |        | 2001          |   |       
|Operating Income          |  | (dollars in thousands and unaudited) |        |               |   |        |                |  
|Clinical Diagnostics      |  | $                                    | 28,676 |               | $ | 30,264 |                | $
|Labware and Life Sciences |  |                                      | 23,075 |               |   | 21,481 |                |  
|Laboratory Equipment      |  |                                      | 4,571  |               |   | 5,305  |                |  
|                          |  |                                      |        |               |   |        |                |  
|Total Operating Income    |  | $                                    | 56,322 |               | $ | 57,050 |                | $
|                          |  |                                      |        |               |   |        |                |  



Operating income for the first quarter of fiscal 2003 was $56.3 million, a decrease of $0.7 million, or 1.3%, from $57.1 million for the corresponding fiscal 2002 quarter.



Interest Expense



Interest expense was $10.4 million for the first quarter of fiscal 2003, as compared to $10.2 million for the corresponding fiscal 2002
quarter.



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Other Income



Other income was $0.5 million for the first
quarter of fiscal 2003, as compared to other income of $1.5 million in the corresponding fiscal 2002 quarter. This decrease of $1.0 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 first
quarter of fiscal 2003 were $16.6 million, a decrease of $0.8 million from the corresponding fiscal 2002 quarter. This decrease resulted primarily from a decrease in taxable income.



Income from Continuing Operations



Income from continuing operations for the first quarter of fiscal 2003 was $28.9 million, a decrease of $1.2
million, or 4.3%, from $30.1 million for the corresponding fiscal 2002 quarter.



Discontinued Operations



The losses from the discontinued operations, net of tax, of $0.2 million and $0.1 million for the first quarters of fiscal 2003 and 2002, respectively, were the result of operating losses from VPT.



Net Income



Net income for the first quarter of fiscal 2003 was $28.7 million, a decrease of $1.3 million, or 4.3%, from
$30.0 million for the corresponding fiscal 2002 quarter.



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 $27.8 million for the three months ended December 31, 2002, as compared to $24.7 million for the same period in fiscal 2001. The increase in net cash provided primarily reflects an increase in depreciation and
amortization of $3.2 million primarily attributable to prior year acquisitions. The cash outflow resulting from the net change in working capital, net of the effects of acquisitions and divestitures, was $17.6 million for the first three months of
fiscal 2003. This cash outflow was primarily the result of an increase in inventories ($14.1 million) and decreases in accrued interest ($8.4 million), accounts payable ($7.7 million), accrued payroll and employee benefits ($3.9 million), income
taxes payable ($3.2 million) and the restructuring reserve ($0.4 million). The cash outflows were partially offset by a decrease in accounts receivable ($18.9 million) and net changes in other current and long-term assets and liabilities of ($1.2
million).



As a result of the acquisition of our
predecessor in 1987 and the acquisitions we completed since 1987, we have increased the carrying value of certain tangible and intangible assets consistent with accounting principles generally accepted in the United States. Accordingly, our results
of operations include a significant level of non-cash expenses related to the depreciation of fixed assets and the amortization of intangible assets. Goodwill and intangible assets, net of amortization, increased by approximately $25.4 million
during the first three months of fiscal 2003, primarily as a result of continued acquisition activity.



Net cash used in investing activities was $28.9 million for the three months ended December 31, 2002, as compared to $44.6 million for the
same period in fiscal 2002. Net cash used in investing activities for the three months ended December 31, 2002 primarily reflects the net payment for businesses acquired of $20.8 million, capital expenditures of $10.4 million and receipt of $2.1
million from an equity investment



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##### Table of Contents



in a joint venture. Net cash
used in investing activities for the three months ended December 31, 2001 primarily reflects payment for businesses acquired of $38.3 million and capital expenditures of $6.3 million. Apogent has no current material commitments for capital
expenditures but does expect to incur approximately $65.0 million in purchases during fiscal year 2003.



Net cash used in financing activities was $4.2 million for the three months ended December 31, 2002, as compared to cash provided by
financing activities of $85.8 million for the same period in fiscal 2002. The net cash used in financing activities for the three months ended December 31, 2002 primarily resulted from $19.7 million in treasury stock purchases offset by $15.7
million in net proceeds from our Revolving Credit Facility. The net cash provided by financing activities for the three months ended December 31, 2001 were primarily related to proceeds from our CODES offering of $300.0 million (see below) and
Revolving Credit Facility of $151.9 million. These amounts were partially offset by payments made on the Revolving Credit Facility of $360.5 million. Financing fees of $8.3 million were paid in connection with the CODES offering.



On October 10, 2001, the Company issued $300 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), into
Apogent Common Stock 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 their CODES on October 20, 2004 and
on October 15, 2006, 2011 and 2016, or, subject to specified exceptions, upon a change of control event. Certain of the Companys U.S. subsidiaries guarantee the Companys obligations under the CODES. The proceeds from the issuance were
used to repay the outstanding balance on our Revolving Credit Facility, and for general corporate purposes. As of December 31, 2002 there was $15.7 million outstanding and $449.9 million available on the Revolving Credit Facility.



The CODES, 8% Senior Notes, and the Revolving Credit Facility
all contain certain cross default provisions. Some of the Revolving Credit Facility provisions include financial and operating covenants which, if not met, could cause acceleration of payments on outstanding balances. The covenants include, among
other things; restrictions on investments, requirements that the Company maintain certain financial ratios, requirements that the Company maintain certain credit ratings, restrictions on the ability of the Company and its subsidiaries to create or
permit liens, or to pay dividends or make other restricted payments (as defined), and limitations on 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.



On January
28, 2003, the Company announced the authorization of a stock repurchase program for the repurchase by the Company in open market transactions from time to time of up to five million shares of Apogent common stock. This program runs through January
28, 2004 unless earlier terminated or completed. Shares will be repurchased at times and prices deemed appropriate to the Company. The Company will use cash generated from operations as well as available credit facilities in order to repurchase
these shares.



The Company believes that it will
continue to be able to meet its present and foreseeable capital and liquidity needs from its existing resources.



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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 are passed.



In connection with annual impairment tests for SFAS 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, 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 on 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, in the event management was to
determine that it would be able to realize its deferred assets in the future in excess of its 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 its 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.



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Off-Balance Sheet
Arrangement



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 December 31, 2002 the equity investment in this entity, included in Other
Assets, was approximately $9.5 million. Net income from the joint venture for the first quarter of fiscal 2003 was approximately $0.4 million 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 December 31, 2002, the joint venture did not have any debt other than trade payables arising out
of its business activities.



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 (in millions):



|Contractual Obligations            |  | Total            |       | Payments Due by Period
|---------------------------------- |  | ---------------- | ----- | ----------------------
|                                   |  | Less than 1 Year |       | 1  3 Years           
|Long-Term Debt                     |  | $                | 688.9 |                       
|Capital Lease Obligations          |  |                  | 0.6   |                       
|Operating Leases                   |  |                  | 70.1  |                       
|Unconditional Purchase Obligations |  |                  | 15.6  |                       
|Other Long-Term Obligations        |  |                  | None  |                       
|Total Contractual Cash Obligations |  | $                | 775.2 |                       



|Other Commercial Commitments   |  | Total Amounts Committed |      |             | Amount of Commitment Expiration Per Period
|------------------------------ |  | ----------------------- | ---- | ----------- | ------------------------------------------
|                               |  | Less Than 1 Year        |      | 1  3 Years |                                           
|Lines of Credit                |  | $                       |     |             |                                           
|Standby Letters of Credit      |  |                         | 34.4 |             |                                           
|Guarantees                     |  |                         | None | (1)         |                                           
|Standby Repurchase Obligations |  |                         | None |             |                                           
|Other Commercial Commitments   |  |                         | None |             |                                           
|Total Commercial Commitments   |  | $                       | 34.4 |             |                                           



| | (1) |  | Certain of the Companys domestic subsidiaries are guarantors under the Companys Revolving Credit Facility, 8% Senior Notes, and CODES.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------



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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 holding company structure increases financial risks.



We are organized as a holding company, with all of our net sales generated through our subsidiaries.
Approximately 20% of our net sales and 6% of our operating cash flow for fiscal 2002 were from foreign 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 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.



Our international operations pose currency and other risks.



We have significant operations outside the United States, where a significant portion of our revenue is
generated. We are therefore subject to risk factors 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 sales were increased by $3.1 million in fiscal 2002 and reduced by $10.1 million in fiscal 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.



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.



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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 significant downturn in our customers markets
or in general economic conditions could result in reduced demand for our products and could harm our business.



Future acquisitions may not be available or may create transitional challenges.



A significant portion of our growth over the past several
years has been achieved through our acquisition program. Our rate of continued growth is therefore subject to factors affecting our ability to execute our acquisition strategy and to be successful with that strategy. These factors include the cost
of the capital required to effect our acquisition strategy, 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. 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. Additionally, on October 1, 2001 we adopted SFAS 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. The Company carries a very significant amount of goodwill and intangible assets and FAS 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 Healthcare Corporation accounted for approximately 13%, 11%, and 7% of revenues in
fiscal 2002, respectively. Our reliance on major independent distributors for a substantial portion of 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.



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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 majuere, could adversely affect our sales and customer relationships and therefore adversely affect our business. In particular, the supply of white glass, which is used in our clinical diagnostics segments worldwide
manufacturing operations, comes solely from our glass manufacturing facility in Switzerland. Risks include 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.



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 could be hurt by product liability claims or other litigation.



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 could occur.



Our business is subject to regulatory risks.



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.



Some of our products are affected by
general levels of insurance and reimbursement.



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.



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Our
separation from SDS 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.



We sometimes experience
quarterly variations in our operating results.



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.



Other risks may arise.



We may be subject to risks arising from other business and investment considerations that may be disclosed from time to time in our
Securities and Exchange Commission filings or in other publicly available written documents.



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



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Item 3: Quantitative and Qualitative Disclosures About Market Risk



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



(a) Evaluation of disclosure controls and procedures.Apogents chief executive officer and chief financial officer have reviewed and evaluated the effectiveness of the Companys disclosure controls and procedures
(as defined in Exchange Act Rules 240.13a-14(c) and 15d-14(c)) as of a date within ninety days before the filing of this quarterly report. Based on that evaluation, the chief executive officer and chief financial officer have concluded that
Apogents current disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules and forms.



(b) Changes in internal controls.There have not been any significant changes in Apogents internal controls or in other factors that could significantly affect these controls subsequent to
the date of their evaluation. There were no significant deficiencies or material weakness in the internal controls, and therefore no corrective actions were taken.



PART IIOTHER INFORMATION



Item 4: Submission of Matters to a Vote of Security Holders



The Company, a Wisconsin corporation, held its Annual Meeting of Shareholders on January 28, 2003. A quorum was present at the Annual Meeting, with 99,631,344 shares out of a total of 106,053,287
(93.46%) shares entitled to cast votes represented in person or by proxy at the meeting.



Proposal Number 1: To elect three directors to serve as Class II Directors until the 2006 Annual Meeting of Shareholders and until their respective successors are duly elected and qualified.



The shareholders voted to elect Stephen R.
Hardis, R. Jeffrey Harris and Frank H. Jellinek, Jr. to serve as Class II directors until the 2006 Annual Meeting of Shareholders and until their respective successors are duly elected and qualified. The results of the vote are as follows:



|              |  | Mr. Hardis |  | Mr. Harris |  | Mr. Jellinek
|------------- |  | ---------- |  | ---------- |  | ------------
|For           |  | 97,457,776 |  | 97,891,562 |  | 97,922,876  
|Withheld From |  | 2,173,557  |  | 1,739,772  |  | 1,708,458   



The
terms of office as directors of William H. Binnie, Don H. Davis, Jr., Christopher L. Doerr, Joe L. Roby, Richard W. Vieser, and Kenneth F. Yontz continued after the meeting.



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Item 5: Other Information



STOCK
REPURCHASE PROGRAM



The Board of Directors at its
meeting on January 28, 2003 authorized a new stock repurchase program for the repurchase by Apogent in open market transactions from time to time of up to five million shares of Apogent common stock. This is in addition to the two million share
repurchase program authorized in July of 2002 which was completed in December 2002. The new program is effective immediately and would run through January 28, 2004 unless earlier terminated or completed.



CHIEF FINANCIAL OFFICER



The Board of Directors at its meeting on January 28, 2003,
confirmed the appointment of Dennis B. Brown as Chief Financial Officer and Treasurer.



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 December 18, 2002, as amended on January 10, 2003, a Current Report on Form 8-K reporting the special purpose financial
statement of Capital Vial.



Apogent filed on
January 6, 2003 a Current Report on Form 8-K announcing the resignation of Jeffrey C. Leathe as its Executive Vice President, Chief Financial Officer and Treasurer.



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: February 13, 2003 |  |  |  | /s/ Dennis B. Brown                  
|                        |  |  |  |                                      
|                        |  |  |  | *                                    



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CERTIFICATIONS



I, Frank H. Jellinek, Jr.,
certify that:



1. I have reviewed this quarterly report on Form
10-Q of Apogent Technologies Inc.;



2. Based on my knowledge,
this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this quarterly report;



3. Based on my
knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;



4. The
registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



6. The registrants other certifying officers
and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material weaknesses.



Date: February 13, 2003



/s/ Frank H. Jellinek Jr.

Frank H. Jellinek, Jr.

Chief Executive Officer



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CERTIFICATIONS



I, Dennis B. Brown,
certify that:



1. I have reviewed this quarterly report on Form
10-Q of Apogent Technologies Inc.;



2. Based on my knowledge,
this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this quarterly report;



3. Based on my
knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;



4. The
registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



6. The registrants other certifying officers
and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material weaknesses.



Date: February 13, 2003



/s/ Dennis B. Brown

Dennis B. Brown

Chief Financial Officer



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APOGENT
TECHNOLOGIES INC.

(the Registrant)

(Commission File No. 1-11091)



EXHIBIT INDEX

to

QUARTERLY REPORT ON FORM 10-Q FOR

THE
QUARTERLY PERIOD ENDED DECEMBER 31, 2002



|Exhibit Number |  | Description                                                                                                                  |  | Incorporated Herein By Reference To |  | Filed or Submitted Herewith
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------- |  | ---------------------------
|12             |  | Computation of Ratio of Earnings to Fixed Charges                                                                            |  |                                     |  | X                          
|99.1           |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (CEO) |  |                                     |  | X                          
|99.2           |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (CFO) |  |                                     |  | X                          



33