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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, 2003



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)



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    x        NO ̈



At February 9, 2004, there were 88,545,131 shares of the Registrants
Common Stock, par value $0.01 per share, outstanding.



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES

FORM 10-Q

QUARTER ENDED DECEMBER 31, 2003



TABLE OF CONTENTS



|                                                                                                        |  |     
|------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                        |  | Page
|PART I
FINANCIAL INFORMATION                                                                           |  |     
|                                                                                                        | 
|Item 1:
Financial Statements                                                                            |  |     
|                                                                                                        | 
|Consolidated Balance Sheets as of December 31, 2003 and September 30, 2003 (unaudited)                  |  | 1   
|                                                                                                        | 
|Consolidated Statements of Income for the Three Months Ended December 31, 2003 and 2002 (unaudited)     |  | 2   
|                                                                                                        | 
|Consolidated Statement of Shareholders Equity for the Three Months Ended December 31, 2003 (unaudited) |  | 3   
|                                                                                                        | 
|Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2003 and 2002 (unaudited) |  | 4   
|                                                                                                        | 
|Notes to Unaudited Consolidated Financial Statements                                                    |  | 5   
|                                                                                                        | 
|Item 2:
Managements Discussion and Analysis of Financial Condition and Results of Operations           |  | 21  
|                                                                                                        | 
|Cautionary Factors                                                                                      |  | 33  
|                                                                                                        | 
|Item 3:
Quantitative and Qualitative Disclosures About Market Risk                                      |  | 37  
|                                                                                                        | 
|Item 4:
Controls and Procedures                                                                         |  | 37  
|                                                                                                        | 
|PART II
OTHER INFORMATION                                                                              |  |     
|                                                                                                        | 
|Item 2:
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities                |  | 38  
|                                                                                                        | 
|Item 4:
Submission of Matters to a Vote of Security Holders                                             |  | 38  
|                                                                                                        | 
|Item 6:
Exhibits and Reports on Form 8-K                                                                |  | 39  
|                                                                                                        | 
|SIGNATURE                                                                                               |  | 40  
|                                                                                                        | 
|EXHIBIT INDEX                                                                                           |  | EI-1



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##### Table of Contents

PART IFINANCIAL INFORMATION



ITEM 1:    Financial Statements



APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)



|                                                                                                                                                    |  |                  |           |   |                   |   |           |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | --------- | - | ----------------- | - | --------- | -
|                                                                                                                                                    |  | December 31,2003 |           |   | September 30,2003 |  
|Assets                                                                                                                                              |  |                  |           |   |                   |   |           |  
|Current assets:                                                                                                                                     |  |                  |           |   |                   |   |           |  
|Cash and cash equivalents                                                                                                                           |  | $                | 12,996    |   |                   | $ | 18,505    |  
|Marketable securitesavailable for sale                                                                                                             |  |                  | 15,169    |   |                   |   | 17,625    |  
|Accounts receivable (less allowance for doubtful accounts of $3,941 and $4,286 respectively)                                                        |  |                  | 172,136   |   |                   |   | 179,523   |  
|Inventories                                                                                                                                         |  |                  | 211,484   |   |                   |   | 206,549   |  
|Deferred income taxes                                                                                                                               |  |                  | 15,308    |   |                   |   | 15,308    |  
|Prepaid expenses and other current assets                                                                                                           |  |                  | 18,798    |   |                   |   | 16,518    |  
|                                                                                                                                                    |  |                  |           |   |                   |   |           |  
|Total current assets                                                                                                                                |  |                  | 445,891   |   |                   |   | 454,028   |  
|Property, plant and equipment, net                                                                                                                  |  |                  | 278,789   |   |                   |   | 282,752   |  
|Intangible assets, net                                                                                                                              |  |                  | 177,802   |   |                   |   | 179,492   |  
|Goodwill                                                                                                                                            |  |                  | 1,009,072 |   |                   |   | 999,243   |  
|Other assets                                                                                                                                        |  |                  | 41,266    |   |                   |   | 34,476    |  
|                                                                                                                                                    |  |                  |           |   |                   |   |           |  
|Total assets                                                                                                                                        |  | $                | 1,952,820 |   |                   | $ | 1,949,991 |  
|                                                                                                                                                    |  |                  |           |   |                   |   |           |  
|Liabilities and Shareholders Equity                                                                                                                |  |                  |           |   |                   |   |           |  
|Current liabilities:                                                                                                                                |  |                  |           |   |                   |   |           |  
|Short-term debt and overdrafts                                                                                                                      |  | $                | 12,001    |   |                   | $ | 12,801    |  
|Current portion of long-term debt                                                                                                                   |  |                  | 2,259     |   |                   |   | 2,281     |  
|Accounts payable                                                                                                                                    |  |                  | 40,484    |   |                   |   | 50,220    |  
|Income taxes payable                                                                                                                                |  |                  | 25,873    |   |                   |   | 20,053    |  
|Accrued payroll and employee benefits                                                                                                               |  |                  | 32,470    |   |                   |   | 34,484    |  
|Accrued interest expense                                                                                                                            |  |                  | 3,646     |   |                   |   | 8,844     |  
|Restructuring reserve                                                                                                                               |  |                  | 3,076     |   |                   |   | 1,758     |  
|Other current liabilities                                                                                                                           |  |                  | 36,178    |   |                   |   | 38,883    |  
|                                                                                                                                                    |  |                  |           |   |                   |   |           |  
|Total current liabilities                                                                                                                           |  |                  | 155,987   |   |                   |   | 169,324   |  
|Long-term debt, less current portion                                                                                                                |  |                  | 962,444   |   |                   |   | 891,989   |  
|Deferred income taxes                                                                                                                               |  |                  | 143,183   |   |                   |   | 137,683   |  
|Other liabilities                                                                                                                                   |  |                  | 27,881    |   |                   |   | 26,948    |  
|Commitments and contingent liabilities                                                                                                              |  |                  |          |   |                   |   |          |  
|Shareholders equity:                                                                                                                               |  |                  |           |   |                   |   |           |  
|Preferred stock, $0.01 par value; authorized 20,000,000 shares                                                                                      |  |                  |          |   |                   |   |          |  
|Common stock, $0.01 par value; authorized 250,000,000 shares; issued 107,057,865 shares; outstanding 87,534,709 and 92,013,345 shares,
respectively |  |                  | 1,071     |   |                   |   | 1,071     |  
|Equity rights, 50 rights at $1.09 per right                                                                                                         |  |                  |          |   |                   |   |          |  
|Additional paid-in capital                                                                                                                          |  |                  | 269,010   |   |                   |   | 270,119   |  
|Retained earnings                                                                                                                                   |  |                  | 765,550   |   |                   |   | 737,045   |  
|Accumulated other comprehensive income (loss)                                                                                                       |  |                  | 12,640    |   |                   |   | (3,127    | )
|Treasury common stock, 19,523,156 and 15,044,520 shares at cost                                                                                     |  |                  | (384,946  | ) |                   |   | (281,061  | )
|                                                                                                                                                    |  |                  |           |   |                   |   |           |  
|Total shareholders equity                                                                                                                          |  |                  | 663,325   |   |                   |   | 724,047   |  
|                                                                                                                                                    |  |                  |           |   |                   |   |           |  
|Total liabilities and shareholders equity                                                                                                          |  | $                | 1,952,820 |   |                   | $ | 1,949,991 |  
|                                                                                                                                                    |  |                  |           |   |                   |   |           |  



See accompanying notes
to the unaudited consolidated financial statements.



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)



|                                                             |  |                                 |         |   |      |   |         |  
|------------------------------------------------------------ |  | ------------------------------- | ------- | - | ---- | - | ------- | -
|                                                             |  | Three Months Ended December 31, |        
|                                                             |  | 2003                            |         |   | 2002 |  
|Net sales                                                    |  | $                               | 278,642 |   |      | $ | 257,798 |  
|Cost of sales:                                               |  |                                 |         |   |      |   |         |  
|Cost of products sold                                        |  |                                 | 147,988 |   |      |   | 132,957 |  
|Restructuring charges                                        |  |                                 | 145     |   |      |   |        |  
|                                                             |  |                                 |         |   |      |   |         |  
|Total cost of sales                                          |  |                                 | 148,133 |   |      |   | 132,957 |  
|                                                             |  |                                 |         |   |      |   |         |  
|Gross profit                                                 |  |                                 | 130,509 |   |      |   | 124,841 |  
|Selling, general and administrative expenses                 |  |                                 | 71,656  |   |      |   | 68,630  |  
|Restructuring charges and asset impairments                  |  |                                 | 4,415   |   |      |   |        |  
|                                                             |  |                                 |         |   |      |   |         |  
|Total selling, general and administrative expenses           |  |                                 | 76,071  |   |      |   | 68,630  |  
|                                                             |  |                                 |         |   |      |   |         |  
|Operating income                                             |  |                                 | 54,438  |   |      |   | 56,211  |  
|Other income (expense):                                      |  |                                 |         |   |      |   |         |  
|Interest expense, net                                        |  |                                 | (8,824  | ) |      |   | (10,411 | )
|Amortization of deferred financing fees                      |  |                                 | (1,323  | ) |      |   | (912    | )
|Loss on extinguishment of debt                               |  |                                 | (171    | ) |      |   |        |  
|Other, net                                                   |  |                                 | 355     |   |      |   | 491     |  
|                                                             |  |                                 |         |   |      |   |         |  
|Income from continuing operations before income taxes        |  |                                 | 44,475  |   |      |   | 45,379  |  
|Income taxes                                                 |  |                                 | 16,011  |   |      |   | 16,564  |  
|                                                             |  |                                 |         |   |      |   |         |  
|Income from continuing operations                            |  |                                 | 28,464  |   |      |   | 28,815  |  
|Discontinued operations, net of income taxes                 |  |                                 | 41      |   |      |   | (82     | )
|                                                             |  |                                 |         |   |      |   |         |  
|Net income                                                   |  | $                               | 28,505  |   |      | $ | 28,733  |  
|                                                             |  |                                 |         |   |      |   |         |  
|Basic earnings per common share from continuing operations   |  | $                               | 0.31    |   |      | $ | 0.27    |  
|Discontinued operations                                      |  |                                 | 0.00    |   |      |   | (0.00   | )
|                                                             |  |                                 |         |   |      |   |         |  
|Basic earnings per common share                              |  | $                               | 0.31    |   |      | $ | 0.27    |  
|                                                             |  |                                 |         |   |      |   |         |  
|Diluted earnings per common share from continuing operations |  | $                               | 0.31    |   |      | $ | 0.27    |  
|Discontinued operations                                      |  | $                               | 0.00    |   |      |   | (0.00   | )
|                                                             |  |                                 |         |   |      |   |         |  
|Diluted earnings per common share                            |  | $                               | 0.31    |   |      | $ | 0.27    |  
|                                                             |  |                                 |         |   |      |   |         |  
|Weighted average basic shares outstanding                    |  |                                 | 90,729  |   |      |   | 105,719 |  
|Weighted average diluted shares outstanding                  |  |                                 | 92,039  |   |      |   | 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, 2003

(in thousands)

(unaudited)



|                                                          |  |             |       |              |   |                          |  |   |                  |   |                                            |   |         |                     |   |        |                          |  |   |          |   |  |   |          |  
|--------------------------------------------------------- |  | ----------- | ----- | ------------ | - | ------------------------ |  | - | ---------------- | - | ------------------------------------------ | - | ------- | ------------------- | - | ------ | ------------------------ |  | - | -------- | - |  | - | -------- | -
|                                                          |  | CommonStock |       | EquityRights |   | AdditionalPaid-InCapital |  |   | RetainedEarnings |   | AccumulatedOtherComprehensiveIncome (Loss) |   |         | TreasuryCommonStock |   |        | TotalShareholdersEquity | 
|Balance at September 30, 2003                             |  | $           | 1,071 |              | $ |                         |  | $ | 270,119          |   |                                            | $ | 737,045 |                     | $ | (3,127 | )                        |  | $ | (281,061 | ) |  | $ | 724,047  |  
|Comprehensive income:                                     |  |             |       |              |   |                          |  |   |                  |   |                                            |   |         |                     |   |        |                          |  |   |          |   |  |   |          |  
|Net income                                                |  |             |      |              |   |                         |  |   |                 |   |                                            |   | 28,505  |                     |   |       |                          |  |   |         |   |  |   | 28,505   |  
|Translation adjustment                                    |  |             |      |              |   |                         |  |   |                 |   |                                            |   |        |                     |   | 17,296 |                          |  |   |         |   |  |   | 17,296   |  
|Unrealized loss on marketable security net of tax of $927 |  |             |      |              |   |                         |  |   |                 |   |                                            |   |        |                     |   | (1,529 | )                        |  |   |         |   |  |   | (1,529   | )
|                                                          |  |             |       |              |   |                          |  |   |                  |   |                                            |   |         |                     |   |        |                          |  |   |          |   |  |   |          |  
|Total comprehensive income                                |  |             |      |              |   |                         |  |   |                 |   |                                            |   | 28,505  |                     |   | 15,767 |                          |  |   |         |   |  |   | 44,272   |  
|Treasury shares purchased                                 |  |             |      |              |   |                         |  |   |                 |   |                                            |   |        |                     |   |       |                          |  |   | (109,542 | ) |  |   | (109,542 | )
|Shares issued in connection with stock options            |  |             |      |              |   |                         |  |   | (2,134           | ) |                                            |   |        |                     |   |       |                          |  |   | 5,657    |   |  |   | 3,523    |  
|Tax benefit related to stock options                      |  |             |      |              |   |                         |  |   | 1,025            |   |                                            |   |        |                     |   |       |                          |  |   |         |   |  |   | 1,025    |  
|                                                          |  |             |       |              |   |                          |  |   |                  |   |                                            |   |         |                     |   |        |                          |  |   |          |   |  |   |          |  
|Balance at December 31, 2003                              |  | $           | 1,071 |              | $ |                         |  | $ | 269,010          |   |                                            | $ | 765,550 |                     | $ | 12,640 |                          |  | $ | (384,946 | ) |  | $ | 663,325  |  
|                                                          |  |             |       |              |   |                          |  |   |                  |   |                                            |   |         |                     |   |        |                          |  |   |          |   |  |   |          |  





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, |         
|                                                                                  |  | 2003                            |          |   | 2002 |  
|Cash flows from operating activities:                                             |  |                                 |          |   |      |   |          |  
|Net income                                                                        |  | $                               | 28,505   |   |      | $ | 28,733   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                 |          |   |      |   |          |  
|Discontinued operations                                                           |  |                                 | (41      | ) |      |   | 82       |  
|Depreciation                                                                      |  |                                 | 11,584   |   |      |   | 10,604   |  
|Amortization                                                                      |  |                                 | 5,223    |   |      |   | 4,848    |  
|Gain on sale of property plant and equipment                                      |  |                                 | 25       |   |      |   | (36      | )
|Asset impairments                                                                 |  |                                 | 2,156    |   |      |   |         |  
|Loss on extinguishment of debt                                                    |  |                                 | 171      |   |      |   |         |  
|Deferred income taxes                                                             |  |                                 | 5,500    |   |      |   |         |  
|Changes in assets and liabilities, net of effects of businesses acquired:         |  |                                 |          |   |      |   |          |  
|Decrease in accounts receivable                                                   |  |                                 | 9,634    |   |      |   | 16,657   |  
|Increase in inventories                                                           |  |                                 | (1,915   | ) |      |   | (12,784  | )
|Increase (decrease) in prepaid expenses and other current assets                  |  |                                 | (1,965   | ) |      |   | 634      |  
|Decrease in accounts payable                                                      |  |                                 | (10,349  | ) |      |   | (7,067   | )
|Increase (decrease) in income taxes payable                                       |  |                                 | 4,045    |   |      |   | (3,384   | )
|Decrease in accrued payroll and employee benefits                                 |  |                                 | (2,465   | ) |      |   | (3,780   | )
|Decrease in accrued interest expense                                              |  |                                 | (5,198   | ) |      |   | (8,443   | )
|Increase (decrease) in restructuring reserve                                      |  |                                 | 1,318    |   |      |   | (451     | )
|Increase (decrease) in other current liabilities                                  |  |                                 | (1,048   | ) |      |   | 2,753    |  
|Net change in other assets and liabilities                                        |  |                                 | (4,052   | ) |      |   | (1,103   | )
|                                                                                  |  |                                 |          |   |      |   |          |  
|Net cash provided by operating activities                                         |  |                                 | 41,128   |   |      |   | 27,263   |  
|                                                                                  |  |                                 |          |   |      |   |          |  
|Cash flows from investing activities:                                             |  |                                 |          |   |      |   |          |  
|Capital expenditures                                                              |  |                                 | (5,486   | ) |      |   | (9,897   | )
|Proceeds from sales of property, plant and equipment                              |  |                                 | 1,967    |   |      |   | 254      |  
|Net payments for businesses acquired                                              |  |                                 | (856     | ) |      |   | (20,834  | )
|Other investing activities                                                        |  |                                 | 2,000    |   |      |   | 2,070    |  
|                                                                                  |  |                                 |          |   |      |   |          |  
|Net cash used in investing activities                                             |  |                                 | (2,375   | ) |      |   | (28,407  | )
|                                                                                  |  |                                 |          |   |      |   |          |  
|Cash flows from financing activities:                                             |  |                                 |          |   |      |   |          |  
|Proceeds from revolving credit facility                                           |  |                                 | 144,200  |   |      |   | 117,800  |  
|Principal payments on revolving credit facility                                   |  |                                 | (417,506 | ) |      |   | (102,100 | )
|Proceeds from long-term debt                                                      |  |                                 | 345,000  |   |      |   |         |  
|Proceeds from the exercise of stock options                                       |  |                                 | 3,523    |   |      |   | 1,734    |  
|Purchase of treasury stock                                                        |  |                                 | (109,542 | ) |      |   | (19,730  | )
|Financing fees paid                                                               |  |                                 | (9,797   | ) |      |   |         |  
|Premium paid on extinguishment of debt and settlement of securities lending       |  |                                 | (171     | ) |      |   |         |  
|Other financing activities                                                        |  |                                 |         |   |      |   | (1,941   | )
|                                                                                  |  |                                 |          |   |      |   |          |  
|Net cash used in financing activities                                             |  |                                 | (44,293  | ) |      |   | (4,237   | )
|                                                                                  |  |                                 |          |   |      |   |          |  
|Effect of exchange rate changes on cash and cash equivalents                      |  |                                 | 31       |   |      |   | 4,809    |  
|                                                                                  |  |                                 |          |   |      |   |          |  
|Net decrease in cash and cash equivalents                                         |  |                                 | (5,509   | ) |      |   | (572     | )
|Cash and cash equivalents at beginning of period                                  |  |                                 | 18,505   |   |      |   | 16,327   |  
|                                                                                  |  |                                 |          |   |      |   |          |  
|Cash and cash equivalents at end of period                                        |  | $                               | 12,996   |   |      | $ | 15,755   |  
|                                                                                  |  |                                 |          |   |      |   |          |  



See accompanying notes
to unaudited consolidated financial statements.



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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



1.    Basis of Presentation



In the opinion of management, all adjustments that are necessary for a fair
statement of the results for the interim periods presented have been included, and are of a normal recurring nature. The results for the three-month period ended December 31, 2003 are not necessarily indicative of the results to be expected for the
full fiscal year. The financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles in the United States.
These statements should be read in conjunction with the Companys annual report on Form 10-K for the fiscal year ended September 30, 2003.



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



2.    Recent Accounting Pronouncements



Financial Accounting Standards Board Interpretation No. 45



Financial Accounting Standards Board Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others (FIN 45), requires that upon issuance of a guarantee, the guarantor must disclose and recognize a liability for the fair value of the obligation it assumes under that guarantee. The
initial recognition and measurement requirement of FIN 45 is effective for guarantees issued or modified after December 31, 2002. After December 31, 2002, Apogent entered into a new guarantee and has modified another guarantee. The modified
guarantee, as described below, is only subject to the disclosure requirements of FIN 45 as the guarantee represents contingent consideration in a business combination.



The disclosure requirements of FIN 45 are effective for interim and annual periods ending after December 15, 2002, and are
applicable to our product warranty liability and certain guarantees issued before December 31, 2002. Apogent has two guarantees issued prior to December 31, 2002 and that are subject to the disclosure provisions of FIN 45 and one guarantee that was
entered into after December 31, 2002.



Guarantees in
existence prior to December 31, 2002 which have been modified.    In addition to the purchase price paid for our Capitol Vial subsidiary, we agreed to pay the sellers three times the annual revenues of Capitol Vial for
product sales to the U.S. Department of Defense over the twelve-month period ending December 31, 2006, or such other earlier date as Apogent and the sellers agree. The maximum earnout payment cannot exceed $9.0 million. To date, Capitol Vial does
not have a contract with the U.S. Department of Defense, and no sales to the Department have been made.



Guarantees in existence prior to December 31, 2002 which have not been modified.    Our joint venture partner, Kimble Glass, is
entitled to a $4.0 million preferred distribution of the joint ventures available cash in each of the three fiscal years ending November 30, 2002, 2003, and 2004. If the available cash from the joint venture is insufficient in any of these
joint venture fiscal years to pay the $4.0 million preferred distribution to Kimble Glass, then we are obligated to pay Kimble Glass the difference. The joint venture distributes its available cash quarterly. Apogents equity in earnings in the
joint venture is recorded after giving effect to the preferred distribution to Kimble Glass. Available earnings and cash generated by the joint venture have been sufficient to satisfy the preferred distribution requirement to date and are
anticipated to be sufficient to satisfy this requirement until the requirement expires on November 30, 2004. As of December 31, 2003, the maximum amount that potentially could be owed by us to Kimble Glass through November 30, 2004 would not exceed
$4.0 million.



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

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



Guarantees entered into after December 31, 2002.    In January 2003,
Apogent entered into an agreement with a customer that guarantees total payments of $1.7 million through December 2005. In return for the guarantee, Apogent is a participant in certain preferred marketing and sales promotion efforts of the customer.
Apogent has recorded the transaction in accordance with the measurement and recognition requirements of FIN 45.



A rollforward of our product warranties is as follows:



|                                     |  |                  |       |                             |   |           |  |               |       |  |   |      
|------------------------------------ |  | ---------------- | ----- | --------------------------- | - | --------- |  | ------------- | ----- |  | - | -----
|                                     |  | Beginningbalance |       | Paymentsand otherreductions |   | Additions |  | Endingbalance
|                                     |  | (in thousands)  
|Year ended September 30, 2003        |  | $                | 1,462 |                             | $ | 1,542     |  | $             | 1,318 |  | $ | 1,238
|Three months ended December 31, 2003 |  | $                | 1,238 |                             | $ | 189       |  | $             | 88    |  | $ | 1,137



In the normal course
of business, Apogent indemnifies other parties, including customers, lessors, and parties to other transactions with Apogent, with respect to certain matters. In some of these contracts we have agreed to hold the other party harmless against losses
arising from a breach of representations or covenants (including payment obligations), or from intellectual property infringement, or other claims made against certain parties. These agreements may limit the time within which an indemnification
claim can be made and the amount of the claim. In addition, we have entered into indemnification agreements with our officers and directors.



It is not possible to determine the maximum potential amount under these indemnification agreements due to the unique facts and circumstances involved in
each particular agreement. Historically, payments made under these agreements have not had a material impact on our operating results or financial position.



Financial Accounting Standards Board Interpretation No. 46(R)



In December 2003, the FASB issued FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities
(FIN 46(R)). FIN 46(R) clarifies situations in which entities shall be subject to consolidation. FIN 46 (R) is effective for all variable interest entities for periods ending after December 15, 2003. The Company has completed its
evaluation and determined that it has no variable interest entities and that the adoption of FIN 46 (R) did not have a material impact on the Companys financial statements.



6



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

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



3.    Fair Value of Stock Options



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



|                                                                                                                                            |  |                                |        |      |   |       
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ------ | ---- | - | ------
|                                                                                                                                            |  | Three Months EndedDecember 31,
|                                                                                                                                            |  | 2003                           |        | 2002
|Net income, as reported                                                                                                                     |  | $                              | 28,505 |      | $ | 28,733
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                                | 2,870  |      |   | 3,669 
|                                                                                                                                            |  |                                |        |      |   |       
|Pro forma net income                                                                                                                        |  | $                              | 25,635 |      | $ | 25,064
|                                                                                                                                            |  |                                |        |      |   |       
|Earnings per share:                                                                                                                         |  |                                |        |      |   |       
|Basic-as reported                                                                                                                           |  | $                              | 0.31   |      | $ | 0.27  
|                                                                                                                                            |  |                                |        |      |   |       
|Basic-pro forma                                                                                                                             |  | $                              | 0.28   |      | $ | 0.24  
|                                                                                                                                            |  |                                |        |      |   |       
|Diluted-as reported                                                                                                                         |  | $                              | 0.31   |      | $ | 0.27  
|                                                                                                                                            |  |                                |        |      |   |       
|Diluted-pro forma                                                                                                                           |  | $                              | 0.28   |      | $ | 0.23  
|                                                                                                                                            |  |                                |        |      |   |       



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



|                        |  |                                |   |  |           |  
|----------------------- |  | ------------------------------ | - |  | --------- | -
|                        |  | Three Months EndedDecember 31, |  
|                        |  | 2003                           |   |  | 2002      |  
|Volatility              |  | 31.16                          | % |  | 27.29     | %
|Risk-free rate          |  | 2.50                           | % |  | 3.69      | %
|Expected holding period |  | 8.0 years                      |   |  | 8.0 years |  
|Dividend yield          |  | 0.00                           | % |  | 0.00      | %



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



7



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

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



4.    Inventories



Inventories at December 31, 2003 and September 30, 2003 consisted of the following:



|                           |  |                  |         |                   |   |        
|-------------------------- |  | ---------------- | ------- | ----------------- | - | -------
|                           |  | December 31,2003 |         | September 30,2003
|Raw materials and supplies |  | $                | 73,291  |                   | $ | 66,816 
|Work in process            |  |                  | 18,956  |                   |   | 19,531 
|Finished goods             |  |                  | 119,237 |                   |   | 120,202
|                           |  |                  |         |                   |   |        
|                           |  | $                | 211,484 |                   | $ | 206,549
|                           |  |                  |         |                   |   |        



5.    Intangible Assets



Changes in foreign currency rates and final adjustments to purchase price of companies acquired during fiscal 2003 increased goodwill and intangible assets by approximately $12.5 million during the first three months of fiscal 2003.
Unamortizable intangible assets (goodwill) were approximately $1,009.1 million as of December 31, 2003.



Intangible assets are as follows:



|                                           |  |                   |           |   |                    |   |           |  
|------------------------------------------ |  | ----------------- | --------- | - | ------------------ | - | --------- | -
|                                           |  | December 31, 2003 |           |   | September 30, 2003 |  
|Amortizable intangible assets              |  |                   |           |   |                    |   |           |  
|Proprietary technology                     |  | $                 | 81,519    |   |                    | $ | 80,838    |  
|Trademarks                                 |  |                   | 81,972    |   |                    |   | 80,823    |  
|Patents                                    |  |                   | 37,005    |   |                    |   | 36,604    |  
|Licenses                                   |  |                   | 12,139    |   |                    |   | 11,913    |  
|Drawings                                   |  |                   | 11,833    |   |                    |   | 11,806    |  
|Non-compete agreements                     |  |                   | 11,053    |   |                    |   | 11,007    |  
|Customer lists and other                   |  |                   | 21,461    |   |                    |   | 21,342    |  
|Less: Accumulated amortization             |  |                   | (79,180   | ) |                    |   | (74,841   | )
|                                           |  |                   |           |   |                    |   |           |  
|Net amortizable intangible assets          |  |                   | 177,802   |   |                    |   | 179,492   |  
|Unamortizable intangible assets (goodwill) |  |                   | 1,009,072 |   |                    |   | 999,243   |  
|                                           |  |                   |           |   |                    |   |           |  
|                                           |  | $                 | 1,186,874 |   |                    | $ | 1,178,735 |  
|                                           |  |                   |           |   |                    |   |           |  



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

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



Intangible assets at December 31, 2003 by business segment are as follows:



|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|----------------------------------------------------- |  | ------------- | ------- | - | ------------- | - | ------- | ------------ |  | - | --------- | -
|                                                      |  | ClinicalGroup |         |   | ResearchGroup |   |         | Consolidated | 
|Proprietary technology                                |  | $             | 65,444  |   |               | $ | 16,075  |              |  | $ | 81,519    |  
|Less: Accumulated amortization                        |  |               | (21,504 | ) |               |   | (7,527  | )            |  |   | (29,031   | )
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|Net proprietary technology                            |  |               | 43,940  |   |               |   | 8,548   |              |  |   | 52,489    |  
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|Trademarks                                            |  |               | 18,452  |   |               |   | 63,520  |              |  |   | 81,972    |  
|Less: Accumulated amortization                        |  |               | (2,342  | ) |               |   | (17,279 | )            |  |   | (19,621   | )
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|Net trademarks                                        |  |               | 16,110  |   |               |   | 46,241  |              |  |   | 62,351    |  
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|Patents                                               |  |               | 20,632  |   |               |   | 16,373  |              |  |   | 37,005    |  
|Less: Accumulated amortization                        |  |               | (5,364  | ) |               |   | (4,820  | )            |  |   | (10,184   | )
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|Net patents                                           |  |               | 15,268  |   |               |   | 11,553  |              |  |   | 26,821    |  
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|Licenses                                              |  |               | 9,710   |   |               |   | 2,429   |              |  |   | 12,139    |  
|Less: Accumulated amortization                        |  |               | (3,292  | ) |               |   | (336    | )            |  |   | (3,628    | )
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|Net licenses                                          |  |               | 6,418   |   |               |   | 2,093   |              |  |   | 8,512     |  
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|Drawings                                              |  |               |        |   |               |   | 11,833  |              |  |   | 11,833    |  
|Less: Accumulated amortization                        |  |               |        |   |               |   | (6,363  | )            |  |   | (6,363    | )
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|Net drawings                                          |  |               |        |   |               |   | 5,470   |              |  |   | 5,470     |  
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|Non-compete agreements                                |  |               | 5,488   |   |               |   | 5,565   |              |  |   | 11,053    |  
|Less: Accumulated amortization                        |  |               | (3,858  | ) |               |   | (3,780  | )            |  |   | (7,638    | )
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|Net non-compete agreements                            |  |               | 1,630   |   |               |   | 1,785   |              |  |   | 3,416     |  
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|Other identifiable intangible assets(a)               |  |               | 8,680   |   |               |   | 12,086  |              |  |   | 20,766    |  
|Less: Accumulated amortization                        |  |               | (875    | ) |               |   | (1,433  | )            |  |   | (2,308    | )
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|Net other identifiable intangibles(a)                 |  |               | 7,805   |   |               |   | 10,653  |              |  |   | 18,456    |  
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|Net amortizable intangible assets(a)                  |  | $             | 91,171  |   |               | $ | 86,343  |              |  | $ | 177,514   |  
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|Excess cost over net asset values acquired (goodwill) |  | $             | 513,386 |   |               | $ | 495,686 |              |  | $ | 1,009,072 |  
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  
|Unamortizable intangible assets                       |  |               | 513,386 |   |               |   | 495,686 |              |  |   | 1,009,072 |  
|                                                      |  |               |         |   |               |   |         |              |  |   |           |  

---

Note (a): At December 31, 2003, Apogent Corporate
Office had $695 of amortizable other identifiable intangible assets and $407 of related accumulated amortization that were not allocated to either of the business segments and are not included in the consolidated totals in the above table.



Amortization of intangible assets was $3,900 and $3,936 for
the three months ended December 31, 2003 and 2002, respectively. Amortization expense relating to the existing identifiable intangible assets for each of the next five years (beginning with fiscal 2004) is expected to be $14,624, $13,953, $13,315,
$12,782, and $11,664, respectively.



9



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

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



The changes in the carrying amount of goodwill for the three months ended December 31, 2003 are as
follows:



|                                                        |  |               |         |               |   |              |  |   |          
|------------------------------------------------------- |  | ------------- | ------- | ------------- | - | ------------ |  | - | ---------
|                                                        |  | ClinicalGroup |         | ResearchGroup |   | Consolidated
|Balance at September 30, 2003                           |  | $             | 513,216 |               | $ | 486,027      |  | $ | 999,243  
|Adjustments to purchase price of prior year acquisition |  |               |        |               |   | 856          |  |   | 856      
|Effect of change in foreign currencies                  |  |               | 170     |               |   | 8,803        |  |   | 8,973    
|                                                        |  |               |         |               |   |              |  |   |          
|Balance at December 31, 2003                            |  | $             | 513,386 |               | $ | 495,686      |  | $ | 1,009,072
|                                                        |  |               |         |               |   |              |  |   |          



6.    Long-Term
Debt



Floating Rate CODES



On December 17, 2003, Apogent issued $300 million principal amount of its
floating rate senior convertible contingent debt securities (floating rate CODES), and on December 30, 2003, Apogent issued an additional $45 million principal amount of these securities upon the exercise by the initial purchasers of their option to
purchase up to an additional $45 million principal amount of floating rate CODES. The floating rate CODES are due in 2033.



The floating rate CODES bear interest at a floating rate equal to 3-month LIBOR minus 125 basis points (but not less than 0% per annum), payable in cash.
The securities will be convertible into approximately 10,426 shares of Apogent common stock using a conversion price of $33.09 per share of common stock, subject to adjustment in certain circumstances (reflecting a premium of approximately 42%,
relative to the closing price for Apogents common stock of $23.30 on December 11, 2003) under the following circumstances: (a) if the price of Apogents common stock exceeds the conversion price by 130% for at least 20 trading days during
specified periods, (b) on or before December 15, 2028, if for at least 10 consecutive trading days, the securities trade below 98% of the average conversion value for the securities during that period, (c) if any of the credit ratings assigned to
the securities fall below specified levels or other adverse credit rating developments occur, (d) if Apogent calls the securities for redemption, or (e) upon the occurrence of specified corporate transactions. Apogent may redeem all or some of the
floating rate CODES on or after March 15, 2010 at par plus accrued and unpaid interest, if any, to the redemption date. Apogent may be required to repurchase the floating rate CODES, at the option of the holders, on December 15, 2008, March 15,
2010, December 15, 2014, December 15, 2019, December 15, 2024, and December 15, 2029, at par plus accrued and unpaid interest, if any, to the redemption date. Apogent may also be required to repurchase the securities upon a change in control at par
plus accrued and unpaid interest, if any, to the redemption date. The floating rate CODES rank equal with all existing and future senior unsecured indebtedness and will be effectively junior to the outstanding indebtedness and other liabilities,
including trade payables, of our non-guarantor subsidiaries.



2.25% CODES



On October 10, 2001,
Apogent issued $300 million of senior convertible contingent debt securities (2.25% CODES). Although the 2.25% CODES will mature on October 15, 2021, the holders of the 2.25% CODES may require Apogent to repurchase all or any portion of them on
October 20, 2004 and on October 15, 2006, 2011, and 2016, or upon a change of control. Apogent also has the right to redeem some or all of the 2.25% CODES on or after October 20, 2004. If the holders of the 2.25% CODES require Apogent to repurchase
any or all of the 2.25% CODES on October 20, 2004, Apogent intends to refinance the obligation on a long-term basis using its revolving credit facility that matures in July 2008. Therefore, in accordance with FAS 6, Apogent has classified the 2.25%
CODES as a non-current liability.



10



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

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



Although no conversion features outlined in our 2.25% CODES have been met, holders may convert any
outstanding 2.25% CODES (or portions of outstanding 2.25% CODES) into approximately 9,839 shares of Apogents common stock at the current conversion price of approximately $30.49 per share (equal to a conversion rate of 32.7955 shares per
$1,000 principal amount of 2.25% CODES) under the following circumstances: a) during any conversion period if the sale price of our common stock for at least 20 trading days in the 30 consecutive trading-day period ending on the first day of the
conversion period was more than 120% of the conversion price on that thirtieth trading day; b) during the five business-day period following any 10 consecutive trading-day period in which the average of the trading prices for the 2.25% CODES for
that 10 trading-day period was less than 105% of the average conversion value for the 2.25% CODES during that period; c) during any period in which the credit rating assigned to the 2.25% CODES by either Moodys or Standard & Poors is
lower than Ba2 or BB+, respectively, in which the credit rating assigned to the 2.25% CODES is suspended or withdrawn by either rating agency or in which neither rating agency continues to rate the 2.25% CODES or provide ratings services or coverage
to Apogent; d) if the Company has called the 2.25% CODES for redemption; or e) upon the occurrence of certain corporate transactions.



7.    Restructuring



During the three months ended December 31, 2003, the Company recorded additional restructuring charges of approximately $4,603 (approximately $2,981 net
of tax), related to restructuring activities announced during fiscal 2003, for the consolidation of certain facilities and discontinuance of certain product lines due to product rationalizations. The restructuring charges were primarily classified
as a component of selling, general, and administrative expenses which consisted of approximately $2,156 related to write-off of fixed assets and a $2,404 charge for the present value of future lease payments less assumed sublease amounts.



A rollforward of these restructuring activities is as follows:



|                           |  |              |        |   |              |   |        |                |  |   |                         |   |  |       |        |   |       |   |     |   |  |   |        |  
|-------------------------- |  | ------------ | ------ | - | ------------ | - | ------ | -------------- |  | - | ----------------------- | - |  | ----- | ------ | - | ----- | - | --- | - |  | - | ------ | -
|                           |  | Severance(a) |        |   | Inventory(b) |   |        | FixedAssets(b) |  |   | FacilityClosureCosts(c) |   |  | Other |        |   | Total |  
|2003 Restructuring charges |  | $            | 3,664  |   |              | $ | 5,825  |                |  | $ | 2,798                   |   |  | $     | 1,220  |   |       | $ | 28  |   |  | $ | 13,535 |  
|2003 Cash payments         |  |              | (2,378 | ) |              |   |       |                |  |   |                        |   |  |       | (1,070 | ) |       |   |    |   |  |   | (3,448 | )
|2003 Non-cash charges      |  |              |       |   |              |   | (5,825 | )              |  |   | (2,798                  | ) |  |       |       |   |       |   | (28 | ) |  |   | (8,651 | )
|                           |  |              |        |   |              |   |        |                |  |   |                         |   |  |       |        |   |       |   |     |   |  |   |        |  
|September 30, 2003 balance |  | $            | 1,286  |   |              | $ |       |                |  | $ |                        |   |  | $     | 150    |   |       | $ |    |   |  | $ | 1,436  |  
|2004 Restructuring charges |  |              |       |   |              |   |       |                |  |   | 2,156                   |   |  |       | 2,404  |   |       |   |    |   |  |   | 4,560  |  
|2004 Cash payments         |  |              | (603   | ) |              |   |       |                |  |   |                        |   |  |       |       |   |       |   |    |   |  |   | (603   | )
|2004 Non-cash charges      |  |              |       |   |              |   |       |                |  |   | (2,156                  | ) |  |       | (447   | ) |       |   |    |   |  |   | (2,603 | )
|                           |  |              |        |   |              |   |        |                |  |   |                         |   |  |       |        |   |       |   |     |   |  |   |        |  
|December 31, 2003 balance  |  | $            | 683    |   |              | $ |       |                |  | $ |                        |   |  | $     | 2,107  |   |       | $ |    |   |  | $ | 2,790  |  
|                           |  |              |        |   |              |   |        |                |  |   |                         |   |  |       |        |   |       |   |     |   |  |   |        |  

---

|(a) |  | Amount represents severance and termination costs for 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.
|--- |  | ---------------------------------------------------------------------------------------



As of December 31, 2003, included in the restructuring liability was a balance of $286 related to fiscal 2002 facility
closure activities.



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

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



The Company expects to make future cash payments of approximately $1,700 associated with the above
restructuring actions during fiscal 2004 and approximately $1,376 in fiscal 2005 and beyond.



8.    Capital Stock



During the three months ended December 31, 2003, the Company purchased approximately 4,761 shares of its common stock at an average purchase price of $23.01 per share. The aggregate purchase price of the shares
purchased was approximately $109,542.



9.    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 EndedDecember 31,
|                                                       |  | 2003                           |  | 2002   
|Basic                                                  |  | 90,729                         |  | 105,719
|Effect of assumed conversion of employee stock options |  | 1,310                          |  | 2,189  
|                                                       |  |                                |  |        
|Diluted                                                |  | 92,039                         |  | 107,010
|                                                       |  |                                |  |        



Excluded from the
shares used in calculating the diluted earnings per common share in the above table are options to purchase 4,388 and 5,515 shares of common stock for the three months ended December 31, 2003 and 2002, respectively, as their effects would have been
anti-dilutive. Also excluded from the shares used in calculating the diluted earnings per common share are approximately 9,839 shares of common stock issuable upon the conversion of our senior convertible contingent debt securities (2.25% CODES)
based on a conversion price of $30.49 per share and approximately 10,426 shares of common stock issuable upon the conversion of our floating rate senior convertible contingent debt securities (floating rate CODES) based on a conversion price of
$33.09 per share.



10.    Segment Information



During fiscal 2003, we realigned our lines of business
for financial reporting purposes. Our three former business segments (clinical diagnostics, labware and life sciences, and laboratory equipment) were reclassified into two business segments: Clinical Group and Research Group. The Clinical Group
business segment is the former clinical diagnostics business segment. The Research Group business segment is composed of the former labware and life sciences and laboratory equipment business segments.



The Companys operating subsidiaries are engaged primarily in the
manufacture and sale of laboratory products in the United States and other countries. The Companys products are categorized in the business segments of: the Clinical Group and the Research Group. Corporate office expenses are allocated to the
business segments based on net sales. A description of the business segments follows:



Clinical Group



Our Clinical Group manufactures and sells products primarily to clinical and commercial laboratories and to scientific research and industrial customers. These products are used in a number of in vitro (out of body)



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APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

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



diagnostic applications, including specimen collection, specimen transportation, drug testing, therapeutic drug monitoring, and infectious disease detection.
Other applications include human tissue research and human cell research, with an emphasis on cancer applications. Clinical group products include:



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



| | n |  | stains and reagents;
| | - |  | --------------------



| | n |  | instrumentation for human tissue and cell research;
| | - |  | ---------------------------------------------------



| | n |  | diagnostic test kits;
| | - |  | ---------------------



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



| | n |  | culture media;
| | - |  | --------------



| | n |  | diagnostic reagents; and
| | - |  | ------------------------



| | n |  | other products used in detecting and/or monitoring the existence of infectious diseases and conditions, therapeutic drugs, and drugs of abuse.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



Research Group



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



| | n |  | reusable plastic and glass products;
| | - |  | ------------------------------------



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



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



| | n |  | environmental and safety containers;
| | - |  | ------------------------------------



| | n |  | liquid handling automation products;
| | - |  | ------------------------------------



| | n |  | glass liquid sample vials and seals used in various applications;
| | - |  | -----------------------------------------------------------------



| | n |  | heating, cooling, shaking, stirring, mixing, and temperature control instruments; and
| | - |  | -------------------------------------------------------------------------------------



| | n |  | water purification systems.
| | - |  | ---------------------------



13



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##### Table of Contents

APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

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



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



|                                               |  |               |         |               |   |              |  |   |        |   |  |   |          
|---------------------------------------------- |  | ------------- | ------- | ------------- | - | ------------ |  | - | ------ | - |  | - | ---------
|                                               |  | ClinicalGroup |         | ResearchGroup |   | Eliminations |  |   | Total 
|Three Months Ended December 31, 2003           |  |               |         |               |   |              |  |   |        |   |  |   |          
|                                               |  |               |         |              
|Revenues:                                      |  |               |         |               |   |              |  |   |        |   |  |   |          
|External customer                              |  | $             | 129,706 |               | $ | 148,936      |  | $ |       |   |  | $ | 278,642  
|Intersegment                                   |  |               | 2,723   |               |   | 215          |  |   | (2,938 | ) |  |   |         
|Total revenues                                 |  |               | 132,429 |               |   | 149,151      |  |   | (2,938 | ) |  |   | 278,642  
|Gross profit                                   |  |               | 61,196  |               |   | 69,313       |  |   |       |   |  |   | 130,509  
|Selling general and administrative             |  |               | 30,215  |               |   | 45,856       |  |   |       |   |  |   | 76,071   
|Operating income                               |  |               | 30,981  |               |   | 23,457       |  |   |       |   |  |   | 54,438   
|Depreciation and amortization                  |  |               | 7,625   |               |   | 9,182        |  |   |       |   |  |   | 16,807   
|Interest income                                |  |               | 18      |               |   | 19           |  |   |       |   |  |   | 37       
|Interest expense                               |  |               | 4,125   |               |   | 4,736        |  |   |       |   |  |   | 8,861    
|Expenditures for property, plant and equipment |  |               | 1,814   |               |   | 3,672        |  |   |       |   |  |   | 5,486    
|Segment assets (as of December 31, 2003)       |  |               | 943,342 |               |   | 1,009,478    |  |   |       |   |  |   | 1,952,820
|                                               |  |               |         |              
|Three Months Ended December 31, 2002           |  |               |         |               |   |              |  |   |        |   |  |   |          
|                                               |  |               |         |              
|Revenues:                                      |  |               |         |               |   |              |  |   |        |   |  |   |          
|External customer                              |  | $             | 119,413 |               | $ | 138,385      |  | $ |       |   |  | $ | 257,798  
|Intersegment                                   |  |               | 2,668   |               |   | 127          |  |   | (2,795 | ) |  |   |         
|Total revenues                                 |  |               | 122,081 |               |   | 138,512      |  |   | (2,795 | ) |  |   | 257,798  
|Gross profit                                   |  |               | 56,169  |               |   | 68,672       |  |   |       |   |  |   | 124,841  
|Selling general and administrative             |  |               | 27,986  |               |   | 40,644       |  |   |       |   |  |   | 68,630   
|Operating income                               |  |               | 28,183  |               |   | 28,028       |  |   |       |   |  |   | 56,211   
|Depreciation and amortization                  |  |               | 7,224   |               |   | 8,229        |  |   |       |   |  |   | 15,453   
|Interest income                                |  |               | 15      |               |   | 18           |  |   |       |   |  |   | 33       
|Interest expense                               |  |               | 4,844   |               |   | 5,600        |  |   |       |   |  |   | 10,444   
|Expenditures for property, plant and equipment |  |               | 4,158   |               |   | 5,739        |  |   |       |   |  |   | 9,897    



14



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##### Table of Contents

APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

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



11.    Supplementary Cash Flow Information



|                                                   |  |                                 |        |      |   |        |  
|-------------------------------------------------- |  | ------------------------------- | ------ | ---- | - | ------ | -
|                                                   |  | Three Months Ended December 31, |       
|                                                   |  | 2003                            |        | 2002 |  
|Supplemental disclosures of cash flow information: |  |                                 |        |      |   |        |  
|                                                   |  |                                
|Cash paid for acquisitions, net of cash acquired:  |  |                                 |        |      |   |        |  
|Tangible assets                                    |  | $                               |       |      | $ | 1,964  |  
|Liabilities assumed                                |  |                                 |       |      |   | (2,113 | )
|                                                   |  |                                 |        |      |   |        |  
|Net assets assumed                                 |  |                                 |       |      |   | (149   | )
|Goodwill and intangible assets                     |  |                                 | 856    |      |   | 22,625 |  
|Debt issued                                        |  |                                 |       |      |   |       |  
|Less Cash acquired, if any                         |  |                                 |       |      |   | (1,642 | )
|                                                   |  |                                 |        |      |   |        |  
|Cash paid for acquisitions, net of cash acquired   |  | $                               | 856    |      | $ | 20,834 |  
|                                                   |  |                                 |        |      |   |        |  
|Cash paid during the period for:                   |  |                                 |        |      |   |        |  
|Interest                                           |  | $                               | 14,992 |      | $ | 18,746 |  
|                                                   |  |                                 |        |      |   |        |  
|Income taxes                                       |  | $                               | 4,493  |      | $ | 18,748 |  
|                                                   |  |                                 |        |      |   |        |  
|Capital lease obligations incurred                 |  | $                               | 36     |      | $ | 44     |  
|                                                   |  |                                 |        |      |   |        |  



12.    Condensed Consolidating Financial Statements



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



Below are the condensed consolidating balance sheets as
of December 31, 2003 and September 30, 2003, and statements of income and statements of cash flows for the three months ended December 31, 2003 and 2002, respectively, of the Company and its subsidiaries, reflecting the subsidiary guarantors for the
revolving credit facility, the 8% senior notes, both classes of CODES, and the 61/2% senior subordinated notes.
For guarantors acquired during the period, the results of operations are included from the date of acquisition.



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



15



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##### Table of Contents

APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

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



Condensed Consolidating Balance Sheets



|                                                      |  |                         |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|----------------------------------------------------- |  | ----------------------- | --------- | - | --------------------- | - | ---------- | ------------------------ |  | - | ------------ | - |  | ------------ | ---------- | - |  | - | --------- | -
|                                                      |  | As of December 31, 2003 |          
|                                                      |  | ApogentTechnologies     |           |   | GuarantorSubsidiaries |   |            | NonGuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |           
|Assets                                                |  |                         |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Current assets:                                       |  |                         |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Cash and cash equivalents                             |  | $                       | 12,433    |   |                       | $ |           |                          |  | $ | 7,500        |   |  | $            | (6,937     | ) |  | $ | 12,996    |  
|Accounts receivable, net                              |  |                         |          |   |                       |   | 125,050    |                          |  |   | 47,086       |   |  |              |           |   |  |   | 172,136   |  
|Inventories, net                                      |  |                         | 1,263     |   |                       |   | 154,124    |                          |  |   | 56,097       |   |  |              |           |   |  |   | 211,484   |  
|Other current assets                                  |  |                         | 881       |   |                       |   | 28,819     |                          |  |   | 19,575       |   |  |              |           |   |  |   | 49,275    |  
|                                                      |  |                         |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Total current assets                                  |  |                         | 14,577    |   |                       |   | 307,993    |                          |  |   | 130,258      |   |  |              | (6,937     | ) |  |   | 445,891   |  
|Property, plant and equipment, net                    |  |                         | 11,580    |   |                       |   | 185,052    |                          |  |   | 82,157       |   |  |              |           |   |  |   | 278,789   |  
|Intangible assets, net                                |  |                         | 288       |   |                       |   | 961,367    |                          |  |   | 225,219      |   |  |              |           |   |  |   | 1,186,874 |  
|Investment in subsidiaries                            |  |                         | 2,135,052 |   |                       |   | 57,054     |                          |  |   | (1,185       | ) |  |              | (2,190,921 | ) |  |   |          |  
|Other assets                                          |  |                         | 31,691    |   |                       |   | 8,399      |                          |  |   | 1,176        |   |  |              |           |   |  |   | 41,266    |  
|                                                      |  |                         |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Total assets                                          |  | $                       | 2,193,188 |   |                       | $ | 1,519,865  |                          |  | $ | 437,625      |   |  | $            | (2,197,858 | ) |  | $ | 1,952,820 |  
|                                                      |  |                         |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Liabilities and Shareholders Equity                  |  |                         |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Current liabilities:                                  |  |                         |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Accounts payable                                      |  | $                       | 1,226     |   |                       | $ | 35,548     |                          |  | $ | 10,647       |   |  | $            | (6,937     | ) |  | $ | 40,484    |  
|Short-term debt and current portion of long-term debt |  |                         |          |   |                       |   | 14,218     |                          |  |   | 42           |   |  |              |           |   |  |   | 14,260    |  
|Income taxes payable                                  |  |                         | 151       |   |                       |   | 18,379     |                          |  |   | 9,721        |   |  |              | (2,378     | ) |  |   | 25,873    |  
|Accrued expenses and other current liabilities        |  |                         | 17,626    |   |                       |   | 20,345     |                          |  |   | 37,399       |   |  |              |           |   |  |   | 75,370    |  
|                                                      |  |                         |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Total current liabilities                             |  |                         | 19,003    |   |                       |   | 88,490     |                          |  |   | 57,809       |   |  |              | (9,315     | ) |  |   | 155,987   |  
|                                                      |  |                         |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Long-term debt, less current portion                  |  |                         |          |   |                       |   | 962,413    |                          |  |   | 31           |   |  |              |           |   |  |   | 962,444   |  
|Deferred income taxes                                 |  |                         | 127,058   |   |                       |   |           |                          |  |   | 16,125       |   |  |              |           |   |  |   | 143,183   |  
|Other liabilities                                     |  |                         | 23,606    |   |                       |   | 2,540      |                          |  |   | 1,735        |   |  |              |           |   |  |   | 27,881    |  
|Net intercompany payable/(receivable)                 |  |                         | 865,504   |   |                       |   | (1,188,594 | )                        |  |   | 323,055      |   |  |              | 35         |   |  |   |          |  
|Commitments and contingent liabilities                |  |                         |          |   |                       |   |           |                          |  |   |             |   |  |              |           |   |  |   |          |  
|Shareholders equity                                  |  |                         |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Preferred stock                                       |  |                         |          |   |                       |   |           |                          |  |   |             |   |  |              |           |   |  |   |          |  
|Common stock                                          |  |                         | 1,071     |   |                       |   |           |                          |  |   |             |   |  |              |           |   |  |   | 1,071     |  
|Equity rights                                         |  |                         |          |   |                       |   |           |                          |  |   |             |   |  |              |           |   |  |   |          |  
|Additional paid-in-capital                            |  |                         | 248,538   |   |                       |   | 2,114,319  |                          |  |   | 78,460       |   |  |              | (2,172,307 | ) |  |   | 269,010   |  
|Retained earnings (deficit)                           |  |                         | 1,234,033 |   |                       |   | (479,515   | )                        |  |   | 27,303       |   |  |              | (16,271    | ) |  |   | 765,550   |  
|Accumulated other comprehensive income (loss)         |  |                         | (15,929   | ) |                       |   | 20,212     |                          |  |   | 8,357        |   |  |              |           |   |  |   | 12,640    |  
|Treasury stock (at cost)                              |  |                         | (309,696  | ) |                       |   |           |                          |  |   | (75,250      | ) |  |              |           |   |  |   | (384,946  | )
|                                                      |  |                         |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Total shareholders equity                            |  |                         | 1,158,017 |   |                       |   | 1,655,016  |                          |  |   | 38,870       |   |  |              | (2,188,578 | ) |  |   | 663,325   |  
|                                                      |  |                         |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Total liabilities and shareholders equity            |  | $                       | 2,193,188 |   |                       | $ | 1,519,865  |                          |  | $ | 437,625      |   |  | $            | (2,197,858 | ) |  | $ | 1,952,820 |  
|                                                      |  |                         |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  



16



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##### Table of Contents

APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

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



Condensed Consolidating Balance Sheets(Continued)



|                                                      |  |                          |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|----------------------------------------------------- |  | ------------------------ | --------- | - | --------------------- | - | ---------- | ------------------------ |  | - | ------------ | - |  | ------------ | ---------- | - |  | - | --------- | -
|                                                      |  | As of September 30, 2003 |          
|                                                      |  | ApogentTechnologies      |           |   | GuarantorSubsidiaries |   |            | NonGuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |           
|Assets                                                |  |                          |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Current assets:                                       |  |                          |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Cash and cash equivalents                             |  | $                        | 15,999    |   |                       | $ |           |                          |  | $ | 5,916        |   |  | $            | (3,410     | ) |  | $ | 18,505    |  
|Accounts receivable, net                              |  |                          |          |   |                       |   | 132,755    |                          |  |   | 46,768       |   |  |              |           |   |  |   | 179,523   |  
|Inventories, net                                      |  |                          | 1,263     |   |                       |   | 151,880    |                          |  |   | 53,405       |   |  |              |           |   |  |   | 206,548   |  
|Other current assets                                  |  |                          | 4,524     |   |                       |   | 25,549     |                          |  |   | 19,379       |   |  |              |           |   |  |   | 49,452    |  
|                                                      |  |                          |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Total current assets                                  |  |                          | 21,786    |   |                       |   | 310,184    |                          |  |   | 125,468      |   |  |              | (3,410     | ) |  |   | 454,028   |  
|Property, plant and equipment, net                    |  |                          | 12,045    |   |                       |   | 191,736    |                          |  |   | 78,971       |   |  |              |           |   |  |   | 282,752   |  
|Intangible assets, net                                |  |                          | 299       |   |                       |   | 963,889    |                          |  |   | 214,547      |   |  |              |           |   |  |   | 1,178,735 |  
|Investment in subsidiaries                            |  |                          | 2,123,714 |   |                       |   | 57,054     |                          |  |   | (1,185       | ) |  |              | (2,179,583 | ) |  |   |          |  
|Other assets                                          |  |                          | 23,087    |   |                       |   | 10,244     |                          |  |   | 1,145        |   |  |              |           |   |  |   | 34,476    |  
|                                                      |  |                          |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Total assets                                          |  | $                        | 2,180,931 |   |                       | $ | 1,533,107  |                          |  | $ | 418,946      |   |  | $            | (2,182,993 | ) |  | $ | 1,949,991 |  
|                                                      |  |                          |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Liabilities and Shareholders Equity                  |  |                          |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Current liabilities:                                  |  |                          |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Accounts payable                                      |  | $                        | 1,061     |   |                       | $ | 40,168     |                          |  | $ | 12,401       |   |  | $            | (3,410     | ) |  | $ | 50,220    |  
|Short-term debt and current portion of long-term debt |  |                          |          |   |                       |   | 15,023     |                          |  |   | 59           |   |  |              |           |   |  |   | 15,082    |  
|Income taxes payable                                  |  |                          | 12,376    |   |                       |   | (541       | )                        |  |   | 10,596       |   |  |              | (2,378     | ) |  |   | 20,053    |  
|Accrued expenses and other current liabilities        |  |                          | 24,515    |   |                       |   | 22,256     |                          |  |   | 37,198       |   |  |              |           |   |  |   | 83,969    |  
|                                                      |  |                          |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Total current liabilities                             |  |                          | 37,952    |   |                       |   | 76,906     |                          |  |   | 60,254       |   |  |              | (5,788     | ) |  |   | 169,324   |  
|                                                      |  |                          |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Long-term debt, less current portion                  |  |                          |          |   |                       |   | 891,959    |                          |  |   | 30           |   |  |              |           |   |  |   | 891,989   |  
|Deferred income taxes                                 |  |                          | 122,167   |   |                       |   | 93         |                          |  |   | 15,423       |   |  |              |           |   |  |   | 137,683   |  
|Other liabilities                                     |  |                          | 22,515    |   |                       |   | 2,814      |                          |  |   | 1,619        |   |  |              |           |   |  |   | 26,948    |  
|Net intercompany payable/(receivable)                 |  |                          | 961,926   |   |                       |   | (1,267,849 | )                        |  |   | 305,888      |   |  |              | 35         |   |  |   |          |  
|Commitments and contingent liabilities                |  |                          |          |   |                       |   |           |                          |  |   |             |   |  |              |           |   |  |   |          |  
|Shareholders equity                                  |  |                          |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Preferred stock                                       |  |                          |          |   |                       |   |           |                          |  |   |             |   |  |              |           |   |  |   |          |  
|Common stock                                          |  |                          | 1,071     |   |                       |   |           |                          |  |   |             |   |  |              |           |   |  |   | 1,071     |  
|Equity rights                                         |  |                          |          |   |                       |   |           |                          |  |   |             |   |  |              |           |   |  |   |          |  
|Additional paid-in-capital                            |  |                          | 249,648   |   |                       |   | 2,102,980  |                          |  |   | 78,460       |   |  |              | (2,160,969 | ) |  |   | 270,119   |  
|Retained earnings (deficit)                           |  |                          | 1,016,019 |   |                       |   | (287,702   | )                        |  |   | 24,999       |   |  |              | (16,271    | ) |  |   | 737,045   |  
|Accumulated other comprehensive income (loss)         |  |                          | (24,556   | ) |                       |   | 13,906     |                          |  |   | 7,523        |   |  |              |           |   |  |   | (3,127    | )
|Treasury stock (at cost)                              |  |                          | (205,811  | ) |                       |   |           |                          |  |   | (75,250      | ) |  |              |           |   |  |   | (281,061  | )
|                                                      |  |                          |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Total shareholders equity                            |  |                          | 1,036,371 |   |                       |   | 1,829,184  |                          |  |   | 35,732       |   |  |              | (2,177,240 | ) |  |   | 724,047   |  
|                                                      |  |                          |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  
|Total liabilities and shareholders equity            |  | $                        | 2,180,931 |   |                       | $ | 1,533,107  |                          |  | $ | 418,946      |   |  | $            | (2,182,993 | ) |  | $ | 1,949,991 |  
|                                                      |  |                          |           |   |                       |   |            |                          |  |   |              |   |  |              |            |   |  |   |           |  



17



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##### Table of Contents

APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

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



Condensed Consolidating Statements of Income



|                                                       |  |                                              |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|------------------------------------------------------ |  | -------------------------------------------- | ------ | - | ---------------------- | - | ------- | -------------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | ------- | -
|                                                       |  | For the Three Months Ended December 31, 2003 |       
|                                                       |  | Apogent Technologies                         |        |   | Guarantor Subsidiaries |   |         | Non Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Net sales                                              |  | $                                            |       |   |                        | $ | 231,169 |                            |  | $ | 69,526       |   |  | $            | (22,053 | ) |  | $ | 278,642 |  
|Cost of sales                                          |  |                                              |       |   |                        |   | 127,303 |                            |  |   | 42,883       |   |  |              | (22,053 | ) |  |   | 148,133 |  
|                                                       |  |                                              |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Gross profit                                           |  |                                              |       |   |                        |   | 103,866 |                            |  |   | 26,643       |   |  |              |        |   |  |   | 130,509 |  
|Selling, general and administrative expenses           |  |                                              | 8,231  |   |                        |   | 50,196  |                            |  |   | 17,644       |   |  |              |        |   |  |   | 76,071  |  
|                                                       |  |                                              |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Operating income                                       |  |                                              | (8,231 | ) |                        |   | 53,670  |                            |  |   | 8,999        |   |  |              |        |   |  |   | 54,438  |  
|Other income (expense):                                |  |                                              |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Interest expense                                       |  |                                              |       |   |                        |   | (8,772  | )                          |  |   | (52          | ) |  |              |        |   |  |   | (8,824  | )
|Other, net                                             |  |                                              | (1,473 | ) |                        |   | 114     |                            |  |   | 220          |   |  |              |        |   |  |   | (1,139  | )
|                                                       |  |                                              |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Income before income taxes and discontinued operations |  |                                              | (9,704 | ) |                        |   | 45,012  |                            |  |   | 9,167        |   |  |              |        |   |  |   | 44,475  |  
|Income taxes                                           |  |                                              | (3,494 | ) |                        |   | 16,205  |                            |  |   | 3,300        |   |  |              |        |   |  |   | 16,011  |  
|                                                       |  |                                              |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Income from continuing operations                      |  |                                              | (6,210 | ) |                        |   | 28,807  |                            |  |   | 5,867        |   |  |              |        |   |  |   | 28,464  |  
|Income from discontinued operations, net of tax        |  |                                              |       |   |                        |   | 12      |                            |  |   | 29           |   |  |              |        |   |  |   | 41      |  
|                                                       |  |                                              |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Net income (loss)                                      |  | $                                            | (6,210 | ) |                        | $ | 28,819  |                            |  | $ | 5,896        |   |  | $            |        |   |  | $ | 28,505  |  
|                                                       |  |                                              |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|                                                       | 
|                                                       |  | For the Three Months Ended December 31, 2002 |       
|                                                       |  | Apogent Technologies                         |        |   | Guarantor Subsidiaries |   |         | Non Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Net sales                                              |  | $                                            |       |   |                        | $ | 217,970 |                            |  | $ | 59,998       |   |  | $            | (20,170 | ) |  | $ | 257,798 |  
|Cost of sales                                          |  |                                              |       |   |                        |   | 115,727 |                            |  |   | 36,390       |   |  |              | (19,160 | ) |  |   | 132,957 |  
|                                                       |  |                                              |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Gross profit                                           |  |                                              |       |   |                        |   | 102,243 |                            |  |   | 23,608       |   |  |              | (1,010  | ) |  |   | 124,841 |  
|Selling, general and administrative expenses           |  |                                              | 7,254  |   |                        |   | 46,441  |                            |  |   | 14,935       |   |  |              |        |   |  |   | 68,630  |  
|                                                       |  |                                              |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Operating income                                       |  |                                              | (7,254 | ) |                        |   | 55,802  |                            |  |   | 8,673        |   |  |              | (1,010  | ) |  |   | 56,211  |  
|Other income (expense):                                |  |                                              |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Interest expense                                       |  |                                              |       |   |                        |   | (10,348 | )                          |  |   | (63          | ) |  |              |        |   |  |   | (10,411 | )
|Other, net                                             |  |                                              |       |   |                        |   | (271    | )                          |  |   | (150         | ) |  |              |        |   |  |   | (421    | )
|                                                       |  |                                              |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Income before income taxes and discontinued operations |  |                                              | (7,254 | ) |                        |   | 45,183  |                            |  |   | 8,460        |   |  |              | (1,010  | ) |  |   | 45,379  |  
|Income taxes                                           |  |                                              | (3,016 | ) |                        |   | 16,492  |                            |  |   | 3,088        |   |  |              |        |   |  |   | 16,564  |  
|                                                       |  |                                              |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Income from continuing operations                      |  |                                              | (4,238 | ) |                        |   | 28,691  |                            |  |   | 5,372        |   |  |              | (1,010  | ) |  |   | 28,815  |  
|Loss from discontinued operations                      |  |                                              |       |   |                        |   | 407     |                            |  |   | (489         | ) |  |              |        |   |  |   | (82     | )
|                                                       |  |                                              |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Net income (loss)                                      |  | $                                            | (4,238 | ) |                        | $ | 29,098  |                            |  | $ | 4,883        |   |  | $            | (1,010  | ) |  | $ | 28,733  |  
|                                                       |  |                                              |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  



18



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##### Table of Contents

APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

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



Condensed Consolidating Statements of Cash Flows



|                                                                            |  |                                              |          |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|--------------------------------------------------------------------------- |  | -------------------------------------------- | -------- | - | ---------------------- | - | -------- | -------------------------- |  | - | ------------ | - | ------------ | - | - |  | - | -------- | -
|                                                                            |  | For the Three Months Ended December 31, 2003 |         
|                                                                            |  | Apogent Technologies                         |          |   | Guarantor Subsidiaries |   |          | Non Guarantor Subsidiaries |  |   | Eliminations |   | Consolidated |  
|Cash flows provided by (used in) operating activities:                      |  | $                                            | 102,575  |   |                        | $ | (64,923  | )                          |  | $ | 3,476        |   |              | $ |  |  | $ | 41,128   |  
|                                                                            |  |                                              |          |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Cash flows from investing activities:                                       |  |                                              |          |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Capital expenditures                                                        |  |                                              | (122     | ) |                        |   | (3,456   | )                          |  |   | (1,908       | ) |              |   |  |  |   | (5,486   | )
|Proceeds from sales of property, plant and equipment                        |  |                                              |         |   |                        |   | 1,963    |                            |  |   | 4            |   |              |   |  |  |   | 1,967    |  
|Net payments for businesses acquired                                        |  |                                              |         |   |                        |   | (856     | )                          |  |   |             |   |              |   |  |  |   | (856     | )
|Other investing activities                                                  |  |                                              |         |   |                        |   | 2,000    |                            |  |   |             |   |              |   |  |  |   | 2,000    |  
|                                                                            |  |                                              |          |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Net cash used in investing activities                                       |  |                                              | (122     | ) |                        |   | (349     | )                          |  |   | (1,904       | ) |              |   |  |  |   | (2,375   | )
|                                                                            |  |                                              |          |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Cash flows from financing activities:                                       |  |                                              |          |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Proceeds from long-term debt                                                |  |                                              |         |   |                        |   | 489,200  |                            |  |   |             |   |              |   |  |  |   | 489,200  |  
|Principal payments on long-term debt                                        |  |                                              |         |   |                        |   | (417,487 | )                          |  |   | (19          | ) |              |   |  |  |   | (417,506 | )
|Premium paid on extinguishment of debt and settlement of securities lending |  |                                              |         |   |                        |   | (171     | )                          |  |   |              |   |              |   |   |  |   | (171     | )
|Proceeds from the exercise of stock options and stock purchase program      |  |                                              | 3,523    |   |                        |   |         |                            |  |   |             |   |              |   |  |  |   | 3,523    |  
|Purchase of treasury stock                                                  |  |                                              | (109,542 | ) |                        |   |         |                            |  |   |             |   |              |   |  |  |   | (109,542 | )
|Other                                                                       |  |                                              |         |   |                        |   | (9,797   | )                          |  |   |             |   |              |   |  |  |   | (9,797   | )
|                                                                            |  |                                              |          |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Net cash provided by (used in) financing activities                         |  |                                              | (106,019 | ) |                        |   | 61,745   |                            |  |   | (19          | ) |              |   |  |  |   | (44,293  | )
|Effect of exchange rate on cash and cash equivalents                        |  |                                              |         |   |                        |   |         |                            |  |   | 31           |   |              |   |  |  |   | 31       |  
|                                                                            |  |                                              |          |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Net increase (decrease) in cash and cash equivalents                        |  |                                              | (3,566   | ) |                        |   | (3,527   | )                          |  |   | 1,584        |   |              |   |  |  |   | (5,509   | )
|Cash and cash equivalents at beginning of year                              |  |                                              | 15,999   |   |                        |   | (3,410   | )                          |  |   | 5,916        |   |              |   |  |  |   | 18,505   |  
|                                                                            |  |                                              |          |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Cash and cash equivalents at end of year                                    |  | $                                            | 12,433   |   |                        | $ | (6,937   | )                          |  | $ | 7,500        |   |              | $ |  |  | $ | 12,996   |  
|                                                                            |  |                                              |          |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Supplemental disclosures of cash flow information                           |  |                                              |          |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Cash paid during the year for:                                              |  |                                              |          |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Interest                                                                    |  | $                                            |         |   |                        | $ | 14,913   |                            |  | $ | 79           |   |              | $ |  |  | $ | 14,992   |  
|                                                                            |  |                                              |          |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Income taxes                                                                |  | $                                            | 1,217    |   |                        | $ |         |                            |  | $ | 3,276        |   |              | $ |  |  | $ | 4,493    |  
|                                                                            |  |                                              |          |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Capital lease obligations incurred                                          |  | $                                            |         |   |                        | $ | 36       |                            |  | $ |             |   |              | $ |  |  | $ | 36       |  
|                                                                            |  |                                              |          |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  



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##### Table of Contents

APOGENT TECHNOLOGIES INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

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



Condensed Consolidating Statements of Cash Flows(Continued)



|                                                                       |  |                                              |         |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|---------------------------------------------------------------------- |  | -------------------------------------------- | ------- | - | ---------------------- | - | -------- | -------------------------- |  | - | ------------ | - | ------------ | - | - |  | - | -------- | -
|                                                                       |  | For the Three Months Ended December 31, 2002 |        
|                                                                       |  | Apogent Technologies                         |         |   | Guarantor Subsidiaries |   |          | Non Guarantor Subsidiaries |  |   | Eliminations |   | Consolidated |  
|Cash flows provided by (used in) operating activities:                 |  | $                                            | 13,706  |   |                        | $ | 8,626    |                            |  | $ | 4,931        |   |              | $ |  |  | $ | 27,263   |  
|                                                                       |  |                                              |         |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Cash flows from investing activities:                                  |  |                                              |         |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Capital expenditures                                                   |  |                                              | (377    | ) |                        |   | (5,349   | )                          |  |   | (4,171       | ) |              |   |  |  |   | (9,897   | )
|Proceeds from sales of property, plant and equipment                   |  |                                              |        |   |                        |   | 153      |                            |  |   | 101          |   |              |   |  |  |   | 254      |  
|Net payments for businesses acquired                                   |  |                                              |        |   |                        |   | (20,834  | )                          |  |   |             |   |              |   |  |  |   | (20,834  | )
|Other investing activities                                             |  |                                              |        |   |                        |   | 2,070    |                            |  |   |             |   |              |   |  |  |   | 2,070    |  
|                                                                       |  |                                              |         |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Net cash used in investing activities                                  |  |                                              | (377    | ) |                        |   | (23,960  | )                          |  |   | (4,070       | ) |              |   |  |  |   | (28,407  | )
|                                                                       |  |                                              |         |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Cash flows from financing activities:                                  |  |                                              |         |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Proceeds from long-term debt                                           |  |                                              |        |   |                        |   | 117,800  |                            |  |   |             |   |              |   |  |  |   | 117,800  |  
|Principal payments on long-term debt                                   |  |                                              |        |   |                        |   | (102,100 | )                          |  |   |             |   |              |   |  |  |   | (102,100 | )
|Proceeds from the exercise of stock options and stock purchase program |  |                                              | 1,734   |   |                        |   |         |                            |  |   |             |   |              |   |  |  |   | 1,734    |  
|Purchase of treasury stock                                             |  |                                              | (19,730 | ) |                        |   |         |                            |  |   |             |   |              |   |  |  |   | (19,730  | )
|Other                                                                  |  |                                              | 45      |   |                        |   |         |                            |  |   | (1,986       | ) |              |   |  |  |   | (1,941   | )
|                                                                       |  |                                              |         |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Net cash provided by (used in) financing activities                    |  |                                              | (17,951 | ) |                        |   | 15,700   |                            |  |   | (1,986       | ) |              |   |  |  |   | (4,237   | )
|Effect of exchange rate on cash and cash equivalents                   |  |                                              |        |   |                        |   |         |                            |  |   | 4,809        |   |              |   |  |  |   | 4,809    |  
|                                                                       |  |                                              |         |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Net increase (decrease) in cash and cash equivalents                   |  |                                              | (4,622  | ) |                        |   | 366      |                            |  |   | 3,684        |   |              |   |  |  |   | (572     | )
|Cash and cash equivalents at beginning of year                         |  |                                              | 19,889  |   |                        |   | (7,553   | )                          |  |   | 3,991        |   |              |   |  |  |   | 16,327   |  
|                                                                       |  |                                              |         |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Cash and cash equivalents at end of year                               |  | $                                            | 15,267  |   |                        | $ | (7,187   | )                          |  | $ | 7,675        |   |              | $ |  |  | $ | 15,755   |  
|                                                                       |  |                                              |         |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Supplemental disclosures of cash flow information                      |  |                                              |         |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Cash paid during the year for:                                         |  |                                              |         |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Interest                                                               |  | $                                            |        |   |                        | $ | 18,659   |                            |  | $ | 87           |   |              | $ |  |  | $ | 18,746   |  
|                                                                       |  |                                              |         |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Income taxes                                                           |  | $                                            | 15,702  |   |                        | $ |         |                            |  | $ | 3,046        |   |              | $ |  |  | $ | 18,748   |  
|                                                                       |  |                                              |         |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  
|Capital lease obligations incurred                                     |  | $                                            |        |   |                        | $ | 34       |                            |  | $ | 10           |   |              | $ |  |  | $ | 44       |  
|                                                                       |  |                                              |         |   |                        |   |          |                            |  |   |              |   |              |   |   |  |   |          |  



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ITEM 2:    Managements Discussion and Analysis of Financial Condition and Results of Operations



Overview



Apogent is a leading developer and manufacturer of products for the clinical and research industries. We are organized into two business segments, the
Clinical Group and the Research Group, to serve our customers in these industries.



Net sales for the first quarter of fiscal 2004 were $278.6 million, an increase of $20.8 million or 8.1% over the same period of fiscal 2003. For the quarter ended December 31, 2003, Apogents net income and
diluted earnings per share from continuing operations were $28.5 million and $0.31, respectively. These results compare with net income and diluted earnings per share from continuing operations for the first quarter of fiscal 2003 of $28.8 million
and $0.27, respectively.



During the first quarter of fiscal
2004, Apogent completed the restructuring activities announced in January 2003, and incurred special charges associated with these consolidation activities. In December 2003, Apogent issued $345.0 million floating rate senior convertible contingent
debt securities (floating rate CODES), and used the proceeds to repurchase Apogent stock and repay amounts previously borrowed under our revolving credit facility to repurchase the Apogent 8% senior notes tendered pursuant to the tender offer and
consent solicitation for these notes initiated in September 2003. As a result, we incurred a charge related to this debt extinguishment.



Business



Our subsidiaries manufacture most of the products we sell. Over 50% of our sales are made through distributors. In addition to distributors, our customers
include pharmaceutical and biotechnology companies, clinical, academic, research and industrial laboratories, original equipment manufacturers, and others. Approximately 71% of our consolidated net sales during the first quarter of fiscal 2004 were
generated from sales transactions with customers within the U.S. and the remainder was generated internationally, mostly from Europe.



The end-users of our products include scientists and lab technicians in the fields of life science research, clinical diagnostics, and basic scientific
research. These individuals typically work at pharmaceutical companies, other types of manufacturing companies, hospitals, scientific research organizations, academic and government institutions, and clinical reference laboratories.



Business Strategy



Our goal is to consistently grow our worldwide market presence, net sales,
earnings, and cash flows. Key elements of our strategy continue to be:



| | n |  | Grow earnings while maintaining a prudent capital structure;
| | - |  | ------------------------------------------------------------



| | n |  | Develop profitable new products;
| | - |  | --------------------------------



| | n |  | Increase sales to existing and new customers;
| | - |  | ---------------------------------------------



| | n |  | Improve operating efficiencies; and
| | - |  | -----------------------------------



| | n |  | Make strategic acquisitions.
| | - |  | ----------------------------



Subsidiaries



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



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##### Table of Contents

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, 2003 and 2002 are the Companys first quarters of fiscal
2004 and 2003, 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, 2003.



Results of Operations



Three Months Ended December 31, 2003 Compared to the Three Months
Ended December 31, 2002



Net Sales



|                |  |                                 |         |                |   |                |  |   |        |  |     |  
|--------------- |  | ------------------------------- | ------- | -------------- | - | -------------- |  | - | ------ |  | --- | -
|                |  | Three Months Ended December 31, |         | Dollar Change  |   | Percent Change | 
|                |  | 2003                            |         | 2002           |   |               
|                |  |                                 |         | (in thousands) |   |                |  |   |       
|Net Sales       |  |                                 |         |                |   |                |  |   |        |  |     |  
|Clinical Group  |  | $                               | 129,706 |                | $ | 119,413        |  | $ | 10,293 |  | 8.6 | %
|Research Group  |  |                                 | 148,936 |                |   | 138,385        |  |   | 10,551 |  | 7.6 | %
|                |  |                                 |         |                |   |                |  |   |        |  |     |  
|Total Net Sales |  | $                               | 278,642 |                | $ | 257,798        |  | $ | 20,844 |  | 8.1 | %
|                |  |                                 |         |                |   |                |  |   |        |  |     |  



Overall
Company.    Net sales for the first quarter of fiscal 2004 were $278.6 million, an increase of $20.8 million or 8.1% over the same period of fiscal 2003.



Clinical Group.    Increased net sales in the Clinical Group resulted primarily from: (a)
increased net sales of existing products (approximately $3.6 million), (b) increased net sales of new products developed by us (approximately $3.4 million), (c) foreign currency fluctuations (approximately $2.6 million), (d) price increases
(approximately $0.8 million), and (e) net sales of products of acquired companies, including base period adjustments (approximately $0.4 million). Net sales were partially reduced due to a decrease in net sales of discontinued product lines
(approximately $0.4 million).



The following factors
contributed to the growth in Clinical Group net sales:



| | n |  | Sales of new proprietary diagnostic test products;
| | - |  | --------------------------------------------------



| | n |  | Sales of flu test kits;
| | - |  | -----------------------



| | n |  | Increased average selling prices of OEM consumable glass products; and
| | - |  | ----------------------------------------------------------------------



| | n |  | A positive impact from foreign currency fluctuations.
| | - |  | -----------------------------------------------------



Looking forward, we anticipate that, excluding foreign currency impacts, sales in fiscal 2004 will grow modestly as we seek to expand our sales through
distributors and focus on growing our business organically.



Research Group.    Increased net sales in the Research Group resulted primarily from: (a) increased net sales of new products developed by us (approximately $5.4 million), (b) net sales of products of acquired
companies, (approximately $6.2 million), (c) foreign currency fluctuations (approximately $4.1 million), and (d) price increases (approximately $1.2 million). Net sales were partially reduced by a decrease in net sales of existing products
(approximately $4.4 million) and a decrease in net sales of discontinued product lines (approximately $1.9 million).



The following factors contributed to the growth in Research Group net sales:



| | n |  | Sales by newly-acquired businesses, primarily our Quality Scientific Plastics (QSP) subsidiary acquired in August 2003;
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| | n |  | An increase in sales of newly developed laboratory equipment and life science consumable products;
| | - |  | --------------------------------------------------------------------------------------------------



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| | n |  | Sales of new outdoor consumer bottles; and
| | - |  | ------------------------------------------



| | n |  | A positive impact from foreign currency fluctuations.
| | - |  | -----------------------------------------------------



The increase in net sales is partially offset by a decrease in sales of life science instrumentation, general labware consumables, and sales of
discontinued products related to the restructuring activities announced in fiscal 2003.



Looking forward, we anticipate that, excluding foreign currency impacts, sales in fiscal 2004 will grow modestly as we seek to focus on growing our business organically and to a lesser extent from recently completed
acquisitions. We expect sales of equipment by our Research Group to remain flat.



Gross Profit



|                   |  |                                      |         |                  |      |   |                                      |   |                  |  |      |               |  |                |       |  |     |  
|------------------ |  | ------------------------------------ | ------- | ---------------- | ---- | - | ------------------------------------ | - | ---------------- |  | ---- | ------------- |  | -------------- | ----- |  | --- | -
|                   |  | Three Months Ended December 31, 2003 |         | Percent of Sales |      |   | Three Months Ended December 31, 2002 |   | Percent of Sales |  |      | Dollar Change |  | Percent Change |      
|                   |  | (in thousands)                       |        
|Gross Profit       |  |                                      |         |                  |      |   |                                      |   |                  |  |      |               |  |                |       |  |     |  
|Clinical Group     |  | $                                    | 61,196  |                  | 47.2 | % |                                      | $ | 56,169           |  | 47.0 | %             |  | $              | 5,027 |  | 8.9 | %
|Research Group     |  |                                      | 69,313  |                  | 46.5 | % |                                      |   | 68,672           |  | 49.6 | %             |  |                | 641   |  | 0.9 | %
|                   |  |                                      |         |                  |      |   |                                      |   |                  |  |      |               |  |                |       |  |     |  
|Total Gross Profit |  | $                                    | 130,509 |                  | 46.8 | % |                                      | $ | 124,841          |  | 48.4 | %             |  | $              | 5,668 |  | 4.5 | %
|                   |  |                                      |         |                  |      |   |                                      |   |                  |  |      |               |  |                |       |  |     |  



Overall
Company.    Gross profit for the first quarter of fiscal 2004 was $130.5 million, or 46.8% of net sales, as compared to $124.8 million, or 48.4% of net sales for the same period of fiscal 2003.



Clinical Group.    Gross profit dollars increased
and gross margin percentage remained relatively consistent. Increased gross profit in the Clinical Group resulted primarily from: (a) increases in volume (approximately $2.1 million), (b) the effects of new products (approximately $1.7 million), (c)
foreign currency fluctuations (approximately $1.0 million), (d) price increases (approximately $0.8 million), and (d) the effects of acquired companies (approximately $0.1 million). Gross profit was partially reduced by: (a) increased manufacturing
overhead (approximately $0.4 million), (b) increases in restructuring charges (approximately $0.2 million), and (c) product mix (approximately $0.1 million).



The factors described above that contributed to our growth in net sales also contributed to higher gross profit.



We anticipate that gross profit dollars will continue to grow in proportion
with our growth in net sales as described above. We expect that our gross margin percentage will remain relatively consistent, as decreases in gross margin percentage caused by modest shifts from direct sales to sales through distributors at our
Remel subsidiary will be offset by internal cost saving strategies aimed at increasing gross margin percentage.



Research Group.    Gross profit dollars increased, but gross margin percentage decreased from 49.6% to 46.5%. Increased gross
profit in the Research Group resulted primarily from: (a) the effects of new products (approximately $2.0 million), (b) product mix (approximately $1.4 million), (c) the effects of acquired companies (approximately $1.3 million), (d) price increases
(approximately $1.2 million), and (e) foreign currency fluctuations (approximately $1.1 million). Gross profit was partially reduced by: (a) decreases in volume (approximately $3.8 million) and (b) increased manufacturing overhead (approximately
$2.6 million).



The factors described above that contributed to
our growth in net sales also contributed to the change in gross profit.



The decrease in gross margin percentage is primarily due to the acquisition of QSP and the unfavorable impact of foreign exchange on average selling prices compared to the impact on costs.



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##### Table of Contents

Selling, General and Administrative Expenses



|                                                   |  |                                 |        |                |   |                |  |   |       |  |      |  
|-------------------------------------------------- |  | ------------------------------- | ------ | -------------- | - | -------------- |  | - | ----- |  | ---- | -
|                                                   |  | Three Months Ended December 31, |        | Dollar Change  |   | Percent Change | 
|                                                   |  | 2003                            |        | 2002           |   |               
|                                                   |  |                                 |        | (in thousands) |   |                |  |   |      
|Selling, General and Administrative Expenses       |  |                                 |        |                |   |                |  |   |       |  |      |  
|Clinical Group                                     |  | $                               | 30,215 |                | $ | 27,986         |  | $ | 2,229 |  | 8.0  | %
|Research Group                                     |  |                                 | 41,441 |                |   | 40,644         |  |   | 797   |  | 2.0  | %
|Restructuring charges and asset impairments        |  |                                 |        |                |   |                |  |   |       |  |      |  
|Research Group                                     |  |                                 | 4,415  |                |   |               |  |   | 4,415 |  |      |  
|                                                   |  |                                 |        |                |   |                |  |   |       |  |      |  
|Total Selling, General and Administrative Expenses |  | $                               | 76,071 |                | $ | 68,630         |  | $ | 7,441 |  | 10.8 | %
|                                                   |  |                                 |        |                |   |                |  |   |       |  |      |  



Overall
Company.    Selling, general and administrative expenses for the first quarter of fiscal 2004 were $76.1 million, an increase of $7.4 million, or 10.8%, over the same period of fiscal 2003.



Clinical Group.    Increased selling, general and
administrative expenses in the Clinical Group resulted primarily from: (a) foreign currency fluctuations (approximately $0.8 million), (b) marketing expenses (approximately $0.7 million), (c) research and development expenses (approximately $0.5
million), and (d) administrative, finance and legal expenses (approximately $0.3 million). Selling, general and administrative expenses were partially decreased by lower amortization expenses (approximately $0.1 million).



The following factors contributed to the increase in selling, general and
administrative expenses:



| | n |  | Increased payroll and other employee related expenses from higher headcounts;
| | - |  | -----------------------------------------------------------------------------



| | n |  | Increased consulting and outside service expenses;
| | - |  | --------------------------------------------------



| | n |  | Increased product marketing and advertising expenses;
| | - |  | -----------------------------------------------------



| | n |  | Increased depreciation due to the impact of prior year capital expenditures;
| | - |  | ----------------------------------------------------------------------------



| | n |  | Increased pension, insurance, and workers compensation costs;
| | - |  | --------------------------------------------------------------



| | n |  | Increased travel expenses; and
| | - |  | ------------------------------



| | n |  | A negative impact from foreign currency fluctuations.
| | - |  | -----------------------------------------------------



Research Group.    Increased selling, general and administrative expenses in the Research Group resulted primarily from: (a)
higher restructuring expenses (approximately $4.4 million), (b) foreign currency fluctuations (approximately $1.5 million), and (c) expenses of acquired businesses (approximately $0.6 million). Selling, general and administrative expenses were
partially decreased by: (a) research and development expenses (approximately $0.5 million), (b) administrative, finance and legal expenses (approximately $0.4 million), (c) lower marketing expenses (approximately $0.3 million), and (d) lower
amortization expenses ($0.1 million).



The following factors
contributed to the increase in selling, general and administrative expenses:



| | n |  | Increased payroll and other employee-related expenses from higher headcounts due to the acquisition of QSP;
| | - |  | -----------------------------------------------------------------------------------------------------------



| | n |  | Increased restructuring expenses;
| | - |  | ---------------------------------



| | n |  | Increased travel expenses;
| | - |  | --------------------------



| | n |  | Increased pension, insurance, and workers compensation costs; and
| | - |  | ------------------------------------------------------------------



| | n |  | A negative impact from foreign currency fluctuations.
| | - |  | -----------------------------------------------------



These increases were offset partially by decreases in freight charges, depreciation expenses, and marketing materials expenses.



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##### Table of Contents

Operating Income



|                       |  |                                 |        |                |   |        |                |   |        |   |  |       |  
|---------------------- |  | ------------------------------- | ------ | -------------- | - | ------ | -------------- | - | ------ | - |  | ----- | -
|                       |  | Three Months Ended December 31, |        | Dollar Change  |   |        | Percent Change |  
|                       |  | 2003                            |        | 2002           |   |       
|                       |  |                                 |        | (in thousands) |   |        |                |   |        |  
|Operating Income       |  |                                 |        |                |   |        |                |   |        |   |  |       |  
|Clinical Group         |  | $                               | 30,981 |                | $ | 28,183 |                | $ | 2,798  |   |  | 9.9   | %
|Research Group         |  |                                 | 23,457 |                |   | 28,028 |                |   | (4,571 | ) |  | -16.3 | %
|                       |  |                                 |        |                |   |        |                |   |        |   |  |       |  
|Total Operating Income |  | $                               | 54,438 |                | $ | 56,211 |                | $ | (1,773 | ) |  | -3.2  | %
|                       |  |                                 |        |                |   |        |                |   |        |   |  |       |  



Operating income for
the first quarter of fiscal 2004 was $54.4 million, a decrease of $1.8 million, or 3.2%, compared to $56.2 million for the same period of fiscal 2003.



Interest Expense



Interest expense, net, was $8.8 million for the first quarter of fiscal 2004, as compared to $10.4 million for the same period of fiscal 2002. The
decrease in interest expense is primarily due to a reduction in the Companys weighted average interest rate offset in part by an increase in our outstanding debt obligations.



Other Income



Other income was $0.4 million for the first quarter of fiscal 2004, as compared to other income of $0.5 million in the same period of fiscal 2003.



Income Taxes



Taxes on income from continuing operations for the first quarter of fiscal
2004 were $16.0 million, a decrease of $0.6 million from the same period of fiscal 2002. The decrease in income taxes resulted from both a decrease in net income and a decrease in our effective tax rate to 36.0% from 36.5%.



Income from Continuing Operations



Income from continuing operations for the first quarter of fiscal 2004 was
$28.5 million, a decrease of $0.3 million, from $28.8 million for the same period of fiscal 2003.



Discontinued Operations



Income from discontinued operations, net of tax, for the first quarter of fiscal 2004 was $0.04 million, as compared to a loss of $0.08 million for the
same period of fiscal 2003.



Net Income



Net income for the first quarter of fiscal 2004 was $28.5 million, as
compared to $28.7 million for the same period of fiscal 2003.



Restructuring
Charges



During the three months ended December 31, 2003,
the Company recorded restructuring charges of approximately $4.6 million (approximately $3.0 million net of tax), related to restructuring activities announced during fiscal 2003, for the consolidation of certain facilities and discontinuance of
certain product lines due to product rationalizations. The restructuring charges were primarily classified as a component of selling, general, and administrative expenses, which consisted of approximately $2.2 million related to the write-off of
fixed assets and a $2.4 million charge for the present value of future lease payments less assumed sublease amounts.



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A rollforward of these restructuring activities is as follows:



|                           |  |              |        |   |              |   |        |                 |  |   |                          |   |  |       |        |   |       |   |     |   |  |   |        |  
|-------------------------- |  | ------------ | ------ | - | ------------ | - | ------ | --------------- |  | - | ------------------------ | - |  | ----- | ------ | - | ----- | - | --- | - |  | - | ------ | -
|                           |  | Severance(a) |        |   | Inventory(b) |   |        | Fixed Assets(b) |  |   | Facility ClosureCosts(c) |   |  | Other |        |   | Total |  
|2003 Restructuring charges |  | $            | 3,664  |   |              | $ | 5,825  |                 |  | $ | 2,798                    |   |  | $     | 1,220  |   |       | $ | 28  |   |  | $ | 13,535 |  
|2003 Cash payments         |  |              | (2,378 | ) |              |   |       |                 |  |   |                         |   |  |       | (1,070 | ) |       |   |    |   |  |   | (3,448 | )
|2003 Non-cash charges      |  |              |       |   |              |   | (5,825 | )               |  |   | (2,798                   | ) |  |       |       |   |       |   | (28 | ) |  |   | (8,651 | )
|                           |  |              |        |   |              |   |        |                 |  |   |                          |   |  |       |        |   |       |   |     |   |  |   |        |  
|September 30, 2003 balance |  | $            | 1,286  |   |              | $ |       |                 |  | $ |                         |   |  | $     | 150    |   |       | $ |    |   |  | $ | 1,436  |  
|2004 Restructuring charges |  |              |       |   |              |   |       |                 |  |   | 2,156                    |   |  |       | 2,404  |   |       |   |    |   |  |   | 4,560  |  
|2004 Cash payments         |  |              | (603   | ) |              |   |       |                 |  |   |                         |   |  |       |       |   |       |   |    |   |  |   | (603   | )
|2004 Non-cash charges      |  |              |       |   |              |   |       |                 |  |   | (2,156                   | ) |  |       | (447   | ) |       |   |    |   |  |   | (2,603 | )
|                           |  |              |        |   |              |   |        |                 |  |   |                          |   |  |       |        |   |       |   |     |   |  |   |        |  
|December 31, 2003 balance  |  | $            | 683    |   |              | $ |       |                 |  | $ |                         |   |  | $     | 2,107  |   |       | $ |    |   |  | $ | 2,790  |  
|                           |  |              |        |   |              |   |        |                 |  |   |                          |   |  |       |        |   |       |   |     |   |  |   |        |  

---

|(a) |  | Amount represents severance and termination costs for 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.
|--- |  | ---------------------------------------------------------------------------------------



As of December 31, 2003, included in the restructuring liability was a balance of $0.3 million related to fiscal 2002
facility closure activities.



The Company expects to make
future cash payments of approximately $1.7 million associated with the above restructuring actions during fiscal 2004 and approximately $1.4 million in fiscal 2005 and beyond.



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, funding of pension plan obligations, and our obligation to pay rent under the sale/leaseback facility.



Net cash provided by operating activities was $41.1 million for the first quarter of fiscal 2004 as compared to $27.3 million for the same period during
fiscal 2003. The cash outflow resulting from the net change in working capital, net of the effects of acquisitions and divestitures, was $12.0 million for the three months ended December 31, 2003. This cash outflow was primarily the result of
reductions in accounts payable (approximately $10.3 million), accrued interest (approximately $5.2 million), payroll and payroll related accruals (approximately $2.5 million) due to the timing of cash payments, a decrease in our accrued bonus
(approximately $1.3 million), and increases in inventories (approximately $1.9 million) due to the timing of manufacturing cycles, primarily in our Research Group. The cash outflows were partially offset by decreases in accounts receivable
(approximately $9.6 million) due primarily to improved timing of customer payments, the timing of cash payments made on income taxes (approximately $4.0 million), and an increase in our restructuring reserve (approximately $1.3 million).



Net cash used in investing activities was $2.4 million for the
first quarter of fiscal 2004, as compared to $28.4 million for the same period of fiscal 2003. Net cash used in investing activities for the first quarter of fiscal 2004 primarily reflects capital expenditures of $5.5 million, offset in part by
proceeds received from a distribution of $2.0 million received from an equity investment in a joint venture and proceeds from the sale of property, plant and equipment. Apogent has no current material commitments, but does expect to incur
approximately $50.0 million for capital expenditures during the next twelve months.





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Net cash used in financing activities was $44.3 million for the first quarter of fiscal 2004, as compared
to cash provided by financing activities of $4.2 million for the same period of fiscal 2003. The net cash used in financing activities for the first quarter of fiscal 2004 primarily resulted from $273.3 million of net payments on the revolving
credit facility, $109.5 million in treasury stock purchases, and financing fees of $14.9 million paid in connection with the issuance of the floating rate CODES offset by $345.0 million in gross proceeds received on the issuance of floating rate
CODES.



We believe that the financing actions described above
are in alignment with our strategic financial goals to productively use our cash flow and credit resources to grow shareholder value. Specifically, our level of investment in acquisitions has been reduced this year from historical levels because
fewer attractive acquisition opportunities have become available. At the same time, we have found our own stock to be an attractive and accretive investment opportunity. Therefore, using a combination of our cash flow from operations and our ability
to supplement that by borrowing at historically low rates of interest, we have been repurchasing Apogent stock.



During the three months ended December 31, 2003, the Company purchased approximately 4.8 million shares of its common stock at an average purchase price
of $23.01 per share. The aggregate purchase price of the shares purchased was approximately $109.5 million. Our board of directors has authorized the repurchase of up to 6.8 million additional shares through September 2005. Shares may be repurchased
at times and prices deemed appropriate by the Company. We may use cash generated from operations as well as available credit facilities in order to finance the repurchase of these shares.



On December 17, 2003, we issued $300.0 million principal amount of its floating rate senior convertible contingent debt
securities (floating rate CODES), and on December 30, 2003, Apogent issued an additional $45.0 million principal amount of these securities upon the exercise by the initial purchasers of their option to purchase up to an additional $45.0
million principal amount of floating rate CODES. The floating rate CODES are due in 2033. The floating rate CODES bear interest at a floating rate equal to 3-month LIBOR minus 125 basis points (but not less than 0% per annum), payable in cash. The
securities will be convertible into 10.4 million shares of Apogent common stock at a conversion price of $33.09 per share of common stock, subject to adjustment in certain circumstances (reflecting a premium of approximately 42%, relative to
the closing price for our common stock of $23.30 on December 11, 2003): (a) if the price of Apogents common stock exceeds the conversion price by 130% for at least 20 trading days during specified periods, (b) on or before December 15, 2028,
if for at least 10 consecutive trading days, the securities trade below 98% of the average conversion value for the securities during that period, (c) if any of the credit ratings assigned to the securities fall below specified levels or other
adverse credit rating developments occur, (d) if Apogent calls the securities for redemption, or (e) upon the occurrence of specified corporate transactions. Apogent may redeem all or some of the floating rate CODES on or after March 15, 2010 at par
plus accrued and unpaid interest, if any, to the redemption date. Apogent may be required to repurchase the floating rate CODES, at the option of the holders, on December 15, 2008, March 15, 2010, December 15, 2014, December 15, 2019, December 15,
2024, and December 15, 2029, at par plus accrued and unpaid interest, if any, to the redemption date. Apogent may also be required to repurchase the securities upon a change in control at par plus accrued and unpaid interest, if any, to the
redemption date. The floating rate CODES rank equal with all existing and future senior unsecured indebtedness and are effectively junior to the outstanding indebtedness and other liabilities, including trade payables, of our non-guarantor
subsidiaries.



On July 29, 2003, Apogent and three of our
domestic subsidiaries, as co-borrowers, entered into a new $500 million revolving credit facility that matures on July 29, 2008, and terminated our former revolving credit facility, as amended, that was scheduled to mature on December 1, 2005.
The new revolving credit facility contains essentially the same terms and conditions as our previous credit facility, as amended. As of December 31, 2003, the covenants under our revolving credit facility limited our capacity for additional
borrowings, other than to replace our existing indebtedness, to approximately $154.0 million, even though total availability under our revolving credit facility was approximately $441.0 million.



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On June 2, 2003, we issued $250.0 million aggregate principal amount of 61/2% senior subordinated notes due 2013. We used the proceeds from the 61/2% senior subordinated notes to repay borrowings under our revolving credit facility (including borrowings used to repurchase shares of our common stock
pursuant to the Dutch Auction tender offer described above), to repurchase shares on the open market and otherwise, and for general corporate purposes. We may redeem some or all of the 61/2% senior subordinated notes at any time on or after May 15, 2008. The holders may require us to purchase all or a portion of their 61/2% senior subordinated notes at 101% upon a change in control event. The notes are Apogents general unsecured
obligations and guaranteed on a senior subordinated basis by our domestic subsidiaries that have guaranteed, and our subsidiaries that will in the future guarantee, obligations under our revolving credit facility. The 61/2% senior subordinated notes and the guarantees rank junior in right of payment to all of Apogents and each
subsidiary guarantors existing and future senior debt, and rank equally in right of payment with all of Apogents and each subsidiary guarantors senior subordinated debt.



On October 10, 2001, we issued $300.0 million of senior convertible
contingent debt securities (2.25% CODES). The 2.25% CODES have a fixed interest rate of 2.25% per annum, payable on April 15 and October 15 of each year. The 2.25% CODES provide that we are required to pay contingent interest during a six-month
interest payment period if the average trading price of a 2.25% CODES for the five trading days ending on the second trading day immediately preceding the beginning of the relevant six-month period equals 120% or more of the principal amount of the
2.25% CODES. So far, we have not been required to pay contingent interest. The rate of contingent interest on the outstanding 2.25% CODES, should the contingency occur, would equal 1/20 of our estimated annual borrowing rate for senior
non-convertible fixed-rate indebtedness with a maturity date comparable to the 2.25% CODES, but not less than 0.30% per annum. Based on our current borrowing costs, the contingent interest rate would be approximately 0.4% per annum, so the expense
from contingent interest would be $1.2 million per year on the $300.0 million of outstanding 2.25% CODES, if the contingent interest provisions were applicable. Although the 2.25% CODES will mature on October 15, 2021, the holders of the 2.25% CODES
may require us to repurchase all or any portion of them on October 20, 2004 and on October 15, 2006, 2011, and 2016, or upon a change of control. We also have the right to redeem some or all of the 2.25% CODES on or after October 20, 2004. We
believe that our ability to borrow funds, either under our revolving credit agreement or otherwise, will be sufficient to enable us to make any required repurchase of 2.25% CODES in 2004. Although the 2.25% CODES are not currently convertible into
our common stock, they will become convertible under various circumstances and at a conversion price specified in the indenture for the 2.25% CODES. The conversion price is currently $30.49 per share, so the 2.25% CODES would be convertible into
approximately 9.8 million shares of Apogent common stock. If the holders of the 2.25% CODES require us to repurchase any or all of the 2.25% CODES on October 20, 2004, Apogent intends to refinance the obligation on a long-term basis using our
revolving credit facility that matures in July 2008. Therefore, in accordance with FAS 6, Apogent has classified the 2.25% CODES as a non-current liability.



On April 4, 2001, we issued $325.0 million of unsecured 8% senior notes in a private placement with registration rights, and in August 2001, we completed
a registered exchange of the privately placed notes for similar notes that had been registered with the Securities and Exchange Commission. We repurchased approximately $317.9 million of our 8% senior notes that were tendered pursuant to our tender
offer and consent solicitation dated September 16, 2003 for those notes. The total purchase price and consent payment aggregated approximately $374.5 million, plus $12.5 million of accrued interest. We funded the purchase through borrowings under
our $500.0 million revolving credit facility, together with other available funds. The floating rate CODES, 61/2% senior subordinated notes, 2.25% CODES, and the revolving credit facility all contain certain cross default provisions. The revolving credit facility includes financial and operating covenants which, if not met, could result in
acceleration of payments on outstanding balances. In addition, floating rate CODES, the 61/2% senior
subordinated notes, 2.25% CODES, and/or the revolving credit facility contain covenants which, among other things, restrict investments, loans, and advances, require that we maintain certain financial ratios, require that we maintain certain credit
ratings, restrict our ability to create or permit liens or to pay dividends or make other restricted payments (as defined), and limit our incurrence of additional indebtedness. We are not aware of any violations of these covenants and do not
anticipate any violations in light of current business conditions.



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We believe that loans under our revolving credit facility, floating rate CODES, proceeds from the sale of
the 61/2% senior subordinated notes, and currently available cash and short term investments, along with cash
generated from operations, will be sufficient to meet our long-term and short-term working capital needs, as well as our commitments for capital expenditures and business development needs for the next twelve months and the foreseeable future.



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



Disclosures About Contractual Obligations and Commercial Commitments



In our day-to-day business activities, we incur 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 tables as of December 31, 2003 (in millions):



|                                    |  |                         |                  |     |                                            |   |           |  |              |      |                   |   |      |  |   |      
|----------------------------------- |  | ----------------------- | ---------------- | --- | ------------------------------------------ | - | --------- |  | ------------ | ---- | ----------------- | - | ---- |  | - | -----
|                                    |  | Payments Due by Period 
|Contractual Obligations             |  | Total                   |                  |     | Less than 1 Year                           |   | 1-3 Years |  | 4-5 Years    |      | More than 5 Years
|Long-Term Debt Obligations(1)       |  | $                       | 964.2            |     |                                            | $ | 2.0       |  | $            | 1.9  |                   | $ | 50.7 |  | $ | 909.6
|Capital Lease Obligations           |  |                         | 0.5              |     |                                            |   | 0.3       |  |              | 0.2  |                   |   |     |  |   |     
|Operating Lease Obligations         |  |                         | 82.8             |     |                                            |   | 14.1      |  |              | 21.9 |                   |   | 17.4 |  |   | 29.4 
|Purchase Obligations                |  |                         | 15.5             |     |                                            |   | 12.8      |  |              | 2.7  |                   |   |     |  |   |     
|Other Long-Term Liabilities         |  |                         | None             |     |                                            |   |          |  |              |     |                   |   |     |  |   |     
|                                    |  |                         |                  |     |                                            |   |           |  |              |      |                   |   |      |  |   |      
|Total Contractual Obligations       |  | $                       | 1,063.0          |     |                                            | $ | 29.2      |  | $            | 26.7 |                   | $ | 68.1 |  | $ | 939.0
|                                    |  |                         |                  |     |                                            |   |           |  |              |      |                   |   |      |  |   |      
|                                    |  |                        
|                                    |  | Total Amounts Committed |                  |     | Amount of Commitment Expiration Per Period
|Other Commercial Commitments        |  |                         | Less Than 1 Year |     | 1-3 Years                                  |   | 4-5 Years |  | Over 5 Years
|Lines of Credit                     |  | $                       | 12.8             |     |                                            | $ | 12.8      |  | $            |     |                   | $ |     |  | $ |     
|Available Standby Letters of Credit |  |                         | 6.5              |     |                                            |   | 6.5       |  |              |     |                   |   |     |  |   |     
|Guarantees(2)                       |  |                         | None             | (1) |                                            |   |          |  |              |     |                   |   |     |  |   |     
|Standby Repurchase Obligations      |  |                         | None             |     |                                            |   |          |  |              |     |                   |   |     |  |   |     
|Other                               |  |                         | None             |     |                                            |   |          |  |              |     |                   |   |     |  |   |     
|                                    |  |                         |                  |     |                                            |   |           |  |              |      |                   |   |      |  |   |      
|Total Commercial Commitments        |  | $                       | 19.3             |     |                                            | $ | 19.3      |  | $            |     |                   | $ |     |  | $ |     
|                                    |  |                         |                  |     |                                            |   |           |  |              |      |                   |   |      |  |   |      

---

|(1) |  | On October 10, 2001, we issued $300.0 million of senior convertible contingent debt securities (2.25% CODES). Although the 2.25% CODES will mature on October 15, 2021, the holders
of the 2.25% CODES may require us to repurchase all or any portion of them on October 20, 2004 and on October 15, 2006, 2011, and 2016, or upon a change of control. We also have the right to redeem some or all of the 2.25% CODES on or after October
20, 2004. If the holders of the 2.25% CODES require us to repurchase any or all of the them on October 20, 2004, Apogent intends to refinance the obligation on a long-term basis using our revolving credit facility that matures in July 2008 and
therefore, in accordance with FAS 6, has classified the 2.25% CODES as a non-current liability.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Certain of our domestic subsidiaries are guarantors under our revolving credit facility, 8% senior notes, both series of CODES, and 61/2% senior subordinated notes.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



Off-Balance Sheet Arrangement



We own 49% of Glass & Plastic Labware LLC, an unconsolidated joint venture that we hold as an equity investment. The joint venture combines the
marketing and sales expertise of our Nalge Nunc International subsidiary with the supply-side manufacturing strength of an unaffiliated company, Kimble Glass and its Kontes specialty glass division. Through the joint venture, Nalge Nunc
Internationals sales team is able to offer



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laboratory customers both the plastic labware that is Nalges core competency and glass labware supplied through the joint venture. As of December 31,
2003, our equity investment in the joint venture was approximately $7.6 million, and was classified as Other Assets. Net income from the joint venture for the first quarter of fiscal 2004 was $0.2 million and was included in Other
Income.



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 our 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. Apogent believes the following critical accounting policies affect its more significant estimates and judgments used in the preparation of its consolidated financial statements.



Revenue Recognition



The Company recognizes revenue upon shipment of products when persuasive
evidence of a sales arrangement exists, the price to the buyer is fixed or 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 the risks and rewards of ownership of the product have passed. Sales incentives are offered to our customers based on sales volume requirements. These incentives are recorded
initially based on estimates by the Company and accounted for as a reduction of sales in accordance with Emerging Issues Task Force (EITF) Issue No. EITF 01-9, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller
of the Vendor ́s Products). Warranties and product returns are estimated and accrued for at the time sales are recorded. Service agreements on our equipment are typically sold separately from the sale of the equipment. Revenues on these
service agreements are recognized ratably over the life of the agreement, typically one year, in accordance with FASB Technical Bulletin FTB 90-1, Accounting for Separately Priced Extended Warranty and Product Maintenance Contracts.



Impairment Testing



In connection with annual impairment tests for goodwill, 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 our acquisition program, we have accumulated a large amount 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, we use outside valuation firms to recommend purchase price allocations and estimated lives after an acquisition is completed.



Pensions



We account for our defined benefit pension plans using actuarial models
required by SFAS No. 87, Employers Accounting for Pensions. These models use an attribution approach that generally spreads individual events over the service lives of the employees in the plan. Examples of events are
plan amendments and changes in actuarial assumptions such as discount rate, rate of compensation increases and mortality. See the



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next paragraph for information on the expected long-term rate of return on pension plan assets. The principle underlying the required attribution approach is
that employees render service over their service lives on a relatively smooth basis and therefore, the income statement effects of pensions are earned in, and should follow, the same pattern.



One of the principal components of the net periodic pension (income)/cost
calculation is the expected long-term rate of return on plan assets. We use long-term historical actual return information, the targeted mix of investments that comprise plan assets, and future estimates of long-term investment returns to develop
our expected return on plan assets. The required use of an expected long-term rate of return on plan assets may result in recognized pension income that is greater or less than the actual returns of those plan assets in any given year. Over time,
however, the expected long-term returns are designed to approximate the actual long-term returns and therefore result in a pattern of income and expense recognition that more closely matches the pattern of the services provided by the employees. Our
mix of pension plan investments among asset classes also affects the long-term expected rate of return on plan assets. Our current target asset mix used in determining the expected return is 60% equities and 40% fixed income securities.



Differences between actual and expected returns are recognized in the
calculation of net periodic pension (income)/cost over the average remaining expected future working lifetime of active plan participants, which is approximately fifteen years as provided for in accordance with generally accepted accounting
principles. This expected return may change upward or downward at some point in the future depending on our analysis of prospective market returns. With the current asset base of our pension plans, a 25 basis point increase/decrease in the asset
return assumption would decrease/increase our annual pension expense by approximately $135,000.



The discount rate assumptions used for pension accounting reflect the prevailing rates available on high-quality, fixed-income debt instruments with terms
that match the average expected duration of our defined benefit pension plan obligations. We use the Moodys Aa-rated long-term corporate bonds, which match the average duration of our pension plan liability of approximately 20 years. We start
with the Moodys Aa yield, add 15 basis points to account for annualization of the interest rate, and then round up to the nearest 25 basis point increment to arrive at a tentative discount rate. We then consider other factors to determine
whether this tentative rate is reasonable before making our determination. The amount of pension expense is highly sensitive to changes in the discount rate. At the current asset base in our pension plans, a 25 basis point increase/decrease in the
discount rate would decrease/increase our annual pension expense by approximately $600,000.



The assumed rate of compensation increase is another significant assumption used in the actuarial model for pension accounting and is determined based upon our long-term plans for such increases.



As required by SFAS No. 87, for instances in which pension plan assets are
less than the accumulated benefit obligation (ABO) as of the end of the reporting period (defined as an unfunded ABO position), a minimum liability equal to this difference is established in the consolidated balance sheet. The ABO is the present
value of the actuarially determined company obligation for pension payments assuming no further salary increases for the employees. The offset to the minimum liability is a charge to equity, net of tax. In addition, any prepaid pension asset in
excess of unrecognized prior service cost must be reversed through a net-of-tax charge to equity. The charge to equity is included in the accumulated other comprehensive gains and (losses) not affecting the retained earnings section of the
stockholders equity in the consolidated balance sheet.



Deferred Taxes



We record a valuation
allowance to reduce our deferred tax assets to an amount that management estimates is more likely than not to be realized. While management has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing
the need for the valuation allowance, should management determine that we would be able to realize our deferred assets in the future in excess of the net recorded amount, an adjustment to the deferred tax asset would increase income in the period
such determination



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was made. However, should management determine that Apogent would not be able to realize all or part of the net deferred tax asset in the future, an
adjustment to the deferred tax asset would be charged to income in the period such a determination was made.



Recent Accounting Pronouncements



Financial Accounting Standards Board Interpretation No. 45



Financial Accounting Standards Board Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others (FIN 45), requires that upon issuance of a guarantee, the guarantor must disclose and recognize a liability for the fair value of the obligation it assumes under that guarantee. The
initial recognition and measurement requirement of FIN 45 is effective for guarantees issued or modified after December 31, 2002. After December 31, 2002, Apogent entered into a new guarantee and has modified another guarantee. The modified
guarantee, as described below, is only subject to the disclosure requirements of FIN 45 as the guarantee represents contingent consideration in a business combination.



The disclosure requirements of FIN 45 are effective for interim and annual periods ending after December 15, 2002, and are
applicable to our product warranty liability and certain guarantees issued before December 31, 2002. Apogent has two guarantees issued prior to December 31, 2002 and that are subject to the disclosure provisions of FIN 45 and one guarantee that was
entered into after December 31, 2002.



Guarantees in
existence prior to December 31, 2002 which have been modified.    In addition to the purchase price paid for our Capitol Vial subsidiary, we agreed to pay the sellers three times the annual revenues of Capitol Vial for
product sales to the U.S. Department of Defense over the twelve-month period ending December 31, 2006, or such other earlier date as Apogent and the sellers agree. The maximum earnout payment cannot exceed $9.0 million. To date, Capitol Vial does
not have a contract with the U.S. Department of Defense, and no sales to the Department have been made.



Guarantees in existence prior to December 31, 2002 which have not been modified.    Our joint venture partner, Kimble Glass, is
entitled to a $4.0 million preferred distribution of the joint ventures available cash in each of the three fiscal years ending November 30, 2002, 2003, and 2004. If the available cash from the joint venture is insufficient in any of these
joint venture fiscal years to pay the $4.0 million preferred distribution to Kimble Glass, then we are obligated to pay Kimble Glass the difference. The joint venture distributes its available cash quarterly. Apogents equity in earnings in the
joint venture is recorded after giving effect to the preferred distribution to Kimble Glass. Available earnings and cash generated by the joint venture have been sufficient to satisfy the preferred distribution requirement to date and are
anticipated to be sufficient to satisfy this requirement until the requirement expires on November 30, 2004. As of December 31, 2003, the maximum amount that potentially could be owed by us to Kimble Glass through November 30, 2004 would not exceed
$4.0 million.



Guarantees entered into after December 31,
2002.    In January 2003, Apogent entered into an agreement with a customer that guarantees total payments of $1.7 million through December 2005. In return for the guarantee, Apogent is a participant in certain preferred
marketing and sales promotion efforts of the customer. Apogent has recorded the transaction in accordance the measurement and recognition requirements of FIN 45.



A rollforward of our product warranties is as follows:



|                                     |  |                   |       |                               |   |           |  |                |       |  |   |      
|------------------------------------ |  | ----------------- | ----- | ----------------------------- | - | --------- |  | -------------- | ----- |  | - | -----
|                                     |  | Beginning balance |       | Payments and other reductions |   | Additions |  | Ending balance
|                                     |  | (in thousands)   
|Year ended September 30, 2003        |  | $                 | 1,462 |                               | $ | 1,542     |  | $              | 1,318 |  | $ | 1,238
|Three months ended December 31, 2003 |  | $                 | 1,238 |                               | $ | 189       |  | $              | 88    |  | $ | 1,137



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In the normal course of business, Apogent indemnifies other parties, including customers, lessors and
parties to other transactions with Apogent, with respect to certain matters. In some of these contracts we have agreed to hold the other party harmless against losses arising from a breach of representations or covenants (including payment
obligations), or from intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, we have entered
into indemnification agreements with our officers and directors.



It is not possible to determine the maximum potential amount under these indemnification agreements due to the unique facts and circumstances involved in each particular agreement. Historically, payments made under these agreements have not
had a material impact on our operating results or financial position.



Financial Accounting Standards Board Interpretation No. 46(R)



In December 2003, the FASB issued FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities (FIN 46(R)). FIN 46(R) clarifies situations in which entities shall be subject to
consolidation. FIN 46(R) is effective for all variable interest entities for periods ending after December 15, 2003. The Company has completed its evaluation and determined that it has no variable interest entities and that the adoption of FIN 46
(R) did not have a material impact on the Companys financial statements.



Cautionary Factors



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



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



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



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



We have significant operations outside the United States. Approximately 24%
of our net sales for 2003 were from foreign subsidiaries. We are therefore subject to risks affecting our international operations, including relevant foreign currency exchange rates, which can affect the cost of our products or the ability to sell
our



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products in foreign markets, and the value in U.S. dollars of sales made in foreign currencies. Our net sales were increased by $22.6 million and $2.9
million in 2003 and 2002, respectively and reduced by $10.1 million in 2001 by the impact of currency fluctuations. Other factors include:



| | n |  | our ability to obtain effective hedges against fluctuations in currency exchange rates;
| | - |  | ---------------------------------------------------------------------------------------



| | n |  | foreign trade, monetary and fiscal policies;
| | - |  | --------------------------------------------



| | n |  | laws, regulations and other activities of foreign governments, agencies, and similar organizations;
| | - |  | ---------------------------------------------------------------------------------------------------



| | n |  | 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
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | n |  | risks associated with an economic downturn in other countries.
| | - |  | --------------------------------------------------------------



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



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



Our debt agreements contain covenants
that restrict our ability to:



| | n |  | incur additional indebtedness (including guarantees);
| | - |  | -----------------------------------------------------



| | n |  | incur liens;
| | - |  | ------------



| | n |  | dispose of assets;
| | - |  | ------------------



| | n |  | make some acquisitions;
| | - |  | -----------------------



| | n |  | pay dividends and make other restricted payments;
| | - |  | -------------------------------------------------



| | n |  | issue some types of preferred stock;
| | - |  | ------------------------------------



| | n |  | enter into sale and leaseback transactions;
| | - |  | -------------------------------------------



| | n |  | make loans and investments;
| | - |  | ---------------------------



| | n |  | enter into new lines of business;
| | - |  | ---------------------------------



| | n |  | enter into some leases; and
| | - |  | ---------------------------



| | n |  | engage in some transactions with affiliates.
| | - |  | --------------------------------------------



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



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



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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 we serve 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:



| | n |  | accurately anticipate customer needs;
| | - |  | -------------------------------------



| | n |  | innovate and develop new technologies and applications;
| | - |  | -------------------------------------------------------



| | n |  | successfully commercialize new products in a timely manner;
| | - |  | -----------------------------------------------------------



| | n |  | price our products competitively and manufacture and deliver our products in sufficient volumes and on time; and
| | - |  | ----------------------------------------------------------------------------------------------------------------



| | n |  | differentiate our offerings from those of our competitors.
| | - |  | ----------------------------------------------------------



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



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



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



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



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



We may incur restructuring charges that would reduce our earnings.



We have in the past and may in the future restructure some
of our operations. In such circumstances, we may take actions that would result in a charge and reduce our earnings, including as a result of our inability to dispose of discontinued operations or risks associated with discontinued operations. These
restructurings have or may be undertaken to realign our subsidiaries, eliminate duplicative functions, rationalize our operating facilities and products, and reduce our staff. These restructurings may be implemented to improve the operations of
recently acquired subsidiaries as well as subsidiaries that have been part of our operations for many years. For a discussion of our recent restructuring activities, see Managements Discussion and Analysis of Financial Condition and
Results of OperationsRestructuring Charges.



We
may incur impairment charges on our intangible assets with indefinite lives that would reduce our earnings.



On October 1, 2001, we adopted Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, which
requires that goodwill and intangible assets that have an indefinite useful life be tested at least annually for impairment. Goodwill and other intangible assets with indefinite lives must



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also be tested for impairment between the annual tests if an event occurs that would more likely than not reduce the fair value of the asset below its
carrying amount. As of December 31, 2003, goodwill and other intangible assets with indefinite lives represented approximately 52% of our total assets. If during the testing an impairment is determined, our financial results for the relevant period
will be reduced by the amount of the impairment, net of income tax effects, if any.



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



Our three most significant distributors represent a significant portion of
our revenues. For example, sales to Fisher Scientific, VWR, and Allegiance Corporation accounted for approximately 15%, 11%, and 7% of revenues during the first quarter of fiscal, 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 original equipment manufacturers 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 original equipment manufacturer customers are sometimes unpredictable and wide variances sometimes occur quarter to quarter.



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



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



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



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



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



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



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



Our ability to continue manufacturing and
selling those of our products that are subject to regulation by the United States Food and Drug Administration or other domestic or foreign governments or agencies is subject to a number of risks. If the FDA determines that we are not in compliance
with existing laws and regulations with respect to a particular product or a particular manufacturing facility, we could be subject to delays in the release of products, product recalls, suspension or revocation of authority necessary for product
production and sale, and other administrative, civil or criminal sanctions. 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. Although we currently maintain insurance against
some of these risks uninsured losses could occur.



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



Our business is subject to quarterly variation in operating results caused by a number of factors, including business and industry conditions, timing of
acquisitions, distribution and original equipment manufacturers 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.



ITEM 3:    Quantitative and Qualitative Disclosures About Market Risk



There has been no substantial change in market risk to the Company since September 30, 2003, the end of our prior fiscal year.



ITEM 4:    Controls and Procedures



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



Internal Control Over Financial Reporting: The Companys management, with the participation of the Companys Chief
Executive Officer and Chief Financial Officer, also conducted an evaluation of the Companys internal control over financial reporting to determine whether any changes occurred during the Companys first fiscal quarter ended December 31,
2003 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting. Based on that evaluation, there has been no such change during the Companys first fiscal quarter.



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##### Table of Contents

PART IIOTHER INFORMATION



ITEM 2:    Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities



The following table discloses our purchases of our equity securities during the first quarter of fiscal 2004.



ISSUER PURCHASES OF EQUITY SECURITIES



|                                      |  |                                     |  |                              |       |                                                                                     |           |                                                                                   |           
|------------------------------------- |  | ----------------------------------- |  | ---------------------------- | ----- | ----------------------------------------------------------------------------------- | --------- | --------------------------------------------------------------------------------- | ----------
|Period                                |  | Total Number of Shares Purchased(a) |  | Average Price Paid per Share |       | Total Number of Shares Purchased as Part of Publicly Announced Plans or
Programs(b) |           | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs(c)
|October 1, 2003 to October 31, 2003   |  |                                    |  | $                            |      |                                                                                     |          |                                                                                   | 11,559,716
|November 1, 2003 to November 30, 2003 |  | 1,761,400                           |  | $                            | 22.51 |                                                                                     | 1,761,400 |                                                                                   | 9,798,316 
|December 1, 2003 to December 31, 2003 |  | 3,000,000                           |  | $                            | 23.30 |                                                                                     | 3,000,000 |                                                                                   | 6,798,316 
|                                      |  |                                     |  |                              |       |                                                                                     |           |                                                                                   |           
|Total                                 |  | 4,761,400                           |  | $                            | 23.01 |                                                                                     | 4,761,400 |                                                                                   |           
|                                      |  |                                     |  |                              |       |                                                                                     |           |                                                                                   |           

---

|(a) |  | Shares were purchased in open market and block transactions.
|--- |  | ------------------------------------------------------------

|(b) |  | Apogents stock repurchase program was publicly announced in July 2002 and amended during fiscal 2003. It is scheduled to expire in September 2005.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | The Board of Directors authorized the repurchase of shares of Apogent common stock on the following dates: July 15, 2002  2,000,000 shares; January 28, 2003  5,000,000
shares; April 21, 2003  5,000,000 shares; and May 28, 2003  9,000,000 shares.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



The Company, a Wisconsin corporation, held its Annual Meeting of Shareholders on January 27, 2004. A quorum was present at the Annual Meeting, with
81,830,728 shares out of a total of 87,460,479 (93.6%) shares entitled to cast votes represented in person or by proxy at the meeting. The 87,460,479 shares entitled to vote represent the 90,460,479 shares outstanding and entitled to vote at the
December 1, 2003 record date minus 3 million shares repurchased by the Company prior to the date of the Annual Meeting.



The only matter submitted for a vote was a proposal to elect four directors to serve as Class III Directors until the 2007 Annual Meeting of Shareholders
and until their respective successors are duly elected and qualified.



The shareholders voted to elect Mary G. Puma, Simon B. Rich, Joe L. Roby, and Kenneth F. Yontz to serve as Class III directors until the 2007 Annual Meeting of Shareholders and until their respective successors are duly elected and
qualified. The results of the vote are as follows:



|              |  |              |  |               |  |             |  |                 
|------------- |  | ------------ |  | ------------- |  | ----------- |  | ----------------
|              |  | Mary G. Puma |  | Simon B. Rich |  | Joe L. Roby |  | Kenneth F. Yontz
|For           |  | 69,570,321   |  | 69,072,477    |  | 69,572,157  |  | 70,368,609      
|Withheld From |  | 12,260,407   |  | 12,758,251    |  | 12,258,571  |  | 11,462,119      



The terms of office as
directors of William H. Binnie, Don H. Davis, Jr., Christopher L. Doerr, Stephen R. Hardis, R. Jeffrey Harris, Frank H. Jellinek, Jr., and Richard W. Vieser continued after the meeting.



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##### Table of Contents

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:



On October 16, 2003, Apogent filed a Current Report on Form 8-K dated October 15, 2003, reporting the expiration, at 5:00 p.m. New York City time on October 15, 2003, of its tender offer and consent solicitation for any and all of its 8%
senior notes due 2011. On October 24, 2003, Apogent filed a Current Report on Form 8-K/A solely to amend the original Form 8-K filed on May 13, 2003 to correct the audit period referenced in the opinion paragraph of the Independent
Auditors Report.



On November 12, 2003, Apogent furnished
a Current Report on Form 8-K dated November 10, 2003, providing the Companys fourth quarter and 2003 fiscal year financial results and related information, and reporting certain succession planning information.



On December 11, 2003, Apogent filed a Current Report on Form 8-K announcing
the offering of floating rate senior convertible debt securities.



On December 12, 2003, Apogent filed a Current Report on Form 8-K announcing the pricing of floating rate senior convertible debt securities.



On December 31, 2003, Apogent filed a Current Report on Form 8-K dated December 30, 2003, announcing the completion of the sale of floating rate senior
convertible debt securities.



On January 22, 2004, subsequent
to the end of the quarter for which this report is filed, Apogent furnished a Current Report on Form 8-K providing the public disclosure of first quarter financial results.



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##### Table of Contents

SIGNATURE



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



Date: February 13, 2004



APOGENT TECHNOLOGIES INC.(Registrant)/s/    DENNIS
BROWNDennis Brown Chief Financial Officer**  Executing as both the principal financial officer and a duly authorized officer of the Company




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##### Table of Contents

APOGENT TECHNOLOGIES INC.

(COMMISSION FILE NO. 1-11091)



EXHIBIT INDEX

TO

QUARTERLY REPORT ON FORM 10-Q FOR

THE QUARTERLY PERIOD ENDED DECEMBER 31, 2003



|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                                     |  |                           
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------- |  | --------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | Incorporated Herein By Reference To |  | Filed orSubmitted Herewith
|4.10           |  | First Amendment to the Credit Agreement, dated as of July 29, 2003, among the Registrant, Erie Scientific Company, Nalge Nunc International Corporation, and Remel Inc., each as a Subsidiary
Borrower, the several lenders from time to time parties thereto (the Lenders), Fleet National Bank, as Syndication Agent, JPMorgan Chase Bank, as Administrative Agent for the Lenders, ABN AMRO Bank N.V., Bank of America N.A. and SunTrust
Bank, as Co-Documentation Agents, and J.P. Morgan Securities Inc. and Fleet Securities, Inc., as Joint Lead Arrangers and Joint Bookrunners  |  |                                     |  | X                         
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
|4.11           |  | Second Amendment to the Credit Agreement, dated as of July 29, 2003, among the Registrant, Erie Scientific Company, Nalge Nunc International Corporation, and Remel Inc., each as a Subsidiary
Borrower, the several lenders from time to time parties thereto (the Lenders), Fleet National Bank, as Syndication Agent, JPMorgan Chase Bank, as Administrative Agent for the Lenders, ABN AMRO Bank N.V., Bank of America N.A. and SunTrust
Bank, as Co-Documentation Agents, and J.P. Morgan Securities Inc. and Fleet Securities, Inc., as Joint Lead Arrangers and Joint Bookrunners |  |                                     |  | X                         
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
|12.1           |  | Computation of Ratio of Earnings to Fixed Charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                     |  | X                         
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
|31.1           |  | Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CEO)                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                     |  | X                         
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
|31.2           |  | Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CFO)                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                     |  | X                         
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
|32.1           |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CEO)                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                                     |  | X                         
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 
|32.2           |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CFO)                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                                     |  | X                         



EI-1