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Table of Contents

Form 10-Q

Fisher Scientific International Inc.

Registrant’s telephone number, including area code: (603) 926-5911

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:     Yes þ          No o

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act)     Yes þ          No o

      The number of shares of Common Stock outstanding at May 13, 2003 was 54,809,640.

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FISHER SCIENTIFIC INTERNATIONAL INC.

FORM 10-Q

INDEX

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FISHER SCIENTIFIC INTERNATIONAL INC.

PART 1 — FINANCIAL INFORMATION

INTRODUCTION TO THE FINANCIAL STATEMENTS

      The financial statements included herein have been prepared by Fisher Scientific International Inc. (“Fisher”, the “Company” or “we”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The December 31, 2002 balance sheet is the balance sheet included in the audited financial statements as shown in the Company’s 2002 Annual Report on Form 10-K. The Company believes that the disclosures are adequate to make the information presented not misleading when read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

      The financial information presented herein reflects all adjustments (consisting only of normal-recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The results for interim periods are not necessarily indicative of the results to be expected for the full year.

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FISHER SCIENTIFIC INTERNATIONAL INC.

STATEMENT OF OPERATIONS

See the accompanying notes to financial statements.

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FISHER SCIENTIFIC INTERNATIONAL INC.

BALANCE SHEET

See the accompanying notes to financial statements.

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FISHER SCIENTIFIC INTERNATIONAL INC.

See the accompanying notes to financial statements.

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FISHER SCIENTIFIC INTERNATIONAL INC.

See the accompanying notes to financial statements

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FISHER SCIENTIFIC INTERNATIONAL INC.

Note 1 — Formation and Background

      Fisher Scientific International Inc. (“Fisher” or the “Company”) was founded in 1902 and was incorporated as a Delaware Corporation in 1991. The Company’s operations are conducted throughout North and South America, Europe, the Far East, Australia, the Middle East and Africa directly or through one or more subsidiaries, joint ventures, agents, or dealers. The Company reports financial results on the basis of three business segments: domestic distribution, international distribution and laboratory workstations. The domestic distribution segment manufactures, sells and distributes products to three primary customer markets: scientific research, clinical laboratory and industrial safety. Additionally, this segment provides contract manufacturing, chemical manufacturing and custom chemical synthesis and pharmaceutical services for phase III and phase IV clinical trials. The international distribution segment sells and distributes products primarily to the industrial and scientific research markets. The laboratory workstations segment engages in the manufacture and sale of laboratory furniture and fume hoods to the scientific research, educational and medical laboratory markets and the manufacture and sale of consoles and enclosures to the technology, communication and financial markets.

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

      As of January 1, 2003, certain affiliates of Thomas H. Lee Company (“THL Entities”) together with JP Morgan Partners, Merrill Lynch & Co. and Credit Suisse First Boston (USA) Inc. (the “Equity Investors”) owned on a diluted basis 33.4 percent of our issued and outstanding common stock. On January 15, 2003 and April 8, 2003, the THL Entities distributed, on a pro rata basis, approximately 9 million and 10 million shares, respectively, of our common stock, reducing the Equity Investors ownership to approximately 4 percent of the diluted shares of the Company.

      Certain prior year amounts have been reclassified to conform to their current presentation.

Note 2 — Change in Accounting Principle

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

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

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NOTES TO FINANCIAL STATEMENTS — (Continued)

between annual tests, if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company has elected to perform its annual test for indications of goodwill impairment as of October 31 each year.

      During the second quarter of 2002, the Company completed its transitional assessment in accordance with these tests and determined that goodwill was impaired as of January 1, 2002. As a result, the Company recorded a non-cash charge of $63.8 million ($46.1 million, net of tax) in the Company’s statement of operations, reflecting the cumulative effect of the accounting change to adjust goodwill to fair-value. The international distribution segment and laboratory workstations segment accounted for $19.7 million and $44.1 million of the charge, respectively.

Note 3 — Inventories

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

Note 4 — Goodwill and Other Intangible Assets

      The following is a reconciliation of changes in the carrying amounts of goodwill by segment (in millions):

      In March 2003, the Company finalized its third-party valuation of Maybridge Chemical Holdings Limited (“Maybridge”). As a result, the Company has recorded an adjustment to the purchase price allocation for Maybridge reflecting an increase in the fair value of indefinite-lived intangible assets acquired with the offsetting decrease to goodwill of $16.2 million.

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NOTES TO FINANCIAL STATEMENTS — (Continued)

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

      For the three months ended March 31, 2003 and 2002, the Company recorded amortization expense of $2.0 million and $2.1 million, respectively, related to amortizable other intangible assets.

      The estimated amortization expense for each of the five succeeding years and thereafter is as follows (in millions):

(a)	Amount represents estimated amortization expense for the remaining nine months ending December 31, 2003.

      As of March 31, 2003 and December 31, 2002, the Company had indefinite-lived intangible assets in the domestic distribution segment of $76.6 million and $61.5 million, respectively. Indefinite-lived intangible assets consist primarily of tradenames acquired through the Company’s acquisitions of Cole-Parmer and MAS in 2001 and Maybridge in 2002.

Note 5 — Accounts Payable

      The Company maintains a zero balance cash management system for its U.S. accounts payable. Accordingly, included in accounts payable at March 31, 2003 and December 31, 2002, are approximately $98.9 million and $99.9 million, respectively, of checks that have not cleared.

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NOTES TO FINANCIAL STATEMENTS — (Continued)

Note 6 — Debt

      In February 2003, the Company entered into a $225 million receivables securitization facility (“Receivables Securitization”), which provides for the sale, on a revolving basis, of all of the accounts receivable of Fisher Scientific Company L.L.C., Cole Parmer Instrument Company, Fisher Clinical Services Inc., and Fisher Hamilton L.L.C. to FSI Receivables Company LLC (“FSI”), a special purpose, bankruptcy remote indirect wholly owned subsidiary of the Company. On the same date, FSI and the Company, as servicer, entered into a receivables transfer agreement with certain financial institutions, that provides for the transfer on a revolving basis of an undivided percentage ownership interest in a designated pool of accounts receivable up to a maximum amount of $225 million to be funded in cash from time to time to FSI. Under the terms of the Receivables Securitization, the originators retain collection and administrative responsibilities for the receivables in the pool. The effective funded interest rate on the Receivables Securitization is approximately one month LIBOR plus an annual commitment fee of 45 basis points. The unfunded annual commitment fee is 25 basis points. The Receivables Securitization replaced the existing receivables securitization which expired in January 2003. As of March 31, 2003, $10 million was sold through the Receivables Securitzation.

      In January 2003, the Company issued and sold $200 million of 8 1/8 percent senior subordinated notes due in May 2012 at a premium resulting in an effective yield of 7.4 percent. In February 2003, the Company entered into a new credit facility (the “Credit Facility”) with a group of financial institutions, consisting of a $400 million term loan facility (the “Term Facility”) and a $175 million revolving credit facility (the “Revolving Facility”). The Revolving Facility includes a sub-limit for the issuance of letters of credit. The Credit Facility also permits borrowers to be designated in the future to borrow loans denominated in local currency from individual lenders thereunder, either on a negotiated basis or through a competitive bidding process. Commitments under the Revolving Facility expire, and the loans outstanding thereunder mature, on March 31, 2008. The Term Facility requires the Company to make quarterly repayments of principal equal to $1 million beginning June 30, 2003 through March 31, 2009, and quarterly repayments of principal equal to $94 million beginning June 30, 2009 through the maturity of the Term Facility on March 31, 2010. Borrowings under the Revolving Facility bear interest, at the borrowers’ election, at either the adjusted LIBOR rate plus a margin of between 2.25 percent and 3.00 percent per annum or the prime rate plus a margin of between 1.25 percent and 2.00 percent per annum, depending in each case on the Company’s leverage ratio. Borrowings under the Term Facility bear interest at the adjusted LIBOR rate plus 2.50 percent per annum. The Credit Facility replaced the credit facility entered into in January 1998.

      Obligations of the Company and its subsidiaries under the Credit Facility will be secured by substantially all assets of the Company and its material domestic subsidiaries. Our principal financial covenants under the Credit Facility currently are (i) a maximum Total Leverage Ratio of 4.25 to 1.0, (ii) a maximum Senior Leverage Ratio of 3.5 to 1.0, (iii) a minimum Cash Interest Expense Coverage Ratio of 2.75 to 1.0, and (iv) limitations on capital expenditures. In addition, the Credit Facility contains certain other financial covenants of the Company and the subsidiary borrowers, including, restrictions on (i) indebtedness, (ii) the incurrence of liens, (iii) loans and investments, (iv) the sale of assets, (v) mergers, acquisitions and other business combinations and (vi) the payment of cash dividends to shareholders. As of March 31, 2003, the Company was in compliance with all covenants under the Credit Agreement.

      The proceeds from the 8 1/8 percent senior subordinated notes issued and sold in January 2003 and the Term Facility were used to refinance the Company’s 9 percent senior subordinated notes due in 2008.

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NOTES TO FINANCIAL STATEMENTS — (Continued)

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

Note 7 — Comprehensive Income (Loss)

      Comprehensive income (loss) refers to revenues, expenses, gains and losses that under accounting principles generally accepted in the United States of America are included in comprehensive income (loss), but excluded from net loss as these amounts are recorded directly as an adjustment to stockholders equity, net of tax. The following is a summary of comprehensive income (loss) for the three months ended March 31, 2003 and 2002 (in millions).

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NOTES TO FINANCIAL STATEMENTS — (Continued)

Note 8 — Earnings Per Share

      The following is a reconciliation of the shares used in the computation of basic and diluted earnings per share for the three months ended March 31, 2003 and 2002 (in millions):

(a)	The weighted average amount of outstanding antidilutive common stock options excluded from the computation of diluted earnings per share was 1.4 million as of March 31, 2003 and 2002.

Note 9 — Stock and Other Plans

      The company measures compensation expense for its stock-based employee compensation plans using the intrinsic value method. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure”, an amendment of FASB Statement No. 123 (“SFAS No. 148”). Had compensation expense for the Company’s stock option plans been determined based on the fair value at the grant date, consistent with the methodology prescribed under SFAS No. 148, the Company’s net loss and loss per share would have approximated the pro forma amounts indicated below (in millions, except per share amounts):

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NOTES TO FINANCIAL STATEMENTS — (Continued)

      The fair value of each stock option included in the preceding pro forma amounts was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:

Note 10 — Segment Information

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

      Selected business segment financial information for the three months ended March 31, 2003 and 2002 is presented below (in millions):

      Income from operations is revenue less related costs and direct and allocated expenses. Intercompany sales and transfers between segments were not material for the three months ended March 31, 2003 and 2002.

Note 11 — Related Party

      The Company recorded a charge of $1.5 million to terminate the management agreement between the Company and THL pursuant to which THL and certain of its affiliates provided consulting and management advisory services. This agreement was originally set to expire in 2005 and would have resulted in fees totaling $1.8 million being paid to THL for the period from the termination date through the end of the original term of the agreement.

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NOTES TO FINANCIAL STATEMENTS — (Continued)

Note 12 — Recent Accounting Pronouncements

      In April 2003, the FASB issued Statement of Financial Accounting Standards No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” (“SFAS 149”). SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities”. SFAS 149 is effective for contracts entered into or modified after June 30, 2003. The adoption of this statement is not anticipated to have a material effect on the Company’s financial position or results of operations.

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

      In December 2002, the FASB issued SFAS 148 which amends FASB Statement No. 123. This statement provides alternative methods of transition for a voluntary change to the fair value-based method of accounting for stock-based employee compensation and amends the disclosure requirements of FASB Statement No. 123. The transition guidance and annual disclosure provisions are effective for fiscal years beginning after December 15, 2002. The interim disclosure provisions are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002. The Company has included the required interim disclosure provisions in its financial statements for the quarter ended March 31, 2003. The adoption of this statement did not have a material effect on the Company’s financial position or results of operations.

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

      In July 2002, the FASB issued Statement of Financial Accounting Standards No. 146, “Accounting for Exit or Disposal Activities” (“SFAS 146”). SFAS 146 requires the recognition of a liability for costs associated with an exit plan or disposal activity when incurred and nullifies Emerging Issues Task Force (EITF) Issue 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)”, which allowed recognition at the date of an entity’s commitment to an exit plan. The provisions of this statement are effective for exit or disposal activities that are initiated by the Company after December 31, 2002.

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

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      This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this Form 10-Q may constitute forward looking statements. The Company’s actual results could differ materially from those set forth in the forward-looking statements. Certain factors that might cause such a difference include those discussed in the section entitled “Management’s Discussion and Analysis of Results of Operations and Financial Condition — Cautionary Factors Regarding Forward-Looking Statements” contained in the Company’s Form 10-K for the year ended December 31, 2002. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in the report might not occur.

Overview

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

      In January 2003, we issued and sold $200 million of 8 1/8 percent senior subordinated notes due May 2012 pursuant to Rule 144A and Regulation S of the Securities Act of 1933. The notes were issued under our existing 8 1/8 percent indenture and sold at a premium, resulting in an effective yield of 7.4 percent. In February 2003, we entered into a new credit facility agreement that includes a five-year revolving facility that provides for initial available borrowings of $175 million and a seven-year $400 million term loan. The proceeds from the term loan, together with proceeds from the 8 1/8 percent senior subordinated notes, were used to refinance our outstanding $600 million 9 percent senior subordinated notes maturing in 2008. As a result of the refinancing, we recorded a charge of $45.6 million in the first quarter of 2003 consisting of $27.3 million of call-premiums and $18.3 million of deferred financing and other costs associated with calling the 9 percent senior subordinated notes. In February 2003, we also entered into a new receivables securitization facility that provides for the sale, on a revolving basis, of certain accounts receivable of up to $225 million.

      As of January 1, 2003, certain affiliates of Thomas H. Lee Company (“THL Entities”) together with JP Morgan Partners, Merrill Lynch & Co. and Credit Suisse First Boston (USA) Inc. (the “Equity Investors”) owned on a diluted basis 33.4 percent of our issued and outstanding common stock. On January 15, 2003 and April 8, 2003, the THL Entities distributed, on a pro rata basis, approximately 9 million and 10 million shares, respectively, of our common stock, reducing the Equity Investors ownership to approximately 4 percent of the diluted shares of the Company.

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Results of Operations

      The following table sets forth our sales and income from operations by segment for the three months ended March 31, 2003 and 2002 (in millions):

      Sales for the three months ended March 31, 2003 increased 7.5 percent to $833.4 million from $775.5 million for the comparable period in 2002. Excluding $18.7 million for the effect of foreign exchange, sales were $814.7 million, a 5.1 percent increase for the three months ended March 31, 2003 versus the comparable period in 2002. The increase in sales resulted from growth in our domestic distribution and laboratory workstation segments. Excluding the effect of foreign exchange, we are forecasting full year sales growth to range between 4 percent and 6 percent for 2003.

      Sales in the domestic distribution segment increased 6.1 percent to $711.0 million for the three months ended March 31, 2003 from $670.1 million for the comparable period in 2002. Sales growth into the clinical laboratory market was in the high single-digits. Sales into the scientific research and industrial markets grew in the middle single-digits. We are forecasting full year domestic distribution sales growth to range between 4.5 percent and 6.5 percent for 2003.

      Sales in the international distribution segment increased 9.0 percent to $121.6 million for the three months ended March 31, 2003 from $111.6 million for the comparable period in 2002. Excluding the $14.1 million favorable effect of foreign exchange, sales were $107.5 million, a 3.7 percent decrease, for the three months ended March 31, 2003 versus the comparable period in 2002. The decrease in sales, excluding the effect of foreign exchange, was primarily due to a continued economic slowdown, reduced government research funding resulting from increased government deficits and the uncertainty caused by the conflict in Iraq. We are forecasting full year international distribution growth to range between 2 percent and 5 percent for 2003, excluding the effect of foreign exchange, reflecting an anticipated improvement in the international economic environment.

      Sales in the laboratory workstations segment increased 17.1 percent to $49.9 million for the three months ended March 31, 2003 from $42.6 million for the comparable period in 2002. Although our backlog increased slightly to $109 million, we are cautious regarding this segment’s forecasted revenue growth due to continued economic uncertainty and the potential slowdown in new laboratory construction. Laboratory workstations is a project-based business which operates off of a backlog, a majority of which may be shipped in less than one year. Delivery and installation of projects, which are driven by the timing of construction projects, results in a corresponding reduction in backlog. We are forecasting full year laboratory workstations sales growth to range between 0 percent and 1 percent for 2003, primarily due to the effect of the $12.3 million homeland security order awarded to us in the fourth quarter of 2002 that we do not anticipate repeating in 2003.

      Gross profit for the three months ended March 31, 2003 increased 6.5 percent to $218.5 million, or 26.2 percent of sales, from $205.1 million, or 26.4 percent of sales, for the comparable period in 2002. The

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      Selling, general and administrative expense for the three months ended March 31, 2003 increased 4.2 percent to $157.7 million, or 18.9 percent of sales, from $151.3 million, or 19.5 percent of sales, for the comparable period in 2002. Selling, general and administrative expense as a percentage of sales decreased 60 basis points from the full integration of Cole-Parmer and continued fixed-cost leverage within our existing businesses. We are forecasting selling, general and administrative expense as a percentage of sales for the remainder of 2003 to remain comparable with our first quarter.

      Income from operations for the three months ended March 31, 2003 increased to $60.8 million, or 7.3 percent of sales, from $53.8 million, or 6.9 percent of sales, for the comparable period in 2002. The increase in income from operations as a percentage of sales was attributable to an improvement in selling, general and administrative expense as a percentage of sales which more than offset the reduction in gross margins. We are forecasting income from operations as a percentage of sales to range between 7.7 percent and 7.9 percent for 2003.

      Income from operations in the domestic distribution segment increased 8.2 percent to $51.4 million, or 7.2 percent of segment sales for the three months ended March 31, 2003, from $47.5 million, or 7.1 percent of segment sales, for the comparable period in 2002. The increase in income from operations as a percentage of sales for the domestic distribution segment related to the completion of the integration of Cole-Parmer and continued fixed-cost leverage within our existing businesses. We are forecasting income from operations as a percentage of segment sales to range between 7.6 percent and 7.8 percent for 2003.

      Income from operations in the international distribution segment increased 44.7 percent to $6.8 million, or 5.6 percent of segment sales for the three months ended March 31, 2003, from $4.7 million, or 4.2 percent of segment sales, for the comparable period in 2002. The increase in international distribution income from operations as a percentage of sales in 2003 was due to an improvement in gross margin as we continue to focus on margin improvement initiatives and fixed-cost leverage on our existing businesses offset partially by decreased sales volume. We are forecasting income from operations as a percentage of segment sales to range between 5.5 percent and 6.0 percent for 2003.

      Income from operations in the laboratory workstations segment increased 52.9 percent to $2.6 million, or 5.2 percent of segment sales for the three months ended March 31, 2003, from $1.7 million, or 4.0 percent of segment sales, for the comparable period in 2002. Operating income in the laboratory workstations segment increased due to the increase in sales volume and the corresponding impact on fixed cost leverage. We are forecasting income from operations as a percentage of segment sales to range between 5.5 percent and 6.0 percent for 2003, as we continue to focus on improving manufacturing efficiencies.

      Interest expense decreased by $1.6 million to $22.3 million for the three months ended March 31, 2003, from $23.9 million for the comparable period in 2002. The decrease in interest expense is primarily due to the debt refinancing in April 2002 and an overall decrease in interest rates. We are forecasting interest expense for the full year to be approximately $78 million to $80 million.

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      Other expense, net, for the three months ended March 31, 2003 was $44.4 million compared to $0.1 million of other income, net, for the comparable period in 2002. In connection with our debt refinancing in the first quarter of 2003, we recorded a charge of $45.6 million consisting of $27.3 million of call premiums and $18.3 million of deferred financing charges, offset by $1.4 million of dividend income from an investment in preferred stock.

      We recorded an income tax benefit of $5.0 million for the three months ended March 31, 2003 compared with a $10.2 million income tax provision for the comparable period in 2002. The effective income tax rate for the three month period ended March 31, 2003 was 30 percent compared with 34 percent for the corresponding period in 2002. The reduction was predominantly due to the effect of continued tax planning. We are forecasting our effective tax rate to remain at 30 percent for the remainder of 2003.

      In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”).

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