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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended June 30, 2003 or

For the transition period from                      to                     

Commission File Number 001-09781 (0-1052)

MILLIPORE CORPORATION

(Exact name of registrant as specified in its charter)

(978) 715-4321

(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 Exchange Act Rule 12b-2). Yes  x  No  ¨ 

As of July 25, 2003, 48,663,741 shares of the registrant’s Common Stock were outstanding.

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MILLIPORE CORPORATION

INDEX TO FORM 10-Q

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MILLIPORE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MILLIPORE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

The accompanying notes are an integral part of the condensed consolidated financial statements.

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MILLIPORE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MILLIPORE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

1.    General

Millipore Corporation (“Millipore”, “our” or “we”) is a multinational bioscience company that provides technologies, tools and services for the discovery, development and production of therapeutic drugs and for other purposes. Our products serve the worldwide biotechnology and life science research markets as well as other bioscience markets. Our products are based on a variety of enabling technologies, including our membrane filtration and chromatography technologies.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, accordingly, these footnotes condense or omit information and disclosures which substantially duplicate information provided in our latest audited financial statements. These financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2002. In the opinion of our management, these financial statements reflect all adjustments necessary for a fair presentation of the results for the interim periods presented. The accompanying unaudited condensed consolidated financial statements are not necessarily indicative of future trends or our operations for the entire year. Reclassifications have been made to prior year financial statements to conform to the 2003 presentation.

2.    Stock-based Compensation

At June 30, 2003, we have a stock-based employee compensation plan and a non-employee director stock option plan from which we currently grant stock options. We apply the recognition and measurement provisions of Accounting Principles Board Opinion No. 25 (“APB 25”), “Accounting for Stock Issued to Employees,” and related interpretations in accounting for those plans. No stock-based compensation expense is reflected in net income as all options granted under the plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if we had applied the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-based Compensation,” to stock-based employee compensation for the three and six months ended June 30, 2003 and 2002.

The fair value of each option grant is estimated on the date of the grant using the Black-Scholes model. The assumptions used in the Black-Scholes calculation for the three and six months ended June 30, 2003 and 2002 included an expected life of five years, a dividend rate of zero, expected volatility of 40% and a weighted average risk-free interest rate of 4.2%.

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MILLIPORE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

3.    Inventories

Inventories at June 30, 2003 and December 31, 2002, stated at the lower of first-in, first-out (“FIFO”) cost or market, consisted of the following:

4.    Property, Plant and Equipment

Accumulated depreciation on property, plant and equipment was $204,213 at June 30, 2003 and $183,006 at December 31, 2002.

During the six months ended June 30, 2003, we invested $410, for a cumulative total of $7,873 invested to date, related to a planned $30,000 project to expand manufacturing capacity adjacent to our existing manufacturing facility in Ireland. We do not expect to complete construction of this facility prior to 2006. This facility is currently a multipurpose building shell that is expected to increase manufacturing capacity for a core consumable product line. If necessary, this facility could be used for the manufacturing of alternative products.

5.    Intangible Assets, net

Intangible assets consisted of the following at June 30, 2003 and December 31, 2002:

Amortization expense for the six months ended June 30, 2003 and 2002 was $1,690 and $1,794, respectively.

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MILLIPORE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

The estimated aggregate amortization expense for intangible assets owned as of June 30, 2003 for each of the five succeeding years is as follows:

6.    Restructuring Program and Other Charges

During the quarter ended June 30, 2003, we completed the restructuring program that had been initiated during 2001 and also recovered approximately $250 in assets that we had originally written-off and deemed uncollectible. Upon completion of this restructuring program, we reversed $604 of the original estimated reserve, which included the $250 recovered during this quarter and $354 of previously estimated lease and severance payments, as these amounts were no longer required. We eliminated 215 positions which resulted in approximately 190 employees leaving Millipore.

During the quarter ended June 30, 2002, we recorded a charge of $500 related to litigation that became estimable and probable during that quarter and was settled during the quarter ended December 31, 2002.

7.    Discontinued Operations

On October 3, 2000, we announced our plans, subject to certain conditions, to separate into two distinct companies by making our Microelectronics business segment an independent, publicly traded company. In accordance with these plans, the Microelectronics business segment was separated into a wholly owned Millipore subsidiary named Mykrolis Corporation (“Mykrolis”) on March 31, 2001. On August 9, 2001, Mykrolis completed an initial public offering (the “Mykrolis IPO”) of 7,000 Mykrolis common shares at a price of $15.00 per share. Prior to the Mykrolis IPO, our ownership in Mykrolis’ outstanding common shares was 100%, and at December 31, 2001 our ownership in Mykrolis’ outstanding common shares was approximately 82%. On February 27, 2002 (the “Distribution Date”), we distributed our remaining ownership interest in Mykrolis common stock as a dividend to our shareholders of record as of February 13, 2002. During the first quarter of 2002, the amount of loss from discontinued operations that we had estimated during the year ended December 31, 2001 was reduced by $2,900 to reflect the actual net loss of Mykrolis through the Distribution Date.

8.    Basic and Diluted Earnings per Share

In addition to the 48,460 and 48,432 weighted average shares outstanding for the three and six months ended June 30, 2003, respectively, there were 374 and 244 stock options and shares of restricted stock that had a dilutive effect during the three and six months ended June 30, 2003, respectively. Including the dilutive effect of the stock options and shares of restricted stock, there were 48,834 and 48,676 weighted average shares outstanding on a diluted basis for the three and six months ended June 30, 2003, respectively.

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MILLIPORE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

In addition to the 48,176 and 48,034 weighted average shares outstanding for the three and six months ended June 30, 2002, respectively, there were 300 and 443 stock options and shares of restricted stock that had a dilutive effect during the three and six months ended June 30, 2002, respectively. Including the dilutive effect of the stock options and shares of restricted stock, there were 48,476 and 48,477 weighted average shares outstanding on a diluted basis for the three and six months ended June 30, 2002, respectively.

For the three months ended June 30, 2003 and June 30, 2002, 2,895 and 3,026, respectively, of outstanding stock options were excluded from the calculation of diluted earnings per share because their inclusion would have been antidilutive. These options could be dilutive in the future. For the six months ended June 30, 2003 and June 30, 2002, 3,051 and 2,052, respectively, of outstanding stock options were excluded from the calculation of diluted earnings per share because their inclusion would have been antidilutive. These options could be dilutive in the future.

9.    Comprehensive Income

The following table presents the components of comprehensive income, net of taxes:

10.    Business Segment Information

SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,” establishes standards for reporting information about operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas and major customers. We evaluated our business activities that are regularly reviewed by our chief decision-makers for which separate discrete financial information is available. As a result of this evaluation, we determined that we have three operating segments: BioPharmaceutical, Laboratory Water and Life Sciences, which are aggregated into one reporting segment.

BioPharmaceutical develops, manufactures and sells consumable products and hardware and provides related services used principally in development and manufacturing of therapeutic products. Laboratory Water and Life Sciences manufacture and sell instrumentation, consumable products and services used in drug discovery and other laboratory applications. For all three of these operating segments, economic characteristics, production processes, products and services, types and classes of customers, methods of distribution and regulatory environments are similar. Further, our chief decision-makers evaluate our performance and make resource allocation decisions based on total consolidated company results. Accordingly, the three segments have been aggregated into one reporting segment for financial statement purposes.

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MILLIPORE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

11.    Commitments and Contingencies

We are subject to a number of claims and legal proceedings which, in our opinion, are incidental to our normal business operations. In our opinion, although final settlement of these suits and claims may impact our consolidated financial statements in a particular period, they will not, in the aggregate, have a material adverse effect on our consolidated financial position, results of operations and cash flows.

In November 2002, the FASB issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statement Nos. 5, 57, and 107 and Rescission of FASB Interpretation No. 34.” FIN 45 clarifies the requirements of FASB Statement No. 5, “Accounting for Contingencies,” relating to the guarantor’s accounting for, and disclosure of, the issuance of certain types of guarantees. FIN 45 requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the obligation it assumes under that guarantee. FIN 45 also requires additional disclosures by a guarantor in its interim and annual financial statements about the obligations associated with guarantees issued. The recognition and measurement provisions are effective on a prospective basis to guarantees issued or modified after December 31, 2002. The adoption of FIN 45 did not have an impact on our condensed consolidated financial statements.

As permitted under Massachusetts law and required by our corporate by-laws, we indemnify our officers and directors for certain events or occurrences while the director or officer is or was serving at our request in such capacity. The maximum potential amount of future payments we could be required to make under these indemnification obligations is unlimited; however, we have a Directors and Officers liability insurance policy that enables us to recover a portion of any future amounts paid. As these indemnification obligations were in effect prior to December 31, 2002 these obligations were grandfathered under the provisions of FIN 45. As there were no known or pending claims, we have not accrued a liability for these agreements as of June 30, 2003.

In the ordinary course of business, we warrant to our customers that our products will conform to our published specifications. Generally, the applicable product warranty period is one year from the date of delivery of the product to the customer or of site acceptance, if required. Additionally, we typically provide limited warranties with respect to our services. From time to time, we also make other warranties to our customers, including warranties that our products are manufactured in accordance with applicable laws and not in violation of third party rights. We provide for estimated warranty costs at the time of the product sale. We believe our warranty reserve as of June 30, 2003 appropriately reflects the estimated fair value of our warranty obligations.

In the ordinary course of business, we agree from time to time to indemnify certain customers against certain third party claims for property damage, bodily injury, personal injury or intellectual property infringement arising from the operation or use of our products. Also, from time to time in agreements with our suppliers, licensors and other business partners, we agree to indemnify these partners against certain liabilities arising out of the sale or use of our products. The maximum potential amount of future payments we could be required to make under these indemnification obligations is unlimited; however, we have general and umbrella insurance policies that enable us to recover a portion of any amounts paid. Based on our experience with such indemnification claims, we believe the estimated fair value of these obligations is minimal. Accordingly, we have no liabilities recorded for these agreements as of June 30, 2003.

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MILLIPORE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands, except per share data)

As part of our past acquisitions and divestitures of businesses or assets, we have provided a variety of warranties and indemnifications to the sellers and purchasers that are typical for such transactions. Typically certain of the warranties and the indemnifications expire after a defined period of time following the transaction, but certain warranties and indemnifications may survive indefinitely. In the case of our spin-off of Mykrolis, we agreed to indemnify Mykrolis against any liability associated with Millipore’s bioscience businesses, whether arising prior to or following the Distribution Date. We also retain contingent liability under certain lease agreements that were assigned to Mykrolis as part of the spin-off. The warranty and indemnification obligations noted above were grandfathered under the provisions of FIN 45 as they were in effect prior to December 31, 2002. Accordingly, we have no liabilities recorded for these obligations as of June 30, 2003.

12.    Other New Accounting Pronouncements

In May 2003, FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. SFAS No. 150 establishes standards on the classification and measurement of financial instruments with characteristics of both liabilities and equity. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003. The adoption of SFAS No. 150 did not have an impact on our consolidated financial statements.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”. This statement amends SFAS No. 133 to provide clarification on the financial accounting and reporting of derivative instruments and hedging activities and requires contracts with similar characteristics to be accounted for on a comparable basis. We are in the process of assessing the effect of SFAS No. 149, but we do not expect the adoption of SFAS No. 149, which will be effective for contracts entered into or modified after June 30, 2003, to have a significant effect on our consolidated financial statements.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The Company

Millipore Corporation (“Millipore”, “our” or “we”) is a multinational bioscience company that provides technologies, tools and services for the discovery, development and production of therapeutic drugs and for other purposes. Our products serve the worldwide biotechnology and life science research markets as well as other bioscience markets. Our products are based on a variety of enabling technologies, including our membrane filtration and chromatography technologies.

Basis of Presentation and Use of Non-GAAP Financial Measures

The following discussion of the Results of Operations includes reference to “local currencies” which are non-GAAP financial measures. Local currency results represent the foreign currency balances translated to U.S. dollars, in all periods presented, at Millipore’s predetermined budgeted exchange rates for 2003, thus excluding the impact of fluctuations in the actual foreign currency rates. Our management uses this presentation for internal evaluation of our financial performance because we believe that the local currency results provide a clearer presentation of underlying business trends. The U.S. dollar results represent the foreign currency balances translated at actual exchange rates. Unless otherwise indicated, all items refer to continuing operations only and amounts are in thousands, except per share data.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Our most critical accounting policies had a significant impact on the preparation of these condensed consolidated financial statements. These policies include estimates and significant judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continue to have the same critical accounting policies and estimates as we described in Item 7, on page 11, in our Annual Report on Form 10-K for the year ended December 31, 2002. Those policies and estimates were identified as those relating to revenue recognition, allowance for doubtful accounts, inventory valuation analysis, valuation of long-lived assets, income tax provision, employee retirement plans and our intention to refinance short-term debt on a long-term basis. We continue to evaluate our estimates and judgments on an on-going basis. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty. We base our estimates and judgments on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions.

Results of Operations

Second Quarter of 2003 Compared to the Second Quarter of 2002

Net Sales

The following discussion of net sales summarizes sales growth by the geographies in which our products were sold, the markets in which our products were used and major product types.

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Net Sales by Geography

Sales growth by geography, measured in U.S. dollars and local currencies, for the three months ended June 30 (“second quarter”), 2003 as compared with the second quarter of 2002 is summarized in the table below.

Net sales for the second quarter of 2003, measured in U.S. dollars, increased 12% as compared with net sales during the second quarter of 2002. Local currency sales increased 3% in the second quarter of 2003 as compared with the second quarter of 2002. During the second quarter of 2003 as compared with the second quarter of 2002, the U.S. dollar weakened against the Euro by almost 20% and weakened by approximately 7% against the Japanese Yen. In general, a weaker U.S. dollar will positively impact sales growth.

Local currency sales in the Americas increased 5% in the second quarter of 2003 as compared with the second quarter of 2002. The U.S., which comprises over 90% of the total Americas, saw an increase in sales during the second quarter of 2003 due to higher sales of consumable products to pharmaceutical and life science customers. Local currency sales in Latin America increased 14%, off of a small base, in the second quarter of 2003 as compared with the second quarter of 2002, due to an increase in sales to pharmaceutical customers.

Local currency sales decreased 1% in Europe during the second quarter of 2003 as compared with the second quarter of 2002. The modest 2003 decline was due to the continued weak capital markets, weak economic conditions and lower demand from sequencing centers and core labs. An increase in sales of other bioscience products was offset by a decline in sales in the biotechnology market.

Local currency sales in the Asia/Pacific region increased 5% in the second quarter of 2003 as compared with the second quarter of 2002. Sales of consumable products in the biotechnology market increased 8%. Partially offsetting this increase was a decrease in local currency sales of our hardware products.

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Net Sales by Market

We sell our products into three markets: biotechnology, life science research and other bioscience. The biotechnology market consists of companies that manufacture biotherapeutics. The life science research market consists of research activities in drug discovery, proteomics and genomics within private and publicly funded organizations. The other bioscience market principally includes businesses which develop and manufacture classical pharmaceuticals, have clinical and analytical laboratory activities, or conduct processing and quality control of beverages. Our products may be unique to a market or may be sold in multiple markets depending on the customers’ intended use or application. Net sales growth in local currency for the second quarter of 2003 as compared with the second quarter of 2002, by market, is summarized in the table below.

Local currency sales in the biotechnology market were relatively flat during the second quarter of 2003 as compared with the second quarter of 2002. Within the biotechnology market, sales of consumables increased 3%, but were offset by an 11% decline in sales of hardware products, primarily to our customers located in Europe and the U.S. Sales into the biotechnology market are impacted by customers’ therapeutic production volumes, major capacity expansions, timing of drug approvals and their commercial success. Therefore, the product demand from customers in this market will vary on a quarterly basis. Geographically, biotechnology sales grew by approximately 4% in the Americas and declined by approximately 4% in Europe.

Local currency sales grew 2% in the life science research market during the second quarter of 2003 as compared with the second quarter of 2002. Our sales in protein research and drug discovery continue to gain positive momentum while sales in genomics applications were weak. The slow growth of sales in the life science research market continues to be the result of weak capital markets in the Americas and Europe which constrained funding to our customers for research and development at life science startups and weak economic conditions in Europe.

Local currency sales growth of 5% in the other bioscience market during the second quarter of 2003 as compared with the second quarter of 2002 was primarily due to increased sales of consumable products to customers conducting either laboratory research or process manufacturing. Geographically, other bioscience sales grew by more than 8% in the Americas. The Americas’ sales growth benefited from growth in sales to pharmaceutical customers and increases in spending for U.S. homeland defense initiatives.

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Net Sales by Major Product Type

We divide our product offerings into three categories: consumables, hardware and services. Consumables is the largest category with approximately 79% of net sales during the second quarter of 2003, a slight increase from 78% of net sales during the second quarter of 2002. Consumables include products such as laboratory sample preparation and screening devices and kits in various low and high throughput formats, specialty membranes, large process scale cartridges manufactured in various flat or cylindrical formats. Hardware sales represented approximately 18% of net sales during the second quarter of 2003, down slightly from 19% of net sales during the second quarter of 2002. Hardware products include items such as small benchtop filtration systems and cartridge integrity testers, large stainless steel process scale filtration and chromatography systems and columns costing up to several million dollars as well as a variety of systems for laboratory water purification. Consumables typically have higher profit margins than hardware. The services category represents approximately 3% of net sales in each respective period. Included in this category are field services for the maintenance of laboratory water purification systems and validation services offered to biotechnology and classical pharmaceutical customers.

Net sales growth (decline) by product type, measured in U.S. dollars and local currencies for the second quarter of 2003 as compared with the second quarter of 2002, is summarized in the table below.

Local currency sales growth of 5% in consumables during the second quarter of 2003 as compared with the second quarter of 2002 was primarily attributable to product sales related to the manufacturing of currently licensed drugs, clinical quantities of drugs now in late-stage clinicals. Sales of consumables grew across all markets.

Local currency sales decreased 6% in hardware during the second quarter of 2003 as compared with the second quarter of 2002. This decline is a result of a number of expected hardware projects being delayed by our customers to future quarters. We do not have any assurances that we will record sales related to projects that have been deferred as orders are not guaranteed. The demand for our hardware products is driven principally by the placement of hardware and plant or production line start-ups in any given quarter and is subject to variability. In addition to the decline in hardware sales in the biotechnology market, sales of laboratory water purification systems declined due to research funding delays from government entities impacting our customers’ hardware purchasing decisions.

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Local currency sales growth was 12% for services during the second quarter of 2003 as compared with the second quarter of 2002. The continued increase in service revenue is associated with the installed base of water filtration systems as well as increased validation support services for biotechnology customers.

Gross Profit Margins

Gross profit margin percentages were 54.9% in the second quarter of 2003 as compared with 57.5% in the second quarter of 2002. The change in our gross profit margin percentage for the second quarter of 2003 as compared with the second quarter of 2002 was mainly due to lower capacity utilization in our recently expanded manufacturing plants and unfavorable exchange rates which resulted in increased costs of our products manufactured in Europe. The manufacturing plants were expanded during the second half of 2002 to support increased levels of production in future periods. The increased manufacturing capacity has resulted in a higher level of depreciation and overhead costs, which has decreased gross profit margin.

Operating Expenses

Selling, general and administrative (“SG&A”) expenses increased $7,536, or 13.9%, in the second quarter of 2003 as compared with the second quarter of 2002. The increase during the second quarter of 2003 was primarily due to $3,728 of unfavorable foreign exchange translation. In local currencies, SG&A increased at a rate of 6.8% in the second quarter of 2003 as compared with the second quarter of 2002. This increase was mainly due to an increase in facilities costs, which were partially offset by less travel and promotion programs during the second quarter of 2003. As a percentage of sales, SG&A expenses increased from 30.8% to 31.5% from the second quarter of 2002 to the second quarter of 2003.

Research and development (“R&D”) expenses increased $538, or 4.0%, in the second quarter of 2003 as compared with the second quarter of 2002. The increase during the second quarter of 2003 included $535 of unfavorable foreign exchange translation. In local currencies, R&D remained constant in the second quarter of 2003 as compared with the second quarter of 2002. We continue to fund our planned R&D programs, including those in the areas of proteomics, drug discovery and biopharmaceutical manufacturing. As a percentage of sales, R&D expenses decreased from 7.7% to 7.2% from the second quarter of 2002 to the second quarter of 2003.

Restructuring and Other Charges

During the second quarter of 2003, we completed the restructuring program that we had initiated during 2001 and recovered approximately $250 in assets that we had originally written-off and deemed uncollectible. Upon completion of this restructuring program, we reversed $604 of the original estimated reserve, which included the $250 recovered during this quarter and $354 of previously estimated lease and severance payments, as these amounts were no longer required.

During the second quarter of 2002, we recorded a charge of $500 related to litigation that became estimable and probable during that quarter and was settled during the quarter ended December 31, 2002.

Net Interest Expense

Net interest expense decreased $518 in the second quarter of 2003 as compared with the second quarter of 2002. The lower net interest expense was a result of both lower outstanding debt and lower interest rates. The interest rate on approximately half of our debt decreased approximately 20% as that interest rate is based on LIBOR, which decreased during this period.

Provision for Income Taxes

Our effective tax rate on net income for the second quarter of 2003 was 22.5% as compared with 22.0% during the second quarter of 2002. The effective annual tax rate for 2003 is expected to be higher than the 2002 tax rate, because we expect a greater portion of our profits to be generated in higher tax jurisdictions.

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

Net Sales

The following discussion of net sales summarizes sales growth by the geographies in which our products were sold, the markets in which our products were used and major product types.

Net Sales by Geography

Sales growth by geography, measured in U.S. dollars and local currencies, for the first six months of 2003 as compared with the first six months of 2002 is summarized in the table below.

Net sales for the first six months of 2003, measured in U.S. dollars, increased 12% as compared with net sales during the first six months of 2002. Local currency sales increased 3% in the first six months of 2003 as compared with the first six months of 2002. During the first six months of 2003, the U.S. dollar weakened against the Euro by almost 19% and weakened by approximately 9% against the Japanese Yen. In general, a weaker U.S. dollar will positively impact sales growth.

Local currency sales in the Americas increased 4% in the first six months of 2003 as compared with the first six months of 2002. The U.S., which comprises over 90% of the total Americas, saw an increase in sales during the first six months of 2003 due to higher sales of consumable products to biotechnology and life science research customers which were partially offset by lower sales of hardware products. Local currency sales in Latin America increased 11%, off of a small base, in the first six months of 2003 as compared with the first six months of 2002, due to an increase in sales to biotechnology customers.

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Local currency sales increased 2% in Europe during the first six months of 2003 as compared with the first six months of 2002. During the first six months of 2003, sales of our consumable products to the biotechnology and other bioscience markets increased, but were partially offset by the continued weak capital markets and weak economic conditions that resulted in a decline in sales of our hardware products.

Local currency sales in the Asia/Pacific region increased 3% in the first six months of 2003 as compared with the first six months of 2002. Japanese laboratory water purification consumable sales in the life science research market remained strong.

Net Sales by Market

Net sales growth in local currency for the first six months of 2003 as compared with the first six months of 2002, by market, is summarized in the table below.