A WORLD LEADER IN SERVING SCIENCE
Fisher Scientific International Inc. (NYSE: FSH) is a leading provider of products and services to the scientific community.
Fisher facilitates discovery by supplying researchers and clinicians in labs around the world with the tools they need. We
serve pharmaceutical and biotech companies; colleges and universities; medical-research institutions; hospitals; reference,
quality-control, process-control and R&D labs in various industries; as well as government agencies. From biochemicals,
cell-culture media and proprietary RNAi technology to rapid-diagnostic tests, safety products and other consumable
supplies, Fisher provides more than 600,000 products and services. This broad offering, combined with Fisher ’s globally
integrated supply chain and unmatched sales and marketing capabilities, helps make our 350,000 customers more efficient
and effective at what they do.
Founded in 1902, Fisher Scientific is a FORTUNE 500 company and is a component of the S&P 500 Index. With
approximately 19,500 employees worldwide, the company had revenues of $5.6 billion in 2005. Fisher Scientific is a
company committed to delivering on our promises — to customers, shareholders, employees and our communities.
Additional information about Fisher is available on the company ’s Web site at www.fisherscientific.com.
2 LETTER TO 10 IMAGINE ONE with what they want, strengths, product and
SHAREHOLDERS S O U R C E Fisher helps when and how they service offerings as well
pharmaceutical and want it. as answers to investors’
6 FINANCIAL biotech companies most frequently asked
HIGHLIGHTS 14 IMAGINE
accelerate the drug questions.
O U T S TA N D I N G
9 IMAGINE S E RV I C E Because our 1 8 S U P P L E M E N TA RY
by offering a full range
I N N O VAT I O N From customers come first, FINANCIAL
of clinical-trial services,
advanced diagnostic Fisher was in the field I N F O R M AT I O N
analytical testing and
tests to specialized life- to deliver desperately
science technologies, 19 FORM 10-K
needed supplies in the
Fisher creates novel aftermath of two of 8 0 C O R P O R AT E
products that support 12 IMAGINE ONE the nation’s worst I N F O R M AT I O N
our customers’ quest to S O L U T I O N Fisher’s natural disasters.
enhance and prolong life. 81 DIRECTORS,
and distribution power, AT A G L A N C E
combined with our own Learn about Fisher
R&D capabilities, enable Scientific’s principal
us to provide customers markets, customer base,
A COMPANY THAT ’ S BEEN AROUND FOR MORE THAN 100 YEARS
AND IS STILL AT THE CUTTING EDGE OF SCIENCE.
Researchers and clinicians have relied on Fisher Scientific to meet their laboratory needs for more
than a century. They still count on us to anticipate scientific advances and provide innovations to
move them forward. We are there every step of the way, supporting the breakthroughs that
improve health and extend life.
In 2005, Fisher Scientific continued its momentum in some manufacturing operations and expanding others
generating long-term growth. The company’s financial to accommodate regional and product-area growth. Fisher
performance was outstanding by virtually every measure. built a state-of-the-art immunodiagnostic production and
Sales, earnings and cash flow all reached new highs. Our research facility in Osgood, California, combining the tech-
performance was marked by strong execution against nology strengths of our MAS and Microgenics businesses.
our strategic priority to drive profitable growth.
Especially noteworthy is the scope of our international activ-
ity. To augment our manufacturing operations in Asia, we
In 2005, our: began producing lab equipment in Kuala Lumpur, Malaysia.
• Sales increased 20.6 percent to $5.6 billion; This facility not only provides us with a low-cost structure,
• Diluted earnings per share (EPS) rose 24 percent to but enables us to serve the region’s increasing number of
$3.58, excluding nonrecurring and special items; and research scientists, particularly in China and India.
• Operating cash flow reached a new record of
$612 million. Business expanded significantly at our new HyClone cell-
culture facility in Beijing, which serves local universities and
Our financial performance was fueled by robust demand from the growing R&D needs of multi-national pharmaceutical
our core scientific-research and healthcare customers, our companies in China.
operational achievements and our new strategic investments.
S T R AT E G I C I N V E S T M E N T S
In 2005, we continued acquiring companies to comple-
O P E R AT I O N A L A C C O M P L I S H M E N T S
We made rapid progress on the assimilation of Apogent ment our product offering and reinvested in the business.
businesses into our company. By the end of 2005, we We completed four strategic acquisitions in areas that we
completed a majority of the integration projects, resulting believe have terrific growth potential: biopharma services,
in about $55 million in cost savings for the year. life sciences and immunodiagnostics.
We completed numerous initiatives to enhance our We acquired Lancaster Laboratories and McKesson BioServices
production capabilities that included consolidating to broaden and strengthen our position in the growing market
Paul M. Meister
Paul M. Montrone
Chief Executive Officer
David T. Della Penta
President and Chief
for outsourced pharmaceutical services. Fisher purchased life-science marketplace, enabling researchers to accelerate
privately held Lancaster Laboratories for $150 million in cash. the process of developing new medicines. There are signifi-
It is one of the largest pharmaceutical and industrial testing cant opportunities for Fisher to use its expertise in expanding
laboratories in the United States. a line of consumable reagents for Cellomics’ customers.
Several businesses in our biosciences organization have been
We also bought McKesson BioServices, now called Fisher collaborating on new product development and capitalizing
BioServices, for $64 million in cash. Fisher BioServices is on bundling opportunities, such as combining protein inter-
an industry leader in managing biological specimens and action kits from Pierce, media from HyClone and RNAi
clinical-trial materials and specializes in cold-storage products from Dharmacon.
We continue to bolster our R&D efforts in the biosciences
These two acquisitions coupled with the ongoing investment and immunodiagnostics areas. More specifically, we see
in expanding and enhancing Fisher Clinical Services have significant prospects to enhance our profitability through
given the company a stronghold in this high-growth market. the development of innovative technologies for cell biology
Industry surveys indicate that the pharmaceutical sector is applications, RNAi technology for therapeutic applications
more focused on outsourcing than ever before. The key driv- and bioreagents for molecular biology research. We also
ers of outsourcing for large pharma companies are: focusing invested in the development of specialized media and
on core competencies and utilizing external expertise to disposable bioprocess containers for manufacturing
increase their speed to market and improve productivity while protein-based drugs and immunohistochemistry products
reducing costs. Fisher now holds a very competitive position to for diagnostic applications.
capitalize on this outsourcing trend.
In 2005, we launched an immunohistochemistry initiative,
In 2005, Fisher also bought privately held Cellomics Inc. for drawing on the powerful combination of Richard-Allan
$49 million in cash. Cellomics is the worldwide leader in Scientific, Erie Scientific and Lab Vision. Bringing these
providing complete instrumentation and software systems businesses together has created one of the world’s leading
for high-content screening and analysis of cells. Its portfolio manufacturers of anatomical supplies and equipment. The
complements our offering of drug discovery solutions in the group’s full suite of consumables and instruments is used
SALES ADJUSTED OPERATING INCOME*
in billions in millions
2005 $5.6 2005 $735
2004 $4.6 2004 $471
2003 $3.6 2003 $274
* Excludes nonrecurring and special items
Fisher achieved record sales of $5.6 billion in 2005, an increase In 2005, adjusted operating income increased 56 percent to
of 21 percent over 2004 sales of $4.6 billion. These results reflect $735 million. This significant increase was primarily a result of
strong performance in our scientific-research and healthcare the full-year effect of Apogent, margin expansion in our base
businesses as well as the full-year effect of Apogent. business and synergies from the Apogent merger.
to analyze tissue and other samples for various diseases There are still many opportunities for consolidation within
and conditions, including cancer, cirrhosis of the liver and the fragmented scientific-research and healthcare industries,
organ transplant rejection. Such products are critical to the and we believe we are in a strong position to act. We are
development of personalized medicines that are tailored a disciplined buyer and are especially focused on the areas
to respond to individual needs. This is one example of how of life-science consumables, diagnostic consumables and
businesses across the company are working together to pharmaceutical services.
develop new, innovative products and to streamline the
supply chain. MARKET PERSPECTIVE
Long term, the market dynamics that fuel our growth
We believe our investments in biosciences and immuno- continue to be favorable for Fisher. In 2006, we are opti-
diagnostics will further strengthen our competitive position mistic that the pharma and biotech markets will remain
as well as drive profitable growth. strong. There are a growing number of small and mid-sized
biotech companies that can be well served by our offering.
In October, we acquired privately held Duke Scientific Another positive market indicator is the overall strength
Corporation to enhance our portfolio of higher-margin in biotech funding, which continued unabated in 2005.
proprietary products in our healthcare products and services Funding for biotech companies exceeded $20 billion last
segment. Utilizing its unique microsphere technology, Duke year, which presented us with unique opportunities to
Scientific produces nanometer-particle microscopic beads used secure incremental sales.
in laboratories for quality control and analysis, instrument
calibration, as well as in diagnostic test kits. The company’s From an international perspective, we believe European
intensely blue-dyed particles are used in consumer products markets will further strengthen and our sales should
including electronic home pregnancy test kits. The particles outpace market growth this year as a result of customer-
are also used in a rapid test instrument for diabetes testing. specific initiatives. In Asia, we are growing at double-digit
Duke Scientific enhances our immunodiagnostics business rates and are aggressively expanding the scope of our
and is a good fit with Microgenics. operations across the region, particularly in China.
Tribute to Frank H. Jellinek Jr. In January, we lost a close friend and long-time industry leader.
Frank Jellinek Jr., chairman emeritus of Fisher Scientific, died in a tragic airplane accident while on
company business. While he was only with Fisher for a short time, Frank was an industry veteran
who started his career at age 15, working for the company his grandfather founded, Erie Scientific.
Both Frank and Erie Scientific came to Fisher through our acquisition of Apogent in 2004.
He was a great leader who dedicated his life to his family, company and community. We continue
to be deeply saddened by the loss of our good friend. He will long be remembered by the many
people whose lives he touched as he left an enduring imprint on the business he built and more
Frank H. Jellinek Jr. broadly on our industry. We will remain true to his enthusiasm, his passion for our business and
1945-2006 his philosophy of providing steadfast attention to our supplier partners and customers.
The aging population and the demand for more specialized and we thank them for their contributions. We also
diagnostic tests continue to drive growth in the healthcare appreciate the loyalty of our customers and suppliers,
industry. Our enhanced capabilities in immunodiagnostics whom we consider partners in the effort to improve
and immunohistochemistry give us a leading competitive health and extend life.
position, and we expect to capitalize on opportunities in
this market as the industry moves to a more predictive Our board of directors and management team have a proven
model. This push toward personalized medicine has been track record of setting our direction and guiding our growth.
driven by developments in molecular diagnostics and life- We are grateful to them for their experience and their service.
science research. Our strengths in both life-science research
tools and clinical diagnostics position us well to benefit Every day our focus is on increasing shareholder value.
from this trend. Our objective is to make Fisher Scientific an even stronger
enterprise by setting new performance records. We have
While 2005 was a good year for Fisher, we are not a an excellent foundation for growth and are well positioned
company that spends time reflecting on the past. Our to capture new opportunities in 2006 and beyond.
focus is on the future. We are constantly analyzing market
trends, cognizant of our competition and responsive to
the ever-changing needs of our customers. The research
scientists and clinicians we serve face increased complexity
in their jobs: complexity generated by changing technol-
ogy, increased regulation, pressure to reduce costs and
the need to accelerate drug development. We provide the
products and value-added services that help our customers Paul M. Montrone
manage this complexity. Chairman and Chief Executive Officer
Our success would not be possible without the tireless March 20, 2006
commitment of our nearly 20,000 employees around
the world. Their performance was exemplary in 2005,
Years Ended December 31, 2005 05 vs. 04 2004 2003
in millions, except per share amounts
Sales $5,579.4 21% $4,627.3 $3,554.0
Operating income 657.7 134% 281.5 256.7
Adjusted operating income 734.8 56% 470.8 274.1
Adjusted EBITDA 922.7 52% 605.7 357.4
Diluted EPS 3.05 69% 1.80 1.29
Adjusted diluted EPS 3.58 24% 2.89 2.36
Intangible amortization per share (1) 0.27 17% 0.23 0.13
Operating cash flow 612.0 56% 392.8 218.0
Capital expenditures 127.8 37% 93.4 80.2
Free cash flow (2) 484.2 62% 299.4 137.8
See Supplementary Financial Information on page 18, “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” for information regarding nonrecurring and restructuring-related charges and a reconciliation of certain non-GAAP information provided above.
(1) Included in diluted and adjusted diluted EPS.
(2) Free cash flow is cash provided by operating activities less capital expenditures.
Muhammad Ashfaq, repository specialist for Fisher
BioServices, prepares frozen, patient samples for the
National Cancer Institute. Fisher BioServices currently
houses more than 30 million samples for pharmaceutical
and biotechnology companies as well as government and
academia. Utilizing cold-chain systems technology, Fisher
BioServices provides controlled-temperature storage of
biological specimens from –196ºC to 8ºC.
Yvonne Johnson, lead technician in Manufacturing
Services for Microgenics, inspects vials used for diag-
nostic calibration controls. Proper packaging and
labeling of containers and kits are crucial steps in the
production process, and added inspections like this
ensure strict quality assurance for customers.
A DOCTOR KNOWING A PATIENT ’ S INDIVIDUAL RESPONSE
TO A MEDICINE BEFORE ADMINISTERING A SINGLE DOSE.
Thanks to breakthroughs in personalized medi- diseases including cancer, diabetes and arthritis.
cine, doctors now have the ability to use genetic Dharmacon also led the formation of the Genome-
tests to select the right drug and dosage for a Wide RNAi Global Initiative, an alliance of leading
patient. Pharmacogenomics, the study of individ- international biomedical research centers. This
ual genetic variations and their effect on drug prestigious group is using Dharmacon’s human
response, is heavily dependent on lab testing. genome-wide siRNA library in its research,
The era of personalized medicine is in its infancy sharing protocols and comparing screening data
as only a handful of tests is currently on the among members to accelerate scientific and
market. But we see many opportunities ahead medical discoveries.
as scientific and medical advances make genetic
tests more broadly available. Fisher is well posi- What if a doctor knew the exact dosage of
tioned to serve this growing field by providing an anti-rejection drug for an organ transplant
technologically advanced diagnostic tests and patient? The risk of organ rejection would be
specialized life-science products. reduced, and the patient’s chances of survival
would increase dramatically. Fisher’s immuno-
What if a scientist could choose from a road diagnostics business helps doctors determine
map of more than 20,000 human genes and the correct dosage of these powerful medicines
selectively “turn off ” certain ones to determine by providing tests for all immunosuppressive
their involvement in causing disease or adverse drugs on the market today.
drug reactions? Thanks to Fisher Biosciences
and its Dharmacon business, this technology At Fisher, we imagine innovations that will help
is a reality today. Dharmacon created the first our customers enhance and prolong human life.
siRNA (small interfering RNA) library for the Then we create them.
entire human genome, enabling scientists to
develop novel treatments that fight serious
A PHARMA OR BIOTECH COMPANY HAVING ONE SOURCE READY TO HELP
REDUCE THE COST AND TIME NECESSARY TO DEVELOP NEW DRUGS.
Blockbuster drugs aren’t developed overnight. the complex details that require uncompromised
They take years of research, hundreds of millions quality and accuracy. We use Interactive Voice
of dollars, extensive clinical trials and rigorous Response (IVR) — a sophisticated information
regulatory scrutiny. Only a few new drugs technology tool — to capture patient data and
ever make it into a patient’s medicine cabinet. manage all the logistics involved in a clinical trial.
Imagine this process becoming faster, less costly
and easier to complete. That’s the value Fisher We also offer complementary services to manage
provides to customers through its broad offering biological specimens and clinical-trial materials
of biopharma services. using cold-chain systems technology. And, with
the largest single-site commercial-testing lab
Pharmaceutical and biotechnology companies are in the United States, we can serve the analytical-
under increasing pressure to focus on their core testing needs of leading pharmaceutical, bio-
competency — developing new medicines. Added pharmaceutical and medical-device companies,
pressures to reduce costs and navigate through as well as large industrial firms.
government regulations, while accelerating the
process, make outsourcing a necessity. Fisher Fisher BioPharma Services offers peace of
BioPharma Services offers a full range of clinical- mind and efficiencies that our customers
trial support. From clinical-trial management never imagined were possible — until now.
to investigational drug blinding, labeling and
randomization, our customers trust us to manage
Tom Shatto, manufacturing technical specialist
for Fisher Clinical Services, performs a step in the
overencapsulation process, a technique that blinds
compounds used in clinical trials. Overencapsulation
and drug blinding prevent clinical-trial patients
from being influenced by the knowledge of what
compounds or placebo products they receive.
Scientists and clinicians need access to new
products and technologies that will support
IMAGINE... their work. Fisher has an extensive portfolio of
innovative products and services that includes
the most sought-after brands in the industry.
We augment our product and service offering
by investing in our own research and develop-
ment capabilities and acquiring companies
A COMPANY THAT PROVIDES
with advanced technologies. We also focus on
CUSTOMERS WITH WHAT
bundling our products to provide our customers
THEY WANT, WHEN AND HOW
with solutions, and on developing innovative
THEY WANT IT, IN AN EFFICIENT
products with cross-technology applications.
AND COST-EFFECTIVE MANNER.
Fisher is also home to many talented scientists
and researchers who move our R&D efforts
forward at an aggressive pace. Our researchers
have developed many patented technologies
used in a wide range of our products.
Pauli Undesser, associate research scientist for Pierce,
dispenses Melon™ Gel Resin into a spin column prior
to centrifugation. Researchers purify antibodies from
serum to assess protein interactions. This technique
enables scientists to identify non-functional drug
candidates, reducing the time and money spent
during the drug-discovery process.
Additionally, Fisher has a biotechnology council While having thousands of suppliers and
of renowned scientists who provide insight products available provides customers with
on the future direction of science and point to choice, it also increases the complexity of the
the consequential growth opportunities in the procurement process. Enter Fisher. Our value
industry. All this enables Fisher to offer the most proposition is helping these customers manage
innovative products and serve the changing everything that isn’t part of their core capabili-
needs of our customers. ties. Our solutions help customers streamline
their procurement process.
Our broad offering is supported by our
unparalleled sales and marketing capabilities. At Fisher, we take pride in understanding the
We have nearly 4,000 sales and marketing promise of science as well as the challenges
professionals including application specialists facing scientists and clinicians. Our technolo-
with advanced technical degrees, highly trained gies, products and services are designed to
sales representatives and top-notch customer meet those challenges head-on, providing
service representatives. This impressive team customers with real solutions that enable
gives Fisher a comprehensive channel position them to lower their costs, enhance efficiency
across all of its markets. To further strengthen and focus on their areas of expertise.
this position, Fisher has extensive global sourcing
and manufacturing capabilities, enabling us to
serve customers on virtually every continent.
A COMPANY SERVING CUSTOMERS BEFORE SOME OF THE WORLD ’ S
WORST NATURAL DISASTERS AND BEING THERE TO HELP THEM THE
VERY NEXT DAY.
In 2005, Fisher helped its customers through in desperate need, including more than a
two of the biggest public-safety and medical hundred hospitals and research laboratories.
emergencies in U.S. history: Hurricanes Katrina Fisher also helped to save perishable biological
and Rita. specimens used for cancer and genetic research,
moving liquid-nitrogen tanks until electricity
With extensive experience serving government could be restored to the Tulane University
agencies and first responders, Fisher had the School of Medicine in New Orleans.
logistical expertise to plan for and respond to the
Gulf Coast crisis with a successfully orchestrated The effort included Fisher sales specialists who
and executed strategy. Sourcing and delivering were embedded with government agencies.
the right supplies in the right quantities were Others were based in mobile operations units,
achieved with careful forethought and planning. where they lived and worked for weeks at a time
As part of the massive coordination and commu- to serve customers. For Fisher, putting customers
nications effort, Fisher had a backup delivery first in the face of seemingly insurmountable
fleet ready to serve the region almost immedi- odds isn’t hard to imagine at all. Our customers
ately following the storms. always come first.
Navigating through the debris and chaos, our
employees delivered critical supplies to customers
Kristin Hedgelon, microbiologist
for Lancaster Laboratories,
performs sterility testing in an
isolator. Following Hurricanes
Katrina and Rita, Lancaster
Laboratories provided analytical
services to the United States
Army, including testing Louisiana
water and soil samples for
herbicides and semivolatiles.
W H AT ’ S N E X T
Personalized medicine. A cure for cancer. At Fisher Scientific, we
embrace our role supporting and accelerating future scientific and
medical discoveries. We continue to build the world’s greatest
resource for products and services for the scientist and clinician —
serving them every step of the way.
C O R P O R AT E P R O F I L E
Fisher Scientific International Inc. (NYSE: FSH) is a leading provider of products and services to the scientific community.
Fisher facilitates discovery by supplying researchers and clinicians in labs around the world with the tools they need. We serve
pharmaceutical and biotech companies; colleges and universities; medical-research institutions; hospitals; reference, quality-
control, process-control and R&D labs in various industries; as well as government agencies. From biochemicals, cell-culture
media and proprietary RNAi technology to rapid-diagnostic tests, safety products and other consumable supplies, Fisher provides
more than 600,000 products and services. This broad offering, combined with Fisher’s globally integrated supply chain and
unmatched sales and marketing capabilities, helps make our 350,000 customers more efficient and effective at what they do.
Founded in 1902, Fisher Scientific is a FORTUNE 500 company and is a component of the S&P 500 Index. With approximately
19,500 employees worldwide, the company had revenues of $5.6 billion in 2005. Fisher Scientific is a company committed to
delivering on our promises — to customers, shareholders, employees and our communities. Additional information about Fisher
is available on the company’s Web site at www.fisherscientific.com.
Our businesses are organized into two primary reporting segments. The scientific products and services segment manufactures
and sells products and services primarily to entities conducting scientific research, including drug discovery and drug development,
quality and process control and basic research and development as well as to third-party distributors. Businesses in our healthcare
products and services segment manufacture and distribute an array of diagnostic kits and reagents, equipment, instruments and
other consumable products to hospitals, clinical laboratories, reference laboratories and physicians’ offices, as well as third-party
distributors located primarily in the U.S.
Proprietary Protein, Nucleic Acid, Cell Fine and High-Purity Chemistry
Clinical Trial Support Services
Biology and Cell-Culture Offering • High-purity solvent applications for
• Investigational drug blinding
• RNAi technology and siRNA for life- DNA synthesis and separation science
• Label design and randomization
science research and drug discovery • Combinatorial chemistry libraries
• Packaging, environmentally con-
• Gene silencing services • Laboratory reagents, organic chemicals
trolled storage and distribution
• High-content cell-screening systems and organic-synthesis products
of clinical-trial supplies
and reagents • Custom synthesis in development and
• Data capture and analysis
• Products for the characterization, production quantities
purification, modification and
Biological Lab Services
immunodetection of proteins Chemistry Services
• Biological specimen management
• Cell-culture media, sera and • Repackaging and distribution of
• Cell banking and specimen archiving
biopharma process containers for customized quantities of pharma-
• Cold-chain systems management
biopharmaceutical research and ceutical intermediates
production • Synthesis capability for intermediates,
Analytical Testing Services
• Microbiological-culture media and prod- supported by strong development
• Method development and validation
ucts that test for bacterial contamination chemistry and kilo manufacture to
• Drug stability testing
• PCR reagents and modifying enzymes cGMP standards
• Raw material and finished
• Fluorescent dyes • Manufacturing scale-up from
product release testing
research to production quantities
• Drug-coated device testing
M A N A G E D S E RV I C E S PRODUCTS AND TECHNOLOGY DISTRIBUTION
BIOPHARMA SERVICES ( 1 ) LIFE SCIENCES ( 2 ) SCIENTIFIC PRODUCTS ( 2 ) GLOBAL DISTRIBUTION ( 2 )
2005 Sales ( 3 ) $300 $1,400 $900 $2,800
Major Clinical services Research consumables Research
Life sciences Clinical diagnostics
Businesses Bioservices Clinical consumables Healthcare
Analytical services Lab equipment Safety
Global chemicals Histology
Representative Clinical-trial support Glassware
Products Packaging/labeling Plastic labware
Life-science tools Diagnostic tests
and Services Analytical lab services Lab equipment
Microbiology supplies Instruments
Specimen storage Instruments
Revenues are included in the Scientific Products and Services segment.
Revenues are included in both the Scientific Products and Services segment and the Healthcare Products and Services segment.
Excludes Lab Workstations
Clinical-Testing Supplies Diagnostic Products and Services Research Consumables
and Equipment • Design, development, production • Life-science plastic products including
• Histology, cytology and immuno- and packaging of diagnostic tests PCR accessories, cryogenic vials, pipet
histochemistry/anatomical-pathology and test kits tips for automated liquid handling,
consumables and instrumentation • Antibody production and organic filters, centrifuge ware, cell culture and
including detection and primary- synthesis, which are key components immunology modules for in vitro diag-
antibody kits, stains, specimen-collection in the development of immunoassays nostic kits, as well as bottles, flasks,
containers, tissue-processing reagents, • Broad selection of specialty diagnostic tubing and collection containers
microscope slides, microtomes and tests for: drugs of abuse; therapeutic • Bioproduction products including single
automated slide-staining instruments drugs; organ-transplant drugs; and use and reusable carboys, tanks, tubing,
life-threatening conditions such as flexible bioprocess containers and large-
cardiovascular disease and viral infections scale cell-culture tools such as roller
• Quality Assurance Program (QAP) bottles and cell factories
solutions • Specialty glass products including
• OEM of testing reagents for in vitro HPLC accessories, autosampler vials
diagnostic companies and bottles
SALES EPS ( 1 ) MARGIN ( 1 ) percent CASH FLOW
in billions in dollars in millions
$5.6 $3.58 13.2% $612
7.3% 7.5% 7.7%
01 02 03 04 05 01 02 03 04 05 01 02 03 04 05 01 02 03 04 05
Excludes restructuring and nonrecurring items and amortization of goodwill
See Supplementary Financial Information on page 18.
PRODUCTS GLOBAL DISTRIBUTION
Lab Supplies, Equipment • Educational products for K-12
Clinical Lab Consumables
and Consumables science and math classes
• Supplies used in diagnostic labs
• Comprehensive offering of
including specimen collection and
more than 600,000 products for Services
triple-seal transport containers,
research and clinical labs provided • Supply-chain management
transfer pipets, histology cassettes,
by Fisher and its suppliers services
• Bioreagents, biochemicals, • Product standardization and
test/culture tubes, vials and
specialty antibodies and proteins cost-reduction programs
• Automated instrumentation and • Lab startup programs
• Glass vials, glass tubes and plastic
high-throughput screening • Proprietary programs
products for environmental labs
reagents and supplies for tracking funds
• Instrument systems for clinical • On-site service, repair and
chemistry, immunoassay, calibration of equipment
• Analytical instrumentation
hematology, coagulation • Consulting for physician-office labs
and bench-top lab equipment
and microbiology • Medical-technician recruitment
• Constant temperature,
fluid handling and control,
contamination testing products
• Personal-protection supplies
evaporation and sterilization
K E Y FA C T S A N D S T O C K P E R F O R M A N C E
Stock Symbol: NYSE:FSH +2500%
Index: S&P 500, MSCI +1500%
as of March 20, 2006
Customers: 350,000 +1000%
Since its 1991 public offering,
Countries Served: 150 +500%
Fisher has provided a 25 percent S&P 500
Number of Employees: 19,500
compound annual return to its
Global Sales and Customer Service shareholders.
92 94 96 98 00 02 04 06
CUSTOMERS AND MARKETS
CUSTOMER MIX MARKETS AND MARKET DRIVERS
NO SINGLE CUSTOMER WE SERVE MARKETS TOTALLING MORE THAN $50 BILLION IN REVENUE
REPRESENTS MORE THAN 3% WHICH ARE EXPECTED TO GROW AT CONSISTENT MID TO HIGH SINGLE-DIGIT RATES
OF TOTAL SALES
LAB: $15 BILLION*
• Aging population
• Proliferation of
• Increased focus on RESEARCH: $27 BILLION*
22% Hospitals and
specialized testing • Growth in R&D spending
• Focus on proteomics
GLOBAL BIOPHARMA • Development of
PRODUCTION: $8 BILLION*
25% Pharma and • Shift to protein-based drugs
• Pressure on drug
• Concern about
25% Other Scientific
* Includes safety-related products
P R O P R I E TA RY F I S H E R B R A N D S
F R E Q U E N T LY A S K E D Q U E S T I O N S
relationships. We are especially excited about new
Q: What value do you provide your customers?
products such as those used in the manufacture
A: We provide our customers with what they want,
of biotech drugs; immunoassays used to detect
when and how they want it, in an efficient and
and measure proteins; diagnostic tests for drugs
cost-effective manner. Customers can order a broad
of abuse and immunosuppressive drug monitoring;
range of products and have them delivered to multi-
and immunohistochemistry supplies and equip-
ple global locations through us, rather than dealing
ment used in the analysis of tissue for disease
with multiple suppliers. We also have an extensive
detection, just to name a few.
suite of outsourced managed services that enable
our customers to focus on what they do best —
scientific research and healthcare diagnostics. Q: What type of services do you provide?
A: Our service offering includes packaging and
distributing supplies for clinical trials of new medi-
Q: What are your competitive strengths?
cines; managing and storing biological specimens
A: Our competitive strengths include our:
using cold-chain systems technology; and analytical
• Comprehensive channel position
laboratory testing. We also offer managed R&D
• Broad product offering
services, such as gene silencing; custom diagnostic
• Extensive suite of managed services
formulation; and supply-chain management.
• Unmatched sales and marketing capabilities
• Global manufacturing and distribution network
Q: How much do you invest in R&D?
A: The amount we invest varies by business. In
Q: How will you continue to increase
our manufacturing operations, our R&D investment
as a percentage of sales ranges from 2 percent to
A: We will grow our revenues by increasing our
investments in Research and Development (R&D)
to accelerate new product introductions, making
acquisitions and executing sales and marketing Q: What markets are you looking to expand in?
initiatives to capitalize on cross-selling and product A: We are focused on increasing our portfolio of
bundling opportunities. We will enhance our consumable life-science products, particularly bio-
margins by capturing additional synergies from reagents, protein chemistry supplies and products
acquisitions as well as realizing fixed-cost leverage used in the manufacture of biotech drugs. We are
from aggressively managing expenses and increasing also looking to expand our offering of diagnostic-
productivity. Additionally, we will improve our cash testing kits and immunohistochemistry solutions.
flow by enhancing our margins and reducing our In addition, we are seeking to broaden our range
investment in working capital, particularly in the of outsourced managed services for our life-
former Apogent businesses. science customers.
Q: How do cost pressures on your customers Q: How do you evaluate your performance?
affect Fisher? A: We measure our performance based on growth
A: We can help our customers be more cost-effective in operating margins, cash flow and return on capi-
by partnering with them to standardize products, tal. We have been growing our operating margins
consolidate their supplier base, reduce their supply- through a purposeful shift toward a higher mix of
chain costs and outsource non-core functions. With proprietary products. Our strong cash flow is a result
our broad product portfolio and the scale of our serv- of increased profitability, the efficient use of working
ice offering, we can help our customers reduce costs capital and the low level of ongoing capital expendi-
without affecting our profitability. tures. We improve our return on capital through a
disciplined approach to acquisitions, R&D, working
capital management and capital expenditures,
Q: Where will growth come from?
emphasizing sustainable cash returns on investment.
A: Sales growth will come from ongoing market
As we continue to realize margin expansion, we also
growth, acquisitions, the introduction of new
expect our return on capital to increase.
products and technologies and cross-selling
opportunities that leverage our existing customer
WORLD LEADER IN SERVING SCIENCE
Liberty Lane, Hampton, NH 03842 • 603.926.5911 • www.fisherscientific.com
S U P P L E M E N TA RY
F I N A N C I A L I N F O R M AT I O N
The aforementioned amounts exclude restructuring and other charges (See “Selected Financial Data” on page 13 of the
following 10 -K).
Year Ended December 31,
In millions, except per share amounts 2005 2004 2003
Income from operations $657.7 $281.5 $256.7
Restructuring charges 22.8 7.8 –
Other charges 54.3 181.5 17.4
Adjusted operating Income 734.8 470.8 274.1
Other income (expense), net (60.3) 10.4 (77.7)
Cost of refinancing and financial instruments 70.8 16.6 81.6
Depreciation and amortization, net of deferred financing fees
and accelerated depreciation 180.7 130.6 79.4
Gain on sale of investment (3.3) (22.7) –
Adjusted EBITDA $922.7 $605.7 $357.4
Diluted net income per share $ 3.05 $ 1.80 $ 1.29
Restructuring charges 0.12 0.06 –
Other charges 0.21 0.92 0.19
Cost of refinancing and financial instruments 0.33 0.11 0.88
Gain on sale of business, net (0.13) – –
Adjusted diluted net income per share $ 3.58 $ 2.89 $ 2.36
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(NO FEE REQUIRED)
For the transition period from to
Commission File Number 1-10920
Fisher Scientific International Inc.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
Liberty Lane 03842
Hampton, New Hampshire
(Address of principal executive offices)
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, par value $.01 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ˛ No ®
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ® No ˛
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 ˛ No ®
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter)
is not contained herein, and will not be contained, to the best of registrant‘s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ®
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ˛ Accelerated filer ® Non-accelerated filer ®
The aggregate market value of the voting common equity held by non-affiliates of the registrant as of June 30, 2005 was
The number of shares of Common Stock outstanding as of February 1, 2006 was 123,520,652.
Documents Incorporated by Reference:
The registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held May 5, 2006 is incorporated by
reference into Part III.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ® No ˛
F I S H E R S C I E N T I F I C I N T E R N AT I O N A L I N C .
FORM 10-K ANNUAL REPORT December 31, 2005
Item 1. Business 1
Item 1A. Risk Factors 8
Item 1B. Unresolved Staff Comments 11
Item 2. Properties 11
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities 13
Item 6. Selected Financial Data 13
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 15
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 30
Item 8. Financial Statements and Supplementary Data 32
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 68
Item 9A. Controls and Procedures 68
Item 9B. Other Information 68
Item 10. Directors and Executive Officers of the Registrant 70
Item 11. Executive Compensation 70
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters 70
Item 13. Certain Relationships and Related Transactions 70
Item 14. Principal Accountant Fees and Services 70
Item 15. Exhibits and Financial Statement Schedules 71
F I S H E R S C I E N T I F I C I N T E R N AT I O N A L I N C .
PA R T I
• Global distribution network: We have a world-class
ITEM 1. BUSINESS
supply chain that allows us to reduce end-to-end
procurement costs for our multinational customers.
Fisher Scientific International Inc. (“Fisher,” the “Company,”
Utilizing state-of-the-art systems and our global
“we,” “us” or “our”) is a leading manufacturer and supplier
footprint, we serve our customers in more than
of products and services principally to the scientific-research
150 countries on a cost-effective basis.
and clinical laboratory markets. We serve pharmaceutical
and biotechnology companies; colleges and universities; • Comprehensive channel position: We believe we
medical-research institutions; hospitals; reference, quality- occupy a pivotal position in the globally integrated
control, process-control and research and development supply chain for suppliers and end users, by combining
labs in various industries; as well as government agencies. our global distribution capabilities with an extensive
From biochemicals, cell-culture media and proprietary portfolio of proprietary products and value-added
RNAi technology to rapid-diagnostic tests, safety products services. By constantly expanding our product
and other consumable supplies, Fisher offers an array of and service offerings and leveraging operational
products and services. This broad offering, combined efficiencies, we can further enhance our position
with Fisher’s global supply chain and sales and marketing with both our customers and suppliers.
capabilities, helps make our customers more efficient
and effective. Business Segments and Products
Our operations are organized into three reporting
We were founded in 1902 by Chester G. Fisher in segments: scientific products and services, healthcare
Pittsburgh, Pennsylvania. In 1991 we were incorporated products and services, and laboratory workstations.
as a Delaware corporation and became a public company
whose shares are listed on the New York Stock Exchange. Approximately 65% of our revenue is generated from
Fisher is a Fortune 500 company and a component of the sale of higher-margin proprietary products, which
the S&P 500, Russell 1000 and MSCI World indices. are products that we manufacture, private-label products
Our principal executive office is located at Liberty Lane, and products that we distribute on an exclusive basis. Our
Hampton, New Hampshire 03842, and our telephone remaining revenues are generated from the sale of prod-
number is (603) 926-5911. Our Web site address is ucts we source on a nonexclusive basis from our suppliers.
www.fisherscientific.com. Approximately 80% of our revenue is generated from the
sale of consumable products.
We believe that our key competitive strengths include our: Scientific products and services
The scientific products and services segment manufactures
• Broad product offering: We offer an extensive line and sells products and services primarily to entities conduct-
of products that constitutes a virtual one-stop shop for ing scientific research, including drug discovery and drug
the scientist, researcher and healthcare professional. development, quality and process control and basic research
This comprehensive offering of high-quality products and development, as well as to third-party distributors. Our
includes proprietary products developed in our manu- businesses in this segment manufacture and/or distribute
facturing facilities or exclusively sourced from some a broad range of biochemicals and bioreagents; organic
of the world’s leading scientific and clinical-laboratory and inorganic chemicals; sera; cell-culture media; sterile
suppliers. We actively invest in the development of liquid-handling systems; microbiology media and related
our self-manufactured product portfolio. Given the products; and other scientific research-related consumable
complexity of dealing with multiple suppliers providing products, instruments and equipment. Our businesses in
thousands of products and the pressure to improve effi- this segment also distribute safety-related products, such
ciency and reduce costs, our customers increasingly as personal-protection equipment, respiratory-protection
look to us to meet their diverse product requirements systems, environmental monitoring and sampling equip-
in a timely and cost-effective manner. ment, and other safety and clean-room supplies. Addi-
tionally, businesses in this segment provide services to
• Enhanced suite of outsourced services: We provide
pharmaceutical and biotechnology companies engaged
a wide range of outsourced services, from supply-chain
in clinical trials, including specialized packaging, over-
management and custom chemical synthesis to clinical-
encapsulation, labeling and distribution for phase III and
trial packaging and distribution, analytical-laboratory
phase IV clinical trials, analytical testing, biological-specimen
testing and biological sample storage. Our suite of
management, as well as combinatorial chemistry, custom-
services helps our customers reduce their costs,
chemical synthesis and supply-chain management.
enabling them to engage in more productive
F I S H E R S C I E N T I F I C I N T E R N AT I O N A L I N C .
PA R T I continued
We estimate that the markets served by this segment are sold under such brand names as Fisherbrand®, Fisher
total approximately $40 billion and include the following: Diagnostics®, Erie Scientific®, Microgenics®, MAS®,
global scientific-research market, estimated at approxi- Richard-Allan Scientific® and Seradyn®.
mately $23 billion with an estimated growth rate of 5%
to 8% annually; global biopharma-production supplies Laboratory workstations
market estimated at approximately $5 billion with an esti- The laboratory-workstations segment primarily manu-
mated growth rate of 15% to 25% annually; and U.S. lab factures and sells workstations and fume hoods for
safety and personal-protection market estimated at approxi- laboratories. Our product offerings include steel, wood
mately $12 billion with a projected growth rate equal to and plastic laminate casework systems, adaptable
the overall gross domestic product growth rates, impacted furniture systems, airflow products and various other
by prospective changes in regulations. Scientific research laboratory fixtures and accessories. Products in the
revenues are primarily driven by customer spending on laboratory-workstations segment are sold under such
research and development. The increased customer demand brand names as Fisher Hamilton®, Horizon®, Concept®,
for products and services that create or provide greater SafeAire® and Pioneer®. The laboratory-workstations
efficiency in and lower the costs of drug development also market is highly competitive in both pricing and the cost
drives growth in this market. The U.S. lab-safety and of manufacturing. The market is project-based and is
personal-protection market is affected by environmental influenced by capital-spending cycles. Sales in the
and safety regulations, the growth in homeland security laboratory-workstations segment, including intersegment
spending and increased focus on bioterrorism protection. sales, represented approximately $200.6 million, or 3%
of total sales, in 2005.
Sales in the scientific products and services segment,
including intersegment sales, represented approximately Customers
$4,141.2 million or 74% of our total sales in 2005. Pro- We have a broad and diversified customer base. We do
prietary products and services in this segment are sold not rely on any single customer or one group of customers
under such brand names as Fisherbrand®, Fisher Clinical for a material portion of our sales. No single customer
Services®, ABgene®, Acros Organics™, ART®, Barnstead®, accounted for more than 3% of our total sales in any
Cole-Parmer®, Endogen®, HyClone®, Maybridge®, of the past three years.
Masterflex®, Matrix®, Dharmacon®, MBP®, Nalgene®,
Nunc®, Oxoid®, Pierce® and Remel®, among others. Scientific products and services: The businesses in this
segment primarily serve pharmaceutical and biotechnology
Healthcare products and services companies, colleges and universities, medical-research
Businesses in our healthcare products and services segment institutions, hospital-research labs, government agencies,
manufacture and distribute an array of diagnostic kits and original equipment manufacturers, quality-control, process-
reagents, equipment, instruments and other consumable control and other research and development laboratories
products to hospitals, clinical laboratories, reference labo- as well as third-party distributors worldwide.
ratories and physicians’ offices, as well as third-party
distributors located primarily in the U.S. Other businesses Healthcare products and services: The businesses in
in this segment provide outsourced manufacturing services this segment primarily serve hospitals, clinical laboratories,
for diagnostic reagents, calibrators and controls to the reference laboratories, physicians’ offices, original equip-
healthcare and pharmaceutical industries. We estimate the ment manufacturers and third-party distributors located
domestic clinical-laboratory market to be approximately mostly in the U.S.
$10 billion and growing at a rate of 4% to 5% annually.
Laboratory workstations: This segment primarily serves
Sales in the healthcare products and services segment are pharmaceutical and biotechnology companies, medical-
fueled by the administration and evaluation of diagnostic research institutions, colleges, universities and secondary
tests. We believe that the aging population as well as the schools, as well as hospitals and reference labs worldwide.
increased demand for the development of new specialty
diagnostic tests will result in increased market growth. Competition
Due to our broad product and service offering, we do not
Sales in this segment, including intersegment sales, repre- believe that any single company competes directly with our
sented approximately $1,304.4 million or 23% of our total full range of products and services. Our markets are highly
sales in 2005. Combined sales of a broad range of prod- competitive and we have many competitors in our differ-
ucts obtained from our two largest suppliers accounted for ent product categories. We believe we are well positioned
approximately 31% of sales in this segment. Proprietary to compete effectively in each category. Our competitors
products in the healthcare products and services segment in each of our reporting segments include the following:
F I S H E R S C I E N T I F I C I N T E R N AT I O N A L I N C .
PA R T I continued
Scientific products and services: Our competitors in Manufacturing and Distribution
this segment include a broad range of manufacturers We manufacture our products throughout North America,
and third-party distributors. We compete on the basis of Europe and Asia. Our manufacturing facilities are organ-
a broad product offering, innovative technologies, product ized around groups of similar product categories. We sell
differentiation, availability and reliability, service and price. our manufactured products through our distribution busi-
nesses and through third-party distributors, including
Healthcare products and services: Our competitors in Cardinal Health and VWR International.
this segment include a broad range of manufacturers and
third-party distributors. We compete primarily on the basis During 2005, our Lab Workstations business commenced
of innovative technologies, product differentiation, value operations at its new facility in Mexico. For information
and service. regarding the locations of our principal manufacturing
facilities, refer to “Item 2 – Properties.”
Laboratory workstations: Our competitors in this segment
include Kewaunee Scientific and a number of smaller con- Raw materials and supplies for our product and service
tractors. We compete primarily on the basis of quality, offerings are generally available in adequate quantities.
product innovation, project-management skills and price. While there are some raw materials that we obtain from a
single supplier, we are not dependent on any one supplier
Sales and Distribution for a significant portion of our raw materials. Raw-material
We market and sell our products and services through a and fuel prices are subject to fluctuations due to market
direct sales force, customer-service professionals, electronic conditions. We employ many strategies, including the use
commerce, third-party distributors and various catalogs. The of alternative materials and the use of derivative instru-
Fisher Catalog has been published for more than 100 years ments, to mitigate the effect of these fluctuations on our
and is an internationally recognized scientific supply reference. results. During 2005, we experienced price increases in
We publish more than 3 million copies of our various catalogs certain raw materials, including petroleum-based resins.
each year in eight different languages. Our e-commerce product To date, we have been able to minimize the effect of a
references are showcased by our Web site www.fishersci.com, portion of these increases by raising prices and imple-
which is a leading e-commerce site supporting the scientific- menting various cost-saving measures.
We do not report backlog for our scientific products and
We have approximately 3,100 sales and marketing profes- services and healthcare products and services segments
sionals augmented by approximately 800 highly trained because turnaround time from order placement to fulfill-
technical specialists who enable us to better meet the needs ment generally is within 48 hours. Our laboratory-
of our more technical end-users. We also provide customers workstations segment is project-based, selling primarily
with an efficient ordering system, product standardization through a competitive bidding process. As such, this
and other supply-chain-management services to reduce segment maintains a backlog of work. Our backlog for
procurement costs. Because timeliness is critical to our this segment was approximately $97.6 million and
customers, in the United States our distribution businesses $134.0 million as of December 31, 2005, and 2004,
ship approximately 95% of all orders within 24 hours of respectively. A majority of backlog orders for this
order placement. segment is filled within one year.
Our international distribution network consists of facilities Research and Development
in Europe, Canada, Asia and Latin America, as well as We are increasing our investment in research and develop-
dealers located in countries where we do not have opera- ment within certain businesses to create innovative new
tions. We have 28 distribution facilities in 13 countries, products that both complement and update our existing
augmented by sales offices in 20 countries and indepen- offering. Substantially all of our research and development
dent dealers in more than 100 countries. activities to date have been conducted in the United
States, but we are expanding our research and develop-
We deliver our products through third-party carriers and ment initiatives overseas. These activities take place
our own fleet of delivery vehicles. Third-party carriers primarily in our life-science, immunodiagnostic, clinical
include United Parcel Service (“UPS”), Federal Express, DHL and research consumable and lab equipment businesses.
and other carriers, including national and regional trucking Specific initiatives are focused on cell-culture media
firms, overnight carrier services and the U.S. Postal Service. and sera, single-use disposable-bioprocess containers,
F I S H E R S C I E N T I F I C I N T E R N AT I O N A L I N C .
PA R T I continued
immunohistochemistry products, protein chemistry, our customers’ supply chains, particularly in the global
bioreagents, antibodies, microbiology, and RNAi technol- scientific research market. The following is a brief descrip-
ogy. Our aggregate research and development expenses tion of acquisitions and a disposition completed in 2005.
were approximately $44.2 million, $36.7 million and
$11.8 million for the three years ended December 31, 2005, On August 31, 2005, we acquired privately held Cellomics,
2004 and 2003, respectively. Research and development Inc. (“Cellomics”) for approximately $49 million, including
expenses of $1.5 million and $0.5 million for 2004 and the assumption of approximately $10 million in debt and
2003, respectively, were included in discontinued opera- approximately $4 million in other assumed seller transaction
tions. We expect our research and development expenses costs. Cellomics operates in the high content screening
to continue to increase during 2006. segment of the cellular-analysis market. Cellomics develops
instrumentation, reagents, bioassays and software used to
Intellectual Property provide information on functional changes in fixed and
We own or license an extensive number of patents, trade- living cells. The results of operations of Cellomics have
marks, trade names and service marks in the United States been included in our scientific products and services
and abroad. Our patents, trademarks and licenses are viewed segment from the date of acquisition.
as assets of our operations. Except for certain trade names
and trademarks such as “Fisher Scientific,” “Barnstead,” On August 6, 2005, we acquired privately held Lancaster
“Cellomics,” “Cole Parmer,” “Hamilton,” “HyClone,” Laboratories, Inc. (“Lancaster Laboratories”) for approxi-
“Microgenics,” “Nalgene,” “Oxoid,” and “Remel,” we mately $150 million in cash. Lancaster Laboratories
do not believe that any patent or group of patents, trade- performs pharmaceutical and industrial analytical testing.
mark or license is, in and of itself, essential to us such that The results of operations of Lancaster Laboratories have
its loss would materially affect our business as a whole. been included in our scientific products and services
segment from the date of acquisition.
We transact business with various government agencies On July 31, 2005, we acquired McKesson BioServices, a
and through various government contracts at the Federal, unit of McKesson Corporation, for approximately $64 mil-
state and local levels. Our contracts with these agencies lion in cash. McKesson BioServices manages biological
include both purchase orders for specific products or specimens and clinical-trial materials for government insti-
services and contracts with base terms, typically of one tutions and pharmaceutical and biotech companies. The
to two years, with extension options available at the results of operations of McKesson BioServices have been
government’s discretion. Although it is unlikely, it is possi- included in our scientific products and services segment
ble that a renegotiation or termination of one or more of from the date of acquisition.
our government contracts, or a reduction in the profits
or fees we receive thereunder, would result in a material On April 5, 2005, we completed the sale of Atos Medical
adverse effect on our financial results. Holding AB (“Atos”), a manufacturer of ear, nose and
throat devices, for approximately $110 million in cash.
Acquisitions and Divestiture As a result of the divestiture, we have reflected the
Since our initial public offering in 1991, we have strategi- account balances and activities of Atos as discontinued
cally pursued acquisitions that we believe will help drive operations in our consolidated financial statements. Atos
cash flow and profit growth. Our recent acquisitions have was acquired in September 2003 in connection with our
expanded our geographic presence and the breadth of acquisition of Perbio Science AB.
our product and service offering, enhancing our life-science
products portfolio. These acquisitions have also accelerated Environmental Matters
our revenue growth, enhanced margins and increased We are subject to various laws and governmental regula-
cash flow. tions concerning environmental matters and employee
safety and health in the United States and other countries.
Our principal focus for acquisitions are companies that U.S. federal environmental legislation that affects us
manufacture consumable products for use in life science includes the Toxic Substances Control Act, the Resource
research and immunodiagnostic applications as well as Conservation and Recovery Act, the Clean Air Act,
businesses providing outsourcing services to pharmaceu- the Clean Water Act, the Safe Drinking Water Act,
tical and biotech companies. We are also interested in and the Comprehensive Environmental Response
continuing to consolidate and enhance the efficiency of Compensation and Liability Act (“CERCLA”). We are
also subject to regulation by the Occupational Safety and
Health Administration (“OSHA”) concerning employee