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

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Dade Behring Holdings, Inc.

Condensed Consolidated StatementsStatement of Cash FlowsChanges in Shareholders' Equity

(Unaudited)

(Dollars in millions, except share-related data)

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

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Dade Behring Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

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

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Dade Behring Holdings, Inc.

Notes To Condensed Consolidated Financial Statements (unaudited)

1.    Organization, Business and Plan of Reorganization

        Dade Behring Holdings, Inc., was incorporated in the State of Delaware on September 23, 1994 and owns all the capital stock of its subsidiary, Dade Behring Inc. ("DBI"), formerly Dade International Inc. (collectively, the "Company"). The Company develops, manufactures and markets in vitro diagnostic ("IVD") equipment, reagents, consumable supplies and services worldwide.

        Prior to the reorganization described below, Bain Capital, Inc., GS Capital Partners, L.P. (an affiliate of Goldman Sachs Group, L.P.), their respective related investors, Aventis S.A. and certain of its affiliates ("Aventis S.A.") and the management of the Company owned substantially all the capital stock of the Company.

        On August 1, 2002, Dade Behring Holdings, Inc. and certain of its wholly-owned direct and indirect domestic subsidiaries, including DBI, filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code, as amended, with the United States Bankruptcy Court for the Northern District of Illinois ("Bankruptcy Court"). The companies party to the bankruptcy proceedings are collectively referred to as the "Debtors." On August 1, 2002, the Debtors filed their Disclosure Statement for their Joint Chapter 11 Plan of Reorganization ("POR"). No other subsidiaries of Dade Behring Holdings, Inc., which primarily operate outside of the United States, filed for relief under the United States Bankruptcy Code. On September 18, 2002, the Bankruptcy Court confirmed the POR. All conditions under the confirmation of the POR were subsequently met, and the POR became effective on October 3, 2002, resulting in the Debtors effecting a new capital structure. The POR and associated new senior credit agreement / capital structure provided for the following:

•

A restructuring of the Company's debt occurred that reduced the principal amount of the Company's outstanding indebtedness by approximately $678.2 million and converted that debt into equity. This was accomplished by retiring existing senior debt and 11¹/8% senior subordinated notes, issuing approximately 40,000,000 shares of new common stock (50,000,000 shares were initially authorized; 65,000,000 shares are currently authorized), and replacing the old debt with the new debt described below. The new common stock was issued to the holders of existing senior debt, senior subordinated notes and management.



•

All preferred and common stock existing prior to the filing of the POR, as well as all options, warrants, and rights to purchase or otherwise receive common stock existing prior to the filing of the POR were canceled.



•

Management incentive plans were established that provided for issuing new common stock and granting new stock option awards to employees, which are described in the notes to the December 31, 2002 consolidated financial statements included in the Company's 2002 Annual Report on Form 10-K. See Note 9, "Subsequent Events," for further discussion.



•

A new senior revolving credit facility in the amount of $125 million and a new senior term loan facility of $450 million (both of which include the ability to borrow a portion in Euros) were established. The term loan facility has been subsequently amended; see Note 9, "Subsequent Events." New 11.91% senior subordinated notes of $315.3 million were issued, which did not result in a cash infusion into the CompanyCompany.

        The Company is restricted by its debt agreements from loaningmaking loans or paying cash dividends to third parties, except in limited circumstances defined therein.

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2.    Basis of Presentation

        The condensed consolidated financial statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such regulations. The Company believes the disclosures included in the unaudited condensed consolidated financial statements, when read in conjunction with the December 31, 2002 consolidated financial statements of the Company included in the Company's 2002 Annual Report on Form 10-K and notes thereto, are adequate to make the information presented not misleading. Certain reclassifications have been made to prior period balances to conform to the current year presentation. In management's opinion, the condensed consolidated financial statements reflect all adjustments, consisting solely of normal recurring adjustments, necessary to summarize fairly the consolidated financial position, results of operations, and cash flows for such periods. The results of operations for the quarter and nine-months ended March 31,September 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003.

Fresh-Start Reporting

        Upon emergence from bankruptcy, the consolidated financial statements of the Company are presented in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7: "Financial Reporting by Entities in Reorganization under the Bankruptcy Code" ("SOP 90-7"). In conformity with the procedures specified by Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations," the Company allocated reorganization value to net assets and any excess of reorganization value not allocated to specific tangible or identified intangible assets is reported as an intangible asset representing reorganization value in excess of amounts allocable to identifiable assets. The Company has included such amountamounts in goodwill, in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets." All liabilities existing at the POR confirmation date, other than deferred taxes, are required to be stated at present values of amounts to be paid. New accounting pronouncements that will be required in the financial statements within twelve months following the adoption of fresh-start accounting have been adopted at the same time fresh-start reporting was adopted.

        Although the POR became effective on October 3, 2002, for financial reporting convenience purposes, the Company recorded the adjustments necessitated by SOP 90-7 on October 1, 2002. As a result of the Company's emergence from Chapter 11 bankruptcy and the application of fresh-start reporting, consolidated financial statements for the Company for the periods commencing on October 2, 2002 are referred to as the "Successor Company" and are not comparable with any periods prior to October 1, 2002, which are referred to as the "Predecessor Company." Aside from the effects of fresh-start reporting and new accounting pronouncements adopted on October 2, 2002, the Successor Company follows the same accounting policies as the Predecessor Company. All references in these notes to the quarter ended March 31,and nine-months ended September 30, 2002 are to the Predecessor Company. All references to the quarter ended March 31,and nine-months ended September 30, 2003 are to the Successor Company.

        SOP 90-7 provides that reductions in deferred tax asset valuation allowances that existed at the date fresh-start reporting was applied are first credited to goodwill. Accordingly, $9.7$25.4 million of decreases to certain deferred tax asset valuation allowances during the quarternine-months ended March 31,September 30, 2003 resulted in a corresponding reduction to goodwill. The decreases to certain

9

deferred tax asset valuation allowances are due to the utilization of net operating loss carryforwards, predominantly in the U.S.

Balance Sheet Restructuring Costs

        The Company has recorded all incremental professional and bank fees directly associated with the reorganization of the Company's balance sheet incurred prior to the bankruptcy filing on August 1,

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2002 in a separate line item on the Condensed Consolidated Statement of Operations titled "Balance Sheet Restructuring Costs." For the quarters ended March 31,and nine-months ended September 30, 2003 and 2002, balance sheet restructuring costs included the following (in millions):

Earnings Per Share

        The computation of basic and diluted income per share for the Successor Company is set forth in the following table (in(dollars in millions, except for share data).

        The Predecessor Company's computation of earnings per share was based on the "two-class" method described in SFAS No. 128, "Earnings Per Share." In computing earnings per share, (1) the current year yield on the Class L Common Stock is separately allocated to Class L shareholders (except in years the Company incurs a loss as Class L shareholders are not entitled to a return in such years) and, (2) income available to common shareholders (income less preferred stock dividends, less current year yield on Class L Common Stock) is allocated ratably between Class L Common Stock, Common Stock, and Class B Common Stock. Any Unreturned Original Cost plus Unpaid Yield are not components of the earnings per share computations.

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        As of March 31,September 30, 2002, the Predecessor Company had the following common stock outstanding:

9Class L common stock: cumulative 12%; $.01 par value; 8,000,000 shares authorized; 6,714,520 shares issued and 4,608,552 shares outstanding

---

Common stock: $.01 par value; 80,000,000 shares authorized; 58,336,804 shares issued and 39,093,960 shares outstanding

Class B common stock: $.01 par value; 6,000,000 shares authorized: 6,000,000 shares issued and outstanding at September 30, 2002; convertible on a 1-for-1 basis into Common stock

        The computations of basic and diluted income per share for the Predecessor Company are set forth in the following table (in(dollars in millions, except per share data).

        Predecessor Company outstanding stock options at March 31,September 30, 2002 of 8.7 million were not included because to do so would have been anti-dilutive.

Stock-Based Compensation

        SFAS No. 123, "Accounting for Stock-Based Compensation," encourages, but does not require, the use of a fair value method for recording compensation expense for stock-based compensation plans. The Company has elected to continue to account for its stock-based compensation plans using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25") and related interpretations. Under the intrinsic value method, compensation expense for stock options is based on the excess, if any, of the fair value of the stock at the date of the grant over the amount the employee must pay to acquire the stock.

        The Company accounts for all of its stock option plans under the recognition and measurement principles of APB No. 25. Compensation expense is reflected in net income for the Successor Company when options are granted with an exercise price less than the market value of the underlying common stock on the grant date.11

        The following table illustrates the effect on net income and income per share

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as if the fair value based method has been applied to all outstanding and unvested awards in each period. The fair value of the stock options was estimated using the Black-Scholes option pricing model.

12

        In May 2003, the Company's shareholders approved the Employee Stock Purchase Plan. Under this plan, employees may contribute 1% to 12% of their salary during an offering period (6 months) to purchase stock on the last day of the offering period. The stock is purchased at a discount of 15% of the lesser of the market price on the first or last day of the offering period. The Company has 1,000,000 authorized shares reserved for this plan; therefore, the Company does not intend to purchase the shares on the open market at the end of an offering period. This plan qualifies as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code and has been determined to meet the noncompensatory plan requirements of APB No. 25. As such, no employee compensation expense has been recorded under this plan.

Change in Accounting Principle

        In JuneSeptember 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that all business combinations initiated after JuneSeptember 30, 2001 be accounted for using the purchase method of accounting. SFAS No. 141 also requires that the amount thatby which the fair value of net assets exceeds the cost of the acquired entity, after the pro rata reduction of certain acquired assets ("negative goodwill") be recognized as a change in accounting principle upon adoption. As such, unamortized negative goodwill at December 31, 2001 aggregating $20.0 million was recognized as the cumulative effect of a change in accounting principle on January 1, 2002. With the adoption of SFAS No. 142 on January 1, 2002, goodwill and other intangible assets that have indefinite useful lives will no longer be subject to amortization, but rather, be tested at least annually for impairment. As of January 1, 2002, there was no material impact caused by the initial impairment assessment requirements of SFAS No. 142.

New Accounting Pronouncements

        FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"), was issued in November 2002. The initial recognition and measurement provisions of this new standard, which require a guarantor to recognize a liability at inception of a guarantee at fair value, are effective on a prospective basis to guarantees issued or modified on or after January 1, 2003. The disclosure provisions, which increase the required disclosures relating to guarantees, were adopted in the Company's consolidated financial statements as of December 31, 2002. The adoption of FIN 45 did not have a material impact on the Company's consolidated financial statements.

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        FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"), was issued in January 2003. FIN 46 defines variable interest entities ("VIE") and requires that the assets, liabilities, non-controlling interests, and results of activities of a VIE be consolidated if certain conditions are met. For VIE's created on or before that date,January 31, 2003, the guidance will be applied at the beginning of the third quarter of 2003. For VIE's created after that date, the guidance will be applied immediately; however, no VIE's have been created by the Company. The new rules may be applied prospectively with a cumulative-effect adjustment as of the beginning of the period in which it is first applied or by restating previously issued financial statements for one or more years with a cumulative-effect adjustment as of the beginning of the first year restated. As the Company does not have any VIE's, FIN 46 does not currently have an effect on the Company's consolidated financial statements.

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        In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 149 is effective for contracts entered into or modified after JuneSeptember 30, 2003, and for hedging relationships designated after that date. The provisions of SFAS No. 149 should be applied prospectively. The Company is in the process of evaluating the potential effect of this recently issued accounting pronouncement on the Company's future consolidated financial statements.

3.    Inventories

        Inventories are stated at the lower of cost (first-in, first-out method) or market. Cost includes materials, labor and manufacturing overhead costs. Market for raw materials is based on replacement costs and, for other inventory classifications, on net realizable value. Appropriate consideration is given to deterioration, obsolescence and other factors in evaluating net realizable value. Inventories consist of the following (in millions):

4.    Identifiable Intangible Assets

        Identifiable intangible assets are being amortized over their legal or estimated useful lives, whichever is shorter (generally not exceeding 17 years), except for trade names and trademarks, which are not subject to amortization since they have an indefinite life. Identifiable intangible assets include the following at March 31,September 30, 2003 and December 31, 2002 (in millions):

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