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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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(MARK ONE)

|þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



| | FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005
| | ---------------------------------------------



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



| | FOR THE TRANSITION PERIOD FROM              TO
| | ----------------------------------------------



COMMISSION FILE NUMBER: 1-16057



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SYBRON DENTAL SPECIALTIES, INC.

(Exact name of registrant as specified in its charter)



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|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|DELAWARE                                                      |  | 33-0920985                         
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification No.)



1717 WEST COLLINS
AVENUE, ORANGE, CALIFORNIA 92867

(Address of principal executive offices) (Zip Code)



(714) 516-7400

(Registrants Telephone Number, Including area code)



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



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



At May 5, 2005, there were 40,092,043 shares of the
Registrants Common Stock outstanding.



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##### Table of Contents



SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES



|              |  |                                                                                       |  |     
|------------- |  | ------------------------------------------------------------------------------------- |  | ----
|              |  |                                                                                       |  | PAGE
|PART I -      |  | FINANCIAL INFORMATION                                                                 |  |     
|              |  |                                                                                      
|Item 1.       |  | Financial Statements                                                                  |  |     
|              |  | Condensed Consolidated Balance Sheets                                                 |  | 3   
|              |  | Condensed Consolidated Statements of Income                                           |  | 4   
|              |  | Condensed Consolidated Statement of Stockholders Equity and Comprehensive Income     |  | 5   
|              |  | Condensed Consolidated Statements of Cash Flows                                       |  | 6   
|              |  | Notes to Unaudited Condensed Consolidated Financial Statements                        |  | 7   
|Item 2.       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 18  
|Item 3.       |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 31  
|Item 4.       |  | Controls and Procedures                                                               |  | 33  
|              |  |                                                                                      
|PART II -     |  | OTHER INFORMATION                                                                     |  |     
|              |  |                                                                                      
|Item 4.       |  | Submission of Matters to a Vote of Security Holders                                   |  | 33  
|Item 6.       |  | Exhibits                                                                              |  | 34  
|Signature     |  |                                                                                      
|Exhibit Index |  |                                                                                      



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##### Table of Contents

PART I - FINANCIAL INFORMATION



ITEM 1.Financial Statements



SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)



|                                                                                                                                                                 |  |                                         |         |                   |   |        
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | ------- | ----------------- | - | -------
|                                                                                                                                                                 |  | March 31,2005                           |         | September 30,2004
|                                                                                                                                                                 |  | (in thousands, exceptper share amounts)
|ASSETS                                                                                                                                                           |  |                                         |         |                   |   |        
|Current assets:                                                                                                                                                  |  |                                         |         |                   |   |        
|Cash and cash equivalents                                                                                                                                        |  | $                                       | 47,627  |                   | $ | 40,602 
|Accounts receivable, net                                                                                                                                         |  |                                         | 108,003 |                   |   | 104,148
|Inventories                                                                                                                                                      |  |                                         | 102,637 |                   |   | 93,689 
|Deferred income taxes                                                                                                                                            |  |                                         | 4,323   |                   |   | 3,293  
|Prepaid expenses and other current assets                                                                                                                        |  |                                         | 13,793  |                   |   | 12,975 
|                                                                                                                                                                 |  |                                         |         |                   |   |        
|Total current assets                                                                                                                                             |  |                                         | 276,383 |                   |   | 254,707
|Property, plant and equipment, net                                                                                                                               |  |                                         | 84,093  |                   |   | 83,121 
|Goodwill                                                                                                                                                         |  |                                         | 295,340 |                   |   | 268,768
|Intangible assets, net                                                                                                                                           |  |                                         | 34,686  |                   |   | 16,178 
|Other assets                                                                                                                                                     |  |                                         | 24,085  |                   |   | 23,784 
|                                                                                                                                                                 |  |                                         |         |                   |   |        
|Total assets                                                                                                                                                     |  | $                                       | 714,587 |                   | $ | 646,558
|                                                                                                                                                                 |  |                                         |         |                   |   |        
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                             |  |                                         |         |                   |   |        
|Current liabilities:                                                                                                                                             |  |                                         |         |                   |   |        
|Accounts payable                                                                                                                                                 |  | $                                       | 16,531  |                   | $ | 19,512 
|Current portion of long-term debt                                                                                                                                |  |                                         | 846     |                   |   | 882    
|Income taxes payable                                                                                                                                             |  |                                         | 15,578  |                   |   | 17,089 
|Accrued payroll and employee benefits                                                                                                                            |  |                                         | 29,266  |                   |   | 29,712 
|Restructuring reserve                                                                                                                                            |  |                                         | 711     |                   |   | 711    
|Accrued rebates                                                                                                                                                  |  |                                         | 6,635   |                   |   | 9,475  
|Accrued interest                                                                                                                                                 |  |                                         | 3,784   |                   |   | 3,620  
|Other current liabilities                                                                                                                                        |  |                                         | 15,932  |                   |   | 12,291 
|                                                                                                                                                                 |  |                                         |         |                   |   |        
|Total current liabilities                                                                                                                                        |  |                                         | 89,283  |                   |   | 93,292 
|Long-term debt                                                                                                                                                   |  |                                         | 79,904  |                   |   | 69,589 
|Senior subordinated notes                                                                                                                                        |  |                                         | 150,000 |                   |   | 150,000
|Deferred income taxes                                                                                                                                            |  |                                         | 11,088  |                   |   | 12,266 
|Other liabilities                                                                                                                                                |  |                                         | 26,952  |                   |   | 22,639 
|                                                                                                                                                                 |  |                                         |         |                   |   |        
|Total liabilities                                                                                                                                                |  |                                         | 357,227 |                   |   | 347,786
|Commitments and contingent liabilities                                                                                                                           |  |                                         |         |                   |   |        
|Stockholders equity:                                                                                                                                            |  |                                         |         |                   |   |        
|Preferred stock, $0.01 par value; authorized 20,000 shares, no shares outstanding                                                                                |  |                                         |        |                   |   |       
|Common stock, $0.01 par value; authorized 250,000 shares, 40,035 and 39,307 shares issued and outstanding at March 31, 2005 and September 30,
2004, respectively |  |                                         | 400     |                   |   | 393    
|Additional paid-in capital                                                                                                                                       |  |                                         | 109,571 |                   |   | 93,817 
|Retained earnings                                                                                                                                                |  |                                         | 222,633 |                   |   | 188,156
|Accumulated other comprehensive income                                                                                                                           |  |                                         | 24,756  |                   |   | 16,406 
|                                                                                                                                                                 |  |                                         |         |                   |   |        
|Total stockholders equity                                                                                                                                       |  |                                         | 357,360 |                   |   | 298,772
|                                                                                                                                                                 |  |                                         |         |                   |   |        
|Total liabilities and stockholders equity                                                                                                                       |  | $                                       | 714,587 |                   | $ | 646,558
|                                                                                                                                                                 |  |                                         |         |                   |   |        



See accompanying notes
to unaudited condensed consolidated financial statements.



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SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)



|                                                   |  |                                              |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|-------------------------------------------------- |  | -------------------------------------------- | ------- | - | ------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                   |  | Three Months EndedMarch 31,                  |         |   | Six Months EndedMarch 31, |  
|                                                   |  | 2005                                         |         |   | 2004                      |   |         | 2005 |  |   | 2004    |  
|                                                   |  | (in thousands, except for per share amounts) |        
|Net sales                                          |  | $                                            | 165,056 |   |                           | $ | 150,921 |      |  | $ | 314,096 |   |  | $ | 282,778 |  
|Cost of sales:                                     |  |                                              |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Cost of products sold                              |  |                                              | 71,787  |   |                           |   | 66,854  |      |  |   | 135,460 |   |  |   | 126,753 |  
|Restructuring charge                               |  |                                              | 84      |   |                           |   | 1,482   |      |  |   | 84      |   |  |   | 1,482   |  
|                                                   |  |                                              |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Total cost of sales                                |  |                                              | 71,871  |   |                           |   | 68,336  |      |  |   | 135,544 |   |  |   | 128,235 |  
|                                                   |  |                                              |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Gross profit                                       |  |                                              | 93,185  |   |                           |   | 82,585  |      |  |   | 178,552 |   |  |   | 154,543 |  
|Selling, general and administrative expenses       |  |                                              | 59,207  |   |                           |   | 50,800  |      |  |   | 116,695 |   |  |   | 98,993  |  
|Restructuring charge                               |  |                                              | 488     |   |                           |   |        |      |  |   | 488     |   |  |   |        |  
|Amortization of intangible assets                  |  |                                              | 559     |   |                           |   | 322     |      |  |   | 1,056   |   |  |   | 631     |  
|                                                   |  |                                              |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Total selling, general and administrative expenses |  |                                              | 60,254  |   |                           |   | 51,122  |      |  |   | 118,239 |   |  |   | 99,624  |  
|                                                   |  |                                              |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Operating income                                   |  |                                              | 32,931  |   |                           |   | 31,463  |      |  |   | 60,313  |   |  |   | 54,919  |  
|Other income (expense):                            |  |                                              |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Interest expense                                   |  |                                              | (4,638  | ) |                           |   | (4,941  | )    |  |   | (9,633  | ) |  |   | (10,101 | )
|Amortization of deferred financing fees            |  |                                              | (416    | ) |                           |   | (402    | )    |  |   | (831    | ) |  |   | (809    | )
|Other, net                                         |  |                                              | 708     |   |                           |   | 11      |      |  |   | 852     |   |  |   | (43     | )
|                                                   |  |                                              |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Income before income taxes                         |  |                                              | 28,585  |   |                           |   | 26,131  |      |  |   | 50,701  |   |  |   | 43,966  |  
|Income taxes                                       |  |                                              | 9,147   |   |                           |   | 8,623   |      |  |   | 16,224  |   |  |   | 14,509  |  
|                                                   |  |                                              |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Net income                                         |  | $                                            | 19,438  |   |                           | $ | 17,508  |      |  | $ | 34,477  |   |  | $ | 29,457  |  
|                                                   |  |                                              |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Basic earnings per share                           |  | $                                            | 0.49    |   |                           | $ | 0.46    |      |  | $ | 0.87    |   |  | $ | 0.77    |  
|                                                   |  |                                              |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Diluted earnings per share                         |  | $                                            | 0.47    |   |                           | $ | 0.44    |      |  | $ | 0.84    |   |  | $ | 0.74    |  
|                                                   |  |                                              |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Weighted average shares outstanding:               |  |                                              |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Basic                                              |  |                                              | 39,986  |   |                           |   | 38,471  |      |  |   | 39,732  |   |  |   | 38,391  |  
|                                                   |  |                                              |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Diluted                                            |  |                                              | 41,485  |   |                           |   | 40,166  |      |  |   | 41,276  |   |  |   | 40,032  |  
|                                                   |  |                                              |         |   |                           |   |         |      |  |   |         |   |  |   |         |  



See accompanying notes
to unaudited condensed consolidated financial statements.



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SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME

FOR THE SIX
MONTHS ENDED MARCH 31, 2005

(UNAUDITED)



|                                                           |  |                 |  |                          |     |                  |   |                                     |  |   |                          |  |   |                          |   |  |   |         |   |  |   |        |  
|---------------------------------------------------------- |  | --------------- |  | ------------------------ | --- | ---------------- | - | ----------------------------------- |  | - | ------------------------ |  | - | ------------------------ | - |  | - | ------- | - |  | - | ------ | -
|                                                           |  | Common Stock    |  | AdditionalPaid-inCapital |     | RetainedEarnings |   | AccumulatedOtherComprehensiveIncome |  |   | TotalStockholdersEquity |  |   | TotalComprehensiveIncome |  
|                                                           |  | Number ofShares |  | Par Value                |     |                  |   |                                     | 
|                                                           |  | (in thousands)  | 
|Balance at September 30, 2004                              |  | 39,307          |  | $                        | 393 |                  | $ | 93,817                              |  | $ | 188,156                  |  | $ | 16,406                   |   |  | $ | 298,772 |   |  |   |        |  
|Comprehensive income:                                      |  |                 |  |                          |     |                  |   |                                     |  |   |                          |  |   |                          |   |  |   |         |   |  |   |        |  
|Net income                                                 |  |                |  |                          |    |                  |   |                                    |  |   | 34,477                   |  |   |                         |   |  |   | 34,477  |   |  | $ | 34,477 |  
|Translation adjustment                                     |  |                |  |                          |    |                  |   |                                    |  |   |                         |  |   | 7,887                    |   |  |   | 7,887   |   |  |   | 7,887  |  
|Minimum pension liability adjustments                      |  |                |  |                          |    |                  |   |                                    |  |   |                         |  |   | 799                      |   |  |   | 799     |   |  |   | 799    |  
|Unrealized loss on derivative instruments                  |  |                |  |                          |    |                  |   |                                    |  |   |                         |  |   | (336                     | ) |  |   | (336    | ) |  |   | (336   | )
|                                                           |  |                 |  |                          |     |                  |   |                                     |  |   |                          |  |   |                          |   |  |   |         |   |  |   |        |  
|Total comprehensive income                                 |  |                 |  |                          |     |                  |   |                                     |  |   |                          |  |   |                          |   |  |   |         |   |  | $ | 42,827 |  
|                                                           |  |                 |  |                          |     |                  |   |                                     |  |   |                          |  |   |                          |   |  |   |         |   |  |   |        |  
|Issuance of common stock from stock options exercised      |  | 698             |  |                          | 7   |                  |   | 10,247                              |  |   |                         |  |   |                         |   |  |   | 10,254  |   |  |   |        |  
|Income tax benefit from stock options exercised            |  |                |  |                          |    |                  |   | 4,736                               |  |   |                         |  |   |                         |   |  |   | 4,736   |   |  |   |        |  
|Issuance of common stock from employee stock purchase plan |  | 30              |  |                          |    |                  |   | 771                                 |  |   |                         |  |   |                         |   |  |   | 771     |   |  |   |        |  
|                                                           |  |                 |  |                          |     |                  |   |                                     |  |   |                          |  |   |                          |   |  |   |         |   |  |   |        |  
|Balance at March 31, 2005                                  |  | 40,035          |  | $                        | 400 |                  | $ | 109,571                             |  | $ | 222,633                  |  | $ | 24,756                   |   |  | $ | 357,360 |   |  |   |        |  
|                                                           |  |                 |  |                          |     |                  |   |                                     |  |   |                          |  |   |                          |   |  |   |         |   |  |   |        |  



See accompanying notes
to unaudited condensed consolidated financial statements.



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SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



|                                                                                         |  |                           |         |   |      |   |          |  
|---------------------------------------------------------------------------------------- |  | ------------------------- | ------- | - | ---- | - | -------- | -
|                                                                                         |  | Six Months EndedMarch 31, |        
|                                                                                         |  | 2005                      |         |   | 2004 |  
|                                                                                         |  | (in thousands)            |        
|Cash flows from operating activities:                                                    |  |                           |         |   |      |   |          |  
|Net income                                                                               |  | $                         | 34,477  |   |      | $ | 29,457   |  
|Adjustments to reconcile net income to net cash provided by operating activities:        |  |                           |         |   |      |   |          |  
|Depreciation                                                                             |  |                           | 7,264   |   |      |   | 6,709    |  
|Amortization of intangible assets                                                        |  |                           | 1,056   |   |      |   | 631      |  
|Amortization of deferred financing fees                                                  |  |                           | 831     |   |      |   | 809      |  
|Loss on sales of property, plant and equipment                                           |  |                           | 84      |   |      |   | 26       |  
|Provision for losses on doubtful receivables                                             |  |                           | 431     |   |      |   | 415      |  
|Inventory provisions                                                                     |  |                           | 3,203   |   |      |   | 2,124    |  
|Deferred income taxes                                                                    |  |                           | (557    | ) |      |   | (998     | )
|Tax benefit from issuance of stock under employee stock plan and stock options exercised |  |                           | 4,736   |   |      |   | 814      |  
|Changes in assets and liabilities, net of effects of businesses acquired:                |  |                           |         |   |      |   |          |  
|Increase in accounts receivable                                                          |  |                           | (1,554  | ) |      |   | (1,903   | )
|Increase in inventories                                                                  |  |                           | (5,843  | ) |      |   | (2,772   | )
|Increase in prepaid expenses and other current assets                                    |  |                           | (429    | ) |      |   | (2,763   | )
|Decrease in accounts payable                                                             |  |                           | (3,766  | ) |      |   | (4,034   | )
|Increase (decrease) in income taxes payable                                              |  |                           | (2,519  | ) |      |   | 354      |  
|Increase (decrease) in accrued payroll and employee benefits                             |  |                           | 54      |   |      |   | (1,530   | )
|Decrease in accrued rebates                                                              |  |                           | (2,840  | ) |      |   | (2,246   | )
|Decrease in restructuring reserve                                                        |  |                           |        |   |      |   | (406     | )
|Increase (decrease) in accrued interest                                                  |  |                           | 164     |   |      |   | (203     | )
|Increase in other current liabilities                                                    |  |                           | 914     |   |      |   | 1,711    |  
|Net change in other assets and liabilities                                               |  |                           | 721     |   |      |   | 1,708    |  
|                                                                                         |  |                           |         |   |      |   |          |  
|Net cash provided by operating activities                                                |  |                           | 36,427  |   |      |   | 27,903   |  
|Cash flows from investing activities:                                                    |  |                           |         |   |      |   |          |  
|Capital expenditures                                                                     |  |                           | (6,342  | ) |      |   | (5,334   | )
|Proceeds from sales of property, plant and equipment                                     |  |                           | 938     |   |      |   | 194      |  
|Net payments for businesses acquired                                                     |  |                           | (46,049 | ) |      |   |         |  
|Payments for intangibles                                                                 |  |                           | (849    | ) |      |   | (559     | )
|                                                                                         |  |                           |         |   |      |   |          |  
|Net cash used in investing activities                                                    |  |                           | (52,302 | ) |      |   | (5,699   | )
|Cash flows from financing activities:                                                    |  |                           |         |   |      |   |          |  
|Proceeds from credit facility                                                            |  |                           | 86,000  |   |      |   | 84,000   |  
|Principal payments on credit facility                                                    |  |                           | (75,607 | ) |      |   | (106,895 | )
|Proceeds from long-term debt                                                             |  |                           |        |   |      |   | 2,469    |  
|Principal payments on long-term debt                                                     |  |                           | (292    | ) |      |   | (8,730   | )
|Proceeds from exercise of stock options                                                  |  |                           | 10,254  |   |      |   | 3,353    |  
|Proceeds from employee stock purchase plan                                               |  |                           | 771     |   |      |   | 522      |  
|                                                                                         |  |                           |         |   |      |   |          |  
|Net cash provided by (used in) financing activities                                      |  |                           | 21,126  |   |      |   | (25,281  | )
|Effect of exchange rate changes on cash and cash equivalents                             |  |                           | 1,774   |   |      |   | 1,508    |  
|                                                                                         |  |                           |         |   |      |   |          |  
|Net increase (decrease) in cash and cash equivalents                                     |  |                           | 7,025   |   |      |   | (1,569   | )
|Cash and cash equivalents at beginning of period                                         |  |                           | 40,602  |   |      |   | 22,868   |  
|                                                                                         |  |                           |         |   |      |   |          |  
|Cash and cash equivalents at end of period                                               |  | $                         | 47,627  |   |      | $ | 21,299   |  
|                                                                                         |  |                           |         |   |      |   |          |  
|Supplemental cash flow information:                                                      |  |                           |         |   |      |   |          |  
|Cash paid during the period for interest                                                 |  | $                         | 9,592   |   |      | $ | 10,442   |  
|                                                                                         |  |                           |         |   |      |   |          |  
|Cash paid during the period for income taxes                                             |  | $                         | 13,567  |   |      | $ | 12,958   |  
|                                                                                         |  |                           |         |   |      |   |          |  



See accompanying notes
to unaudited condensed consolidated financial statements.



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SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES



NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(AMOUNTS IN THOUSANDS EXCEPT PER
SHARE AMOUNTS)



1. OVERVIEW AND BASIS OF PRESENTATION



Sybron Dental Specialties, Inc. (SDS or the Company)
was incorporated in Delaware on July 17, 2000. At the time of its incorporation the Company was a wholly-owned subsidiary of Apogent Technologies Inc. (Apogent), which in August 2004 was acquired by and became a wholly-owned subsidiary
of Fisher Scientific International Inc. The Company was created to effect the spin-off by Apogent of its dental business in December 2000. Apogent distributed to its shareholders, by means of pro rata distribution, all of the Companys
outstanding common stock together with related preferred stock purchase rights (the spin-off). As a result, SDS became an independent, publicly-traded company.



The unaudited condensed consolidated financial statements reflect the operations of SDS and its wholly-owned subsidiaries.
The Companys fiscal year ends on September 30. All significant intercompany balances and transactions have been eliminated in consolidation. The quarters ended March 31, 2005 and 2004 refer to the second quarters of fiscal years 2005 and 2004,
respectively.



In the opinion of management, all adjustments,
which are necessary for a fair presentation of the results for the interim periods presented, have been included. All such adjustments were of a normal recurring nature. The results for the period ended March 31, 2005 are not necessarily indicative
of the results to be expected for the full year. The condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by
accounting principles generally accepted in the United States of America. This information should only be read in conjunction with the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 2004.



2. INVENTORIES



Inventories at March 31, 2005 and September 30, 2004 are presented below.



|                           |  |                |         |   |                    |   |        |  
|-------------------------- |  | -------------- | ------- | - | ------------------ | - | ------ | -
|                           |  | March 31, 2005 |         |   | September 30, 2004 |  
|Raw materials and supplies |  | $              | 24,158  |   |                    | $ | 25,110 |  
|Work in process            |  |                | 27,872  |   |                    |   | 22,015 |  
|Finished goods             |  |                | 56,988  |   |                    |   | 51,825 |  
|Inventory reserves         |  |                | (6,381  | ) |                    |   | (5,261 | )
|                           |  |                |         |   |                    |   |        |  
|                           |  | $              | 102,637 |   |                    | $ | 93,689 |  
|                           |  |                |         |   |                    |   |        |  



3. INTANGIBLE ASSETS, NET



Definite lived intangible assets are recorded at cost and
are amortized using the straight-line method, over their estimated useful lives. Indefinite lived intangible assets are not amortized but rather are tested for impairment annually. The following table details the balances of the intangible assets as
of March 31, 2005:



|                                                |  |                       |        |                          |   |                     |  |   |       
|----------------------------------------------- |  | --------------------- | ------ | ------------------------ | - | ------------------- |  | - | ------
|                                                |  | Gross Carrying Amount |        | Accumulated Amortization |   | Net Carrying Amount
|Intangibles Assets Subject To Amortization:     |  |                       |        |                          |   |                     |  |   |       
|Proprietary technology                          |  | $                     | 35,837 |                          | $ | 11,064              |  | $ | 24,773
|Other                                           |  |                       | 14,792 |                          |   | 14,699              |  |   | 93    
|                                                |  |                       |        |                          |   |                     |  |   |       
|Total                                           |  | $                     | 50,629 |                          | $ | 25,763              |  |   | 24,866
|                                                |  |                       |        |                          |   |                     |  |   |       
|Intangibles Assets Not Subject To Amortization: |  |                       |        |                          |   |                     |  |   |       
|Trademarks                                      |  |                       |        |                          |   |                     |  |   | 9,820 
|                                                |  |                       |        |                          |   |                     |  |   |       
|Total Intangible Assets                         |  |                       |        |                          |   |                     |  | $ | 34,686
|                                                |  |                       |        |                          |   |                     |  |   |       



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The following table details the balances of the intangible assets as of September 30, 2004:



|                                                |  |                       |        |                          |   |                     |  |   |       
|----------------------------------------------- |  | --------------------- | ------ | ------------------------ | - | ------------------- |  | - | ------
|                                                |  | Gross Carrying Amount |        | Accumulated Amortization |   | Net Carrying Amount
|Intangibles Assets Subject To Amortization:     |  |                       |        |                          |   |                     |  |   |       
|Proprietary technology                          |  | $                     | 16,283 |                          | $ | 10,084              |  | $ | 6,199 
|Other                                           |  |                       | 14,791 |                          |   | 14,623              |  |   | 168   
|                                                |  |                       |        |                          |   |                     |  |   |       
|Total                                           |  | $                     | 31,074 |                          | $ | 24,707              |  |   | 6,367 
|                                                |  |                       |        |                          |   |                     |  |   |       
|Intangibles Assets Not Subject To Amortization: |  |                       |        |                          |   |                     |  |   |       
|Trademarks                                      |  |                       |        |                          |   |                     |  |   | 9,811 
|                                                |  |                       |        |                          |   |                     |  |   |       
|Total Intangible Assets                         |  |                       |        |                          |   |                     |  | $ | 16,178
|                                                |  |                       |        |                          |   |                     |  |   |       



Amortization of
intangible assets is included as a component of selling, general and administrative expenses.



4. EMPLOYEE BENEFIT PLANS



Pension and Other Postretirement Benefits:The Company participates in various defined benefit pension plans covering substantially all of its U.S. and Canadian employees. The benefits are generally based on various formulas, the
principal factors of which are years of service and compensation. Plan assets are invested primarily in U.S. stocks, bonds and international stocks. In addition to the defined benefit plans, the Company provides certain health care benefits for
certain U.S. employees, which are funded as costs are incurred. Certain salaried employees who reached age 55 prior to January 1, 1996 became eligible for postretirement health care benefits, if they reach retirement age while working for SDS. In
addition, under the current collective bargaining agreement between Kerr Corporation and the United Auto Workers, the bargaining unit employees qualify for postretirement health care benefits. The Company accrues, as current costs, the future
lifetime retirement benefits for qualifying active employees. The postretirement health care plans currently follow a policy instituted by the predecessor of Apogent in 1986 where the Companys contributions were frozen at the levels equal to
the Companys contributions on December 31, 1988, except where collective bargaining agreements or early retirement agreements prohibit such a freeze.



The following table provides the components of net periodic benefit cost:



|                                   |  |                              |        |   |                               |   |       |                             |  |                           |        |   |  |      |        |      |  |      |     |      |   |     |  |   |       |  |   |    
|---------------------------------- |  | ---------------------------- | ------ | - | ----------------------------- | - | ----- | --------------------------- |  | ------------------------- | ------ | - |  | ---- | ------ | ---- |  | ---- | --- | ---- | - | --- |  | - | ----- |  | - | ---
|                                   |  | Pension Benefits             |        |   | Other Postretirement Benefits
|                                   |  | Three Months Ended March 31, |        |   | Six Months EndedMarch 31,     |   |       | Three Months EndedMarch 31, |  | Six Months EndedMarch 31,
|                                   |  | 2005                         |        |   | 2004                          |   |       | 2005                        |  |                           | 2004   |   |  | 2005 |        | 2004 |  | 2005 |     | 2004
|Service cost                       |  | $                            | 1,094  |   |                               | $ | 985   |                             |  | $                         | 2,188  |   |  | $    | 1,970  |      |  | $    | 149 |      | $ | 119 |  | $ | 298   |  | $ | 238
|Interest cost                      |  |                              | 972    |   |                               |   | 820   |                             |  |                           | 1,944  |   |  |      | 1,640  |      |  |      | 253 |      |   | 205 |  |   | 506   |  |   | 410
|Expected return on plan assets     |  |                              | (1,108 | ) |                               |   | (948  | )                           |  |                           | (2,216 | ) |  |      | (1,896 | )    |  |      |    |      |   |    |  |   |      |  |   |   
|Amortization of prior service cost |  |                              | 24     |   |                               |   | 24    |                             |  |                           | 48     |   |  |      | 48     |      |  |      |    |      |   |    |  |   |      |  |   |   
|Amortization of actuarial loss     |  |                              | 241    |   |                               |   | 302   |                             |  |                           | 482    |   |  |      | 604    |      |  |      | 153 |      |   | 121 |  |   | 306   |  |   | 242
|                                   |  |                              |        |   |                               |   |       |                             |  |                           |        |   |  |      |        |      |  |      |     |      |   |     |  |   |       |  |   |    
|Net periodic benefit cost          |  | $                            | 1,223  |   |                               | $ | 1,183 |                             |  | $                         | 2,446  |   |  | $    | 2,366  |      |  | $    | 555 |      | $ | 445 |  | $ | 1,110 |  | $ | 890
|                                   |  |                              |        |   |                               |   |       |                             |  |                           |        |   |  |      |        |      |  |      |     |      |   |     |  |   |       |  |   |    



The Companys
funding policy is to generally make annual contributions to its defined benefit pension plans in excess of both the minimum required contributions required by applicable regulations and the amount needed in order to avoid any Pension Benefit
Guarantee Corporation (PBGC) variable premium payments, and to not have any additional minimum liability under Statement of Financial Accounting Standards (SFAS) No. 87 Employers Accounting for Pensions. The
Company expects to contribute approximately $472 to its pension plan assets in fiscal 2005. The Company made approximately $96 in contributions in the quarter ended March 31, 2005.



5. RESTRUCTURING CHARGES



In March 2005, the Company recorded a restructuring charge of approximately $572 ($389 after tax). The charge was primarily comprised of severance and
termination costs associated with the 56 employees whose employment the Company plans to terminate as a result of the consolidation of its Demetron and Orascoptic operations into one facility. The Company expects to record additional



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charges of approximately $850 in the next two fiscal quarters of 2005 associated with additional severance, employee relocation and facility moving costs.
The majority of the 2005 restructuring is expected to be completed by the end of fiscal 2005.



In fiscal 2004, the Company implemented and completed a plan to close its facility in Tijuana, Mexico and as a result of this plan, recorded restructuring charges of $1,471 ($986 after tax) in the fiscal year ended
2004. The charges are recorded as a component of cost of goods sold and are comprised of severance and termination costs associated with the 246 employees whose employment the Company terminated as a result of the closure. The 2004 restructuring was
completed in the first quarter of fiscal 2005 and all severance was paid.



In September 2002, the Company recorded a restructuring charge of approximately $3,666 ($2,353 after tax). The charge was primarily comprised of severance and termination costs associated with the 71 employees whose
employment the Company terminated as a result of the consolidation of several of its European facilities into its Hawe Neos facility in Switzerland. Of the $3,666 restructuring charge, approximately $3,064 was related to cash payments for severance
and contractual obligations, $300 for the cash payment of tax liabilities included in income taxes payable while the balance of approximately $302 relates to non-cash charges. The Company completed the 2002 restructuring in fiscal 2004, and made an
adjustment to restructuring charges of approximately $200, primarily for over accruals of anticipated costs associated with severance and related costs. A balance of $300 remains in the Companys accrued tax liability until it is remitted.



In June 1998, the Company recorded a restructuring charge of
approximately $14,600 (approximately $10,700 after tax) for the rationalization of certain acquired companies, combination of certain duplicate production facilities, movement of certain customer service and marketing functions, and the exiting of
several product lines. In fiscal 2004 the Company made an adjustment to restructuring charges of approximately $200 relating to over accruals of anticipated costs associated with the restructuring activity. A tax liability of approximately $700
remains in the Companys restructuring reserve.



6. SEGMENT INFORMATION



The Company is a global manufacturer and marketer of a
broad range of consumable dental products and related small equipment and a manufacturer and distributor of products for use in infection prevention in both the medical and dental markets. The Companys subsidiaries operate in two business
segments: Professional Dental and Specialty Products. The Specialty Products segment was previously referred to as the Orthodontics segment. The name was changed to more accurately describe the products of this segment. The composition of the
Specialty Products segment has not changed.



Our corporate
office general and administrative expenses have been allocated to the segments on the basis of net sales.



The following table presents the results of operations for these business segments for the three month and six month periods ended March 31:



|                                             |  |                    |        |                   |   |              |  |   |        |   |  |   |        
|-------------------------------------------- |  | ------------------ | ------ | ----------------- | - | ------------ |  | - | ------ | - |  | - | -------
|Three Months Ended March 31,                 |  | ProfessionalDental |        | SpecialtyProducts |   | Eliminations |  |   | Total 
|                                             |  |                    |        |                  
|2005                                         |  |                    |        |                   |   |              |  |   |        |   |  |   |        
|Revenues:                                    |  |                    |        |                   |   |              |  |   |        |   |  |   |        
|External customer                            |  | $                  | 87,567 |                   | $ | 77,489       |  | $ |       |   |  | $ | 165,056
|Intersegment                                 |  |                    | 476    |                   |   | 923          |  |   | (1,399 | ) |  |   |       
|                                             |  |                    |        |                   |   |              |  |   |        |   |  |   |        
|Total revenues                               |  | $                  | 88,043 |                   | $ | 78,412       |  | $ | (1,399 | ) |  | $ | 165,056
|                                             |  |                    |        |                   |   |              |  |   |        |   |  |   |        
|Gross profit                                 |  | $                  | 49,465 |                   | $ | 43,720       |  | $ |       |   |  | $ | 93,185 
|Selling, general and administrative expenses |  |                    | 30,686 |                   |   | 29,568       |  |   |       |   |  |   | 60,254 
|Operating income                             |  |                    | 18,779 |                   |   | 14,152       |  |   |       |   |  |   | 32,931 
|                                             |  |                    |        |                  
|2004                                         |  |                    |        |                   |   |              |  |   |        |   |  |   |        
|Revenues:                                    |  |                    |        |                   |   |              |  |   |        |   |  |   |        
|External customer                            |  | $                  | 83,849 |                   | $ | 67,072       |  | $ |       |   |  | $ | 150,921
|Intersegment                                 |  |                    | 796    |                   |   | 961          |  |   | (1,757 | ) |  |   |       
|                                             |  |                    |        |                   |   |              |  |   |        |   |  |   |        
|Total revenues                               |  | $                  | 84,645 |                   | $ | 68,033       |  | $ | (1,757 | ) |  | $ | 150,921
|                                             |  |                    |        |                   |   |              |  |   |        |   |  |   |        
|Gross profit                                 |  | $                  | 46,426 |                   | $ | 36,159       |  | $ |       |   |  | $ | 82,585 
|Selling, general and administrative expenses |  |                    | 27,786 |                   |   | 23,336       |  |   |       |   |  |   | 51,122 
|Operating income                             |  |                    | 18,640 |                   |   | 12,823       |  |   |       |   |  |   | 31,463 



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|                                             |  |                    |         |                   |   |              |  |   |        |   |  |   |        
|-------------------------------------------- |  | ------------------ | ------- | ----------------- | - | ------------ |  | - | ------ | - |  | - | -------
|Six Months Ended March 31,                   |  | ProfessionalDental |         | SpecialtyProducts |   | Eliminations |  |   | Total 
|                                             |  |                    |         |                  
|2005                                         |  |                    |         |                   |   |              |  |   |        |   |  |   |        
|Revenues:                                    |  |                    |         |                   |   |              |  |   |        |   |  |   |        
|External customer                            |  | $                  | 163,454 |                   | $ | 150,642      |  | $ |       |   |  | $ | 314,096
|Intersegment                                 |  |                    | 1,321   |                   |   | 1,754        |  |   | (3,075 | ) |  |   |       
|                                             |  |                    |         |                   |   |              |  |   |        |   |  |   |        
|Total revenues                               |  | $                  | 164,775 |                   | $ | 152,396      |  | $ | (3,075 | ) |  | $ | 314,096
|                                             |  |                    |         |                   |   |              |  |   |        |   |  |   |        
|Gross profit                                 |  | $                  | 91,023  |                   | $ | 87,529       |  | $ |       |   |  | $ | 178,552
|Selling, general and administrative expenses |  |                    | 60,672  |                   |   | 57,567       |  |   |       |   |  |   | 118,239
|Operating income                             |  |                    | 30,351  |                   |   | 29,962       |  |   |       |   |  |   | 60,313 
|                                             |  |                    |         |                  
|2004                                         |  |                    |         |                   |   |              |  |   |        |   |  |   |        
|Revenues:                                    |  |                    |         |                   |   |              |  |   |        |   |  |   |        
|External customer                            |  | $                  | 155,293 |                   | $ | 127,485      |  | $ |       |   |  | $ | 282,778
|Intersegment                                 |  |                    | 1,913   |                   |   | 1,918        |  |   | (3,831 | ) |  |   |       
|                                             |  |                    |         |                   |   |              |  |   |        |   |  |   |        
|Total revenues                               |  | $                  | 157,206 |                   | $ | 129,403      |  | $ | (3,831 | ) |  | $ | 282,778
|                                             |  |                    |         |                   |   |              |  |   |        |   |  |   |        
|Gross profit                                 |  | $                  | 84,549  |                   | $ | 69,994       |  | $ |       |   |  | $ | 154,543
|Selling, general and administrative expenses |  |                    | 54,313  |                   |   | 45,311       |  |   |       |   |  |   | 99,624 
|Operating income                             |  |                    | 30,236  |                   |   | 24,683       |  |   |       |   |  |   | 54,919 



The following table
presents the segment assets as of March 31, 2005 compared to the prior fiscal year end:



|                   |  |                    |         |                   |   |         |  |   |        
|------------------ |  | ------------------ | ------- | ----------------- | - | ------- |  | - | -------
|                   |  | ProfessionalDental |         | SpecialtyProducts |   | Total  
|March 31, 2005     |  | $                  | 491,300 |                   | $ | 223,287 |  | $ | 714,587
|September 30, 2004 |  | $                  | 461,140 |                   | $ | 185,418 |  | $ | 646,558



7. EARNINGS PER SHARE



Basic earnings per common share is computed by dividing
net income by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income by the combination of dilutive common share equivalents, comprised of shares
issuable under the Companys share-based compensation plans, and the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflect the potential dilutive effect, calculated using the
treasury stock method, of additional common shares that are issuable upon exercise of outstanding stock options as follows:



|                                            |  |                             |  |                           |  |        |  |       
|------------------------------------------- |  | --------------------------- |  | ------------------------- |  | ------ |  | ------
|                                            |  | Three Months EndedMarch 31, |  | Six Months EndedMarch 31,
|                                            |  | 2005                        |  | 2004                      |  | 2005   |  | 2004  
|Basic shares outstanding (weighted average) |  | 39,986                      |  | 38,471                    |  | 39,732 |  | 38,391
|Effect of dilutive securities               |  | 1,499                       |  | 1,695                     |  | 1,544  |  | 1,641 
|                                            |  |                             |  |                           |  |        |  |       
|Diluted shares outstanding                  |  | 41,485                      |  | 40,166                    |  | 41,276 |  | 40,032
|                                            |  |                             |  |                           |  |        |  |       



Options outstanding
during the three month and six month periods ended March 31, 2005 and 2004 to purchase approximately 100 and 60 shares of common stock, respectively, were not included in the computation of dilutive shares because inclusion would be anti-dilutive.



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8. STOCK-BASED COMPENSATION



The Company accounts for stock-based compensation using the intrinsic value method in accordance with Accounting Principles
Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees, and related interpretations. Because the Company establishes the exercise price based on the fair market value of the Companys stock at the date of
grant, the stock options have no intrinsic value upon grant, and therefore no expense is recorded. Each quarter, the Company reports the potential dilutive impact of stock options in its diluted earnings per common share using the treasury stock
method. Out-of-the-money stock options (i.e., the average stock price during the period is below the strike price of the stock option) are not included in diluted earnings per common share as their effect is anti-dilutive.



As required under SFAS No. 123 (FAS 123), Accounting for
Stock-Based Compensation, as amended, the pro forma effects of stock-based compensation on net income and earnings per common share have been estimated as of the date of grant using the Black-Scholes option-pricing model. The Black-Scholes
option-pricing model was developed for use in estimating the fair value of traded options that have no restrictions and are fully transferable and negotiable in a free trading market. This model does not consider the employment, transfer or vesting
restrictions that are inherent in the Companys employee stock options or purchase rights granted pursuant to the Employee Stock Purchase Plan. Use of an option valuation model, as required by FAS 123, includes highly subjective assumptions
based on long-term predictions, including the expected stock price volatility and average life of each stock option grant. Because the Companys share-based payments have characteristics significantly different from those of freely traded
options, and because changes in the subjective input assumptions can materially affect the Companys estimate of fair values, in the Companys opinion, existing valuation models may not be reliable single measures of the fair values of the
Companys share-based payments. The Black-Scholes weighted average estimated fair values of stock options granted during the three months and six months ended March 31, 2005 were $11.35 per share. The Black-Scholes weighted average estimated
fair values of stock options granted during the three months and six months ended March 31, 2004 were $8.11 per share. The Black-Scholes weighted average estimated fair values of purchase rights granted pursuant to the Employee Stock Purchase Plan
during the three months and six months ended March 31, 2005 were $9.58 per share. The Black-Scholes weighted average estimated fair values of purchase rights granted pursuant to the Employee Stock Purchase Plan during the three months and six months
ended March 31, 2004 were $4.91 per share.



For purposes of pro
forma disclosures, the estimated fair value of each option is assumed to be amortized over its vesting period. The pro forma recognition of compensation expense under the fair value method on net income and earnings per share is as follows:



|                                                                                                                                            |  |                              |        |                            |   |        |  |      |        |  |   |       
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | -------------------------- | - | ------ |  | ---- | ------ |  | - | ------
|                                                                                                                                            |  | Three Months Ended March 31, |        | Six Months Ended March 31,
|                                                                                                                                            |  | 2005                         |        | 2004                       |   | 2005   |  | 2004
|Net income, as reported                                                                                                                     |  | $                            | 19,438 |                            | $ | 17,508 |  | $    | 34,477 |  | $ | 29,457
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                              | 589    |                            |   | 1,093  |  |      | 1,502  |  |   | 2,040 
|                                                                                                                                            |  |                              |        |                            |   |        |  |      |        |  |   |       
|Pro forma net income:                                                                                                                       |  | $                            | 18,849 |                            | $ | 16,415 |  | $    | 32,975 |  | $ | 27,417
|                                                                                                                                            |  |                              |        |                            |   |        |  |      |        |  |   |       
|Earnings per share:                                                                                                                         |  |                              |        |                            |   |        |  |      |        |  |   |       
|Basic - as reported                                                                                                                         |  | $                            | 0.49   |                            | $ | 0.46   |  | $    | 0.87   |  | $ | 0.77  
|                                                                                                                                            |  |                              |        |                            |   |        |  |      |        |  |   |       
|Basic - pro forma                                                                                                                           |  | $                            | 0.47   |                            | $ | 0.43   |  | $    | 0.83   |  | $ | 0.71  
|                                                                                                                                            |  |                              |        |                            |   |        |  |      |        |  |   |       
|Diluted - as reported                                                                                                                       |  | $                            | 0.47   |                            | $ | 0.44   |  | $    | 0.84   |  | $ | 0.74  
|                                                                                                                                            |  |                              |        |                            |   |        |  |      |        |  |   |       
|Diluted - pro forma                                                                                                                         |  | $                            | 0.45   |                            | $ | 0.41   |  | $    | 0.80   |  | $ | 0.68  
|                                                                                                                                            |  |                              |        |                            |   |        |  |      |        |  |   |       



The pro forma net
income may not be representative of future disclosures since the estimated fair value of stock options granted subsequent to the spin-off is amortized to expense over the vesting period, which was only a partial year in 2001, and additional options
may be granted in varying quantities in future years.



In
December 2004, the FASB replaced SFAS 123, Accounting for Stock-Based Compensation, with FASB Statement No. 123 (revised 2004), Share-Based Payment, (FAS 123R). FAS 123R requires companies to expense the estimated fair value of
employee stock options and similar awards. On April 14, 2005, the U.S. Securities and Exchange Commission adopted a new rule amending the compliance dates for FAS 123R. In accordance with the new rule, the accounting provisions of FAS 123R will be
effective for the Company on October 1, 2005, the beginning of fiscal 2006. The Company will adopt the provisions of FAS 123R using a modified prospective application. Under modified prospective application, FAS 123R, which provides certain changes
to the method for valuing



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share-based compensation among other changes, will apply to awards made after October 1, 2005, and awards outstanding on October 1, 2005 that are
subsequently modified or cancelled. Compensation expense for outstanding awards for which the requisite service had not been rendered as of October 1, 2005 will be recognized over the remaining service period using the compensation cost calculated
for pro forma disclosure purposes under FAS 123. At March 31, 2005, unamortized compensation expense, as determined in accordance with FAS 123, that the Company expects to record during fiscal 2006 was approximately $1,337 before income taxes. The
Company may incur additional expense during fiscal 2006, which cannot currently be determined, if new awards are granted during the remainder of fiscal 2005 and fiscal 2006. The Company is in the process of determining how the guidance regarding
valuing share-based compensation as prescribed in FAS 123R will be applied to valuing share-based awards granted after the effective date and the impact the recognition of compensation expense related to such awards will have on its consolidated
financial statements.



9. CONDENSED CONSOLIDATING FINANCIAL INFORMATION



The Companys domestic subsidiaries are guarantors
of the Companys 8 1/8% Senior Subordinated Notes due 2012, on an unsecured senior subordinated basis. Except to the extent necessary to avoid a fraudulent conveyance, the note guarantees are full and unconditional. The notes and the subsidiary
guarantees are unsecured and subordinated to all of the Companys and the Companys guarantor subsidiaries existing and future unsubordinated debt, including debt under the credit facility entered into on June 6, 2002.



Below are the unaudited condensed consolidating balance sheets as of March
31, 2005 and September 30, 2004, statements of income for the three months and six months ended March 31, 2005 and 2004, and statements of cash flows for the six months ended March 31, 2005 and 2004, of Sybron Dental Specialties, Inc. and its
subsidiaries, reflecting the subsidiary guarantors of the Senior Subordinated Notes.



Certain general corporate expenses have been allocated to the subsidiaries. As a matter of course, the Company retains certain assets and liabilities at the corporate level that are not allocated to the subsidiaries
including, but not limited to, certain employee benefit, insurance and tax liabilities. Intercompany balances include receivables/payables incurred in the normal course of business in addition to investments and loans transacted by subsidiaries of
the Company with other subsidiaries or with the Company.



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Condensed Consolidating Balance Sheets



|                                               |  |                          |         |   |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|---------------------------------------------- |  | ------------------------ | ------- | - | --------------------- | - | ------- | ------------------------ |  | ------------ | ------- |  | ------------ | ---------- | - |  | - | -------
|                                               |  | As of March 31, 2005    
|                                               |  | Sybron DentalSpecialties |         |   | GuarantorSubsidiaries |   |         | NonGuarantorSubsidiaries |  | Eliminations |         |  | Consolidated
|ASSETS                                         |  |                          |         |   |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Current assets:                                |  |                          |         |   |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Cash and cash equivalents                      |  | $                        | (91     | ) |                       | $ | (3,393  | )                        |  | $            | 51,111  |  | $            |           |   |  | $ | 47,627 
|Account receivable, net                        |  |                          | 9       |   |                       |   | 54,055  |                          |  |              | 53,939  |  |              |           |   |  |   | 108,003
|Inventories                                    |  |                          |        |   |                       |   | 65,331  |                          |  |              | 37,306  |  |              |           |   |  |   | 102,637
|Other current assets                           |  |                          | 10,076  |   |                       |   | 2,377   |                          |  |              | 5,663   |  |              |           |   |  |   | 18,116 
|                                               |  |                          |         |   |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Total current assets                           |  |                          | 9,994   |   |                       |   | 118,370 |                          |  |              | 148,019 |  |              |           |   |  |   | 276,383
|Property, plant and equipment, net             |  |                          | 8,140   |   |                       |   | 27,254  |                          |  |              | 48,699  |  |              |           |   |  |   | 84,093 
|Goodwill                                       |  |                          |        |   |                       |   | 199,390 |                          |  |              | 95,950  |  |              |           |   |  |   | 295,340
|Intangible assets, net                         |  |                          |        |   |                       |   | 16,220  |                          |  |              | 18,466  |  |              |           |   |  |   | 34,686 
|Investment in subsidiaries                     |  |                          | 899,434 |   |                       |   |        |                          |  |              |        |  |              | (899,434   | ) |  |   |       
|Intercompany balances                          |  |                          |        |   |                       |   | 205,446 |                          |  |              | 139,695 |  |              | (345,141   | ) |  |   |       
|Other assets                                   |  |                          | 11,991  |   |                       |   | 8,655   |                          |  |              | 3,439   |  |              |           |   |  |   | 24,085 
|                                               |  |                          |         |   |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Total assets                                   |  | $                        | 929,559 |   |                       | $ | 575,335 |                          |  | $            | 454,268 |  | $            | (1,244,575 | ) |  | $ | 714,587
|                                               |  |                          |         |   |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|LIABILITIES AND STOCKHOLDERS EQUITY           |  |                          |         |   |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Current liabilities:                           |  |                          |         |   |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Account payable                                |  | $                        | 188     |   |                       | $ | 8,995   |                          |  | $            | 7,348   |  | $            |           |   |  | $ | 16,531 
|Current portion of long-term debt              |  |                          | 113     |   |                       |   | 732     |                          |  |              | 1       |  |              |           |   |  |   | 846    
|Income taxes payable                           |  |                          | (1,096  | ) |                       |   | 8,473   |                          |  |              | 8,201   |  |              |           |   |  |   | 15,578 
|Accrued expenses and other current liabilities |  |                          | 15,416  |   |                       |   | 19,939  |                          |  |              | 20,973  |  |              |           |   |  |   | 56,328 
|                                               |  |                          |         |   |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Total current liabilities                      |  |                          | 14,621  |   |                       |   | 38,139  |                          |  |              | 36,523  |  |              |           |   |  |   | 89,283 
|Long-term debt                                 |  |                          | 25,700  |   |                       |   | 54,204  |                          |  |              |        |  |              |           |   |  |   | 79,904 
|Senior subordinated notes                      |  |                          | 150,000 |   |                       |   |        |                          |  |              |        |  |              |           |   |  |   | 150,000
|Deferred income taxes                          |  |                          | 10,841  |   |                       |   |        |                          |  |              | 247     |  |              |           |   |  |   | 11,088 
|Other liabilities                              |  |                          | 25,896  |   |                       |   |        |                          |  |              | 1,056   |  |              |           |   |  |   | 26,952 
|Intercompany balances                          |  |                          | 345,141 |   |                       |   |        |                          |  |              |        |  |              | (345,141   | ) |  |   |       
|                                               |  |                          |         |   |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Total liabilities                              |  |                          | 572,199 |   |                       |   | 92,343  |                          |  |              | 37,826  |  |              | (345,141   | ) |  |   | 357,227
|Stockholders equity:                          |  |                          |         |   |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Preferred stock                                |  |                          |        |   |                       |   |        |                          |  |              |        |  |              |           |   |  |   |       
|Common stock                                   |  |                          | 400     |   |                       |   | 3,777   |                          |  |              | 15,981  |  |              | (19,758    | ) |  |   | 400    
|Additional paid-in capital                     |  |                          | 109,571 |   |                       |   | 308,023 |                          |  |              | 248,409 |  |              | (556,432   | ) |  |   | 109,571
|Retained earnings                              |  |                          | 222,633 |   |                       |   | 159,124 |                          |  |              | 119,384 |  |              | (278,508   | ) |  |   | 222,633
|Accumulated other comprehensive income         |  |                          | 24,756  |   |                       |   | 12,068  |                          |  |              | 32,668  |  |              | (44,736    | ) |  |   | 24,756 
|                                               |  |                          |         |   |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Total stockholders equity                     |  |                          | 357,360 |   |                       |   | 482,992 |                          |  |              | 416,442 |  |              | (899,434   | ) |  |   | 357,360
|                                               |  |                          |         |   |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Total liabilities and stockholders equity     |  | $                        | 929,559 |   |                       | $ | 575,335 |                          |  | $            | 454,268 |  | $            | (1,244,575 | ) |  | $ | 714,587
|                                               |  |                          |         |   |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        



13



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##### Table of Contents

Condensed Consolidating Balance Sheets



|                                               |  |                          |         |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|---------------------------------------------- |  | ------------------------ | ------- | --------------------- | - | ------- | ------------------------ |  | ------------ | ------- |  | ------------ | ---------- | - |  | - | -------
|                                               |  | As of September 30, 2004
|                                               |  | Sybron DentalSpecialties |         | GuarantorSubsidiaries |   |         | NonGuarantorSubsidiaries |  | Eliminations |         |  | Consolidated
|ASSETS                                         |  |                          |         |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Current assets:                                |  |                          |         |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Cash and cash equivalents                      |  | $                        | 7,402   |                       | $ | (1,801  | )                        |  | $            | 35,001  |  | $            |           |   |  | $ | 40,602 
|Account receivable, net                        |  |                          | 7       |                       |   | 53,894  |                          |  |              | 50,247  |  |              |           |   |  |   | 104,148
|Inventories                                    |  |                          |        |                       |   | 62,240  |                          |  |              | 31,449  |  |              |           |   |  |   | 93,689 
|Other current assets                           |  |                          | 7,458   |                       |   | 3,131   |                          |  |              | 5,679   |  |              |           |   |  |   | 16,268 
|                                               |  |                          |         |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Total current assets                           |  |                          | 14,867  |                       |   | 117,464 |                          |  |              | 122,376 |  |              |           |   |  |   | 254,707
|Property, plant and equipment, net             |  |                          | 8,564   |                       |   | 26,736  |                          |  |              | 47,821  |  |              |           |   |  |   | 83,121 
|Goodwill                                       |  |                          |        |                       |   | 199,275 |                          |  |              | 69,493  |  |              |           |   |  |   | 268,768
|Intangible assets, net                         |  |                          |        |                       |   | 15,980  |                          |  |              | 198     |  |              |           |   |  |   | 16,178 
|Investment in subsidiaries                     |  |                          | 741,104 |                       |   |        |                          |  |              |        |  |              | (741,104   | ) |  |   |       
|Intercompany balances                          |  |                          |        |                       |   | 184,917 |                          |  |              | 75,343  |  |              | (260,260   | ) |  |   |       
|Other assets                                   |  |                          | 11,963  |                       |   | 9,532   |                          |  |              | 2,289   |  |              |           |   |  |   | 23,784 
|                                               |  |                          |         |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Total assets                                   |  | $                        | 776,498 |                       | $ | 553,904 |                          |  | $            | 317,520 |  | $            | (1,001,364 | ) |  | $ | 646,558
|                                               |  |                          |         |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|LIABILITIES AND STOCKHOLDERS EQUITY           |  |                          |         |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Current liabilities:                           |  |                          |         |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Account payable                                |  | $                        | 789     |                       | $ | 10,738  |                          |  | $            | 7,985   |  | $            |           |   |  | $ | 19,512 
|Current portion of long-term debt              |  |                          | 109     |                       |   | 770     |                          |  |              | 3       |  |              |           |   |  |   | 882    
|Income taxes payable                           |  |                          | 11,108  |                       |   | (2,312  | )                        |  |              | 8,423   |  |              | (130       | ) |  |   | 17,089 
|Accrued expenses and other current liabilities |  |                          | 12,715  |                       |   | 22,813  |                          |  |              | 20,281  |  |              |           |   |  |   | 55,809 
|                                               |  |                          |         |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Total current liabilities                      |  |                          | 24,721  |                       |   | 32,009  |                          |  |              | 36,692  |  |              | (130       | ) |  |   | 93,292 
|Long-term debt                                 |  |                          | 10,045  |                       |   | 59,544  |                          |  |              |        |  |              |           |   |  |   | 69,589 
|Senior subordinated notes                      |  |                          | 150,000 |                       |   |        |                          |  |              |        |  |              |           |   |  |   | 150,000
|Deferred income taxes                          |  |                          | 11,171  |                       |   |        |                          |  |              | 1,095   |  |              |           |   |  |   | 12,266 
|Other liabilities                              |  |                          | 21,659  |                       |   |        |                          |  |              | 980     |  |              |           |   |  |   | 22,639 
|                                               |  |                          |         |                       |  
|Intercompany balances                          |  |                          | 260,130 |                       |   |        |                          |  |              |        |  |              | (260,130   | ) |  |   |       
|                                               |  |                          |         |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Total liabilities                              |  |                          | 477,726 |                       |   | 91,553  |                          |  |              | 38,767  |  |              | (260,260   | ) |  |   | 347,786
|Stockholders equity:                          |  |                          |         |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Preferred stock                                |  |                          |        |                       |   |        |                          |  |              |        |  |              |           |   |  |   |       
|Common stock                                   |  |                          | 393     |                       |   | 3,944   |                          |  |              | 7,081   |  |              | (11,025    | ) |  |   | 393    
|Additional paid-in capital                     |  |                          | 93,817  |                       |   | 306,949 |                          |  |              | 144,758 |  |              | (451,707   | ) |  |   | 93,817 
|Retained earnings                              |  |                          | 188,156 |                       |   | 142,460 |                          |  |              | 101,439 |  |              | (243,899   | ) |  |   | 188,156
|Accumulated other comprehensive income         |  |                          | 16,406  |                       |   | 8,998   |                          |  |              | 25,475  |  |              | (34,473    | ) |  |   | 16,406 
|                                               |  |                          |         |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Total stockholders equity                     |  |                          | 298,772 |                       |   | 462,351 |                          |  |              | 278,753 |  |              | (741,104   | ) |  |   | 298,772
|                                               |  |                          |         |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        
|Total liabilities and stockholders equity     |  | $                        | 776,498 |                       | $ | 553,904 |                          |  | $            | 317,520 |  | $            | (1,001,364 | ) |  | $ | 646,558
|                                               |  |                          |         |                       |   |         |                          |  |              |         |  |              |            |   |  |   |        



14



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##### Table of Contents

Condensed Consolidating Statements of Income



|                                             |  |                                           |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|-------------------------------------------- |  | ----------------------------------------- | ------ | - | ---------------------- | - | ------- | -------------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | ------- | -
|                                             |  | For The Three Months Ended March 31, 2005 |       
|                                             |  | Sybron Dental Specialties                 |        |   | Guarantor Subsidiaries |   |         | Non Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Net sales                                    |  | $                                         |       |   |                        | $ | 89,169  |                            |  | $ | 77,286       |   |  | $            | (1,399  | ) |  | $ | 165,056 |  
|Cost of sales                                |  |                                           | 301    |   |                        |   | 31,216  |                            |  |   | 41,753       |   |  |              | (1,399  | ) |  |   | 71,871  |  
|                                             |  |                                           |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Gross profit                                 |  |                                           | (301   | ) |                        |   | 57,953  |                            |  |   | 35,533       |   |  |              |        |   |  |   | 93,185  |  
|Selling, general and administrative expenses |  |                                           | 9,012  |   |                        |   | 31,497  |                            |  |   | 19,745       |   |  |              |        |   |  |   | 60,254  |  
|                                             |  |                                           |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Operating income (loss)                      |  |                                           | (9,313 | ) |                        |   | 26,456  |                            |  |   | 15,788       |   |  |              |        |   |  |   | 32,931  |  
|Other income (expense):                      |  |                                           |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Interest expense                             |  |                                           | (3,509 | ) |                        |   | (1,117  | )                          |  |   | (12          | ) |  |              |        |   |  |   | (4,638  | )
|Amortization of deferred financing fees      |  |                                           |       |   |                        |   | (416    | )                          |  |   |             |   |  |              |        |   |  |   | (416    | )
|Income from equity method investments        |  |                                           | 19,438 |   |                        |   |        |                            |  |   |             |   |  |              | (19,438 | ) |  |   |        |  
|Other, net                                   |  |                                           | 12,822 |   |                        |   | (10,540 | )                          |  |   | (1,574       | ) |  |              |        |   |  |   | 708     |  
|                                             |  |                                           |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Income before income taxes                   |  |                                           | 19,438 |   |                        |   | 14,383  |                            |  |   | 14,202       |   |  |              | (19,438 | ) |  |   | 28,585  |  
|Income taxes                                 |  |                                           |       |   |                        |   | 6,238   |                            |  |   | 2,909        |   |  |              |        |   |  |   | 9,147   |  
|                                             |  |                                           |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Net income                                   |  | $                                         | 19,438 |   |                        | $ | 8,145   |                            |  | $ | 11,293       |   |  | $            | (19,438 | ) |  | $ | 19,438  |  
|                                             |  |                                           |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  



|                                             |  |                                           |        |   |                        |   |        |                            |  |   |              |   |  |              |         |   |  |   |         |  
|-------------------------------------------- |  | ----------------------------------------- | ------ | - | ---------------------- | - | ------ | -------------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | ------- | -
|                                             |  | For The Three Months Ended March 31, 2004 |       
|                                             |  | Sybron Dental Specialties                 |        |   | Guarantor Subsidiaries |   |        | Non Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Net sales                                    |  | $                                         |       |   |                        | $ | 80,733 |                            |  | $ | 71,945       |   |  | $            | (1,757  | ) |  | $ | 150,921 |  
|Cost of sales                                |  |                                           | 284    |   |                        |   | 30,468 |                            |  |   | 39,341       |   |  |              | (1,757  | ) |  |   | 68,336  |  
|                                             |  |                                           |        |   |                        |   |        |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Gross profit                                 |  |                                           | (284   | ) |                        |   | 50,265 |                            |  |   | 32,604       |   |  |              |        |   |  |   | 82,585  |  
|Selling, general and administrative expenses |  |                                           | 6,985  |   |                        |   | 28,514 |                            |  |   | 15,623       |   |  |              |        |   |  |   | 51,122  |  
|                                             |  |                                           |        |   |                        |   |        |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Operating income (loss)                      |  |                                           | (7,269 | ) |                        |   | 21,751 |                            |  |   | 16,981       |   |  |              |        |   |  |   | 31,463  |  
|Other income (expense):                      |  |                                           |        |   |                        |   |        |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Interest expense                             |  |                                           | (3,421 | ) |                        |   | (1,495 | )                          |  |   | (25          | ) |  |              |        |   |  |   | (4,941  | )
|Amortization of deferred financing fees      |  |                                           |       |   |                        |   | (402   | )                          |  |   |             |   |  |              |        |   |  |   | (402    | )
|Income from equity method investments        |  |                                           | 17,508 |   |                        |   |       |                            |  |   |             |   |  |              | (17,508 | ) |  |   |        |  
|Other, net                                   |  |                                           | 10,690 |   |                        |   | (9,553 | )                          |  |   | (1,126       | ) |  |              |        |   |  |   | 11      |  
|                                             |  |                                           |        |   |                        |   |        |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Income before income taxes                   |  |                                           | 17,508 |   |                        |   | 10,301 |                            |  |   | 15,830       |   |  |              | (17,508 | ) |  |   | 26,131  |  
|Income taxes                                 |  |                                           |       |   |                        |   | 4,350  |                            |  |   | 4,273        |   |  |              |        |   |  |   | 8,623   |  
|                                             |  |                                           |        |   |                        |   |        |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Net income                                   |  | $                                         | 17,508 |   |                        | $ | 5,951  |                            |  | $ | 11,557       |   |  | $            | (17,508 | ) |  | $ | 17,508  |  
|                                             |  |                                           |        |   |                        |   |        |                            |  |   |              |   |  |              |         |   |  |   |         |  



15



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##### Table of Contents

Condensed Consolidating Statements of Income



|                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|-------------------------------------------- |  | --------------------------------------- | ------- | - | ---------------------- | - | ------- | -------------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | ------- | -
|                                             |  | For The Six Months Ended March 31, 2005 |        
|                                             |  | Sybron Dental Specialties               |         |   | Guarantor Subsidiaries |   |         | Non Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Net sales                                    |  | $                                       |        |   |                        | $ | 167,459 |                            |  | $ | 149,712      |   |  | $            | (3,075  | ) |  | $ | 314,096 |  
|Cost of sales                                |  |                                         | 594     |   |                        |   | 56,592  |                            |  |   | 81,433       |   |  |              | (3,075  | ) |  |   | 135,544 |  
|                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Gross profit                                 |  |                                         | (594    | ) |                        |   | 110,867 |                            |  |   | 68,279       |   |  |              |        |   |  |   | 178,552 |  
|Selling, general and administrative expenses |  |                                         | 15,745  |   |                        |   | 61,528  |                            |  |   | 40,966       |   |  |              |        |   |  |   | 118,239 |  
|                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Operating income (loss)                      |  |                                         | (16,339 | ) |                        |   | 49,339  |                            |  |   | 27,313       |   |  |              |        |   |  |   | 60,313  |  
|Other income (expense):                      |  |                                         |         |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Interest expense                             |  |                                         | (7,128  | ) |                        |   | (2,470  | )                          |  |   | (35          | ) |  |              |        |   |  |   | (9,633  | )
|Amortization of deferred financing fees      |  |                                         |        |   |                        |   | (831    | )                          |  |   |             |   |  |              |        |   |  |   | (831    | )
|Income from equity method investments        |  |                                         | 34,477  |   |                        |   |        |                            |  |   |             |   |  |              | (34,477 | ) |  |   |        |  
|Other, net                                   |  |                                         | 23,467  |   |                        |   | (19,458 | )                          |  |   | (3,157       | ) |  |              |        |   |  |   | 852     |  
|                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Income before income taxes                   |  |                                         | 34,477  |   |                        |   | 26,580  |                            |  |   | 24,121       |   |  |              | (34,477 | ) |  |   | 50,701  |  
|Income taxes                                 |  |                                         |        |   |                        |   | 11,019  |                            |  |   | 5,205        |   |  |              |        |   |  |   | 16,224  |  
|                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Net income                                   |  | $                                       | 34,477  |   |                        | $ | 15,561  |                            |  | $ | 18,916       |   |  | $            | (34,477 | ) |  | $ | 34,477  |  
|                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  



|                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|-------------------------------------------- |  | --------------------------------------- | ------- | - | ---------------------- | - | ------- | -------------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | ------- | -
|                                             |  | For The Six Months Ended March 31, 2004 |        
|                                             |  | Sybron Dental Specialties               |         |   | Guarantor Subsidiaries |   |         | Non Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Net sales                                    |  | $                                       |        |   |                        | $ | 154,248 |                            |  | $ | 132,361      |   |  | $            | (3,831  | ) |  | $ | 282,778 |  
|Cost of sales                                |  |                                         | 547     |   |                        |   | 57,437  |                            |  |   | 74,082       |   |  |              | (3,831  | ) |  |   | 128,235 |  
|                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Gross profit                                 |  |                                         | (547    | ) |                        |   | 96,811  |                            |  |   | 58,279       |   |  |              |        |   |  |   | 154,543 |  
|Selling, general and administrative expenses |  |                                         | 12,450  |   |                        |   | 56,293  |                            |  |   | 30,881       |   |  |              |        |   |  |   | 99,624  |  
|                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Operating income (loss)                      |  |                                         | (12,997 | ) |                        |   | 40,518  |                            |  |   | 27,398       |   |  |              |        |   |  |   | 54,919  |  
|Other income (expense):                      |  |                                         |         |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Interest expense                             |  |                                         | (6,774  | ) |                        |   | (3,215  | )                          |  |   | (112         | ) |  |              |        |   |  |   | (10,101 | )
|Amortization of deferred financing fees      |  |                                         |        |   |                        |   | (809    | )                          |  |   |             |   |  |              |        |   |  |   | (809    | )
|Income from equity method investments        |  |                                         | 29,457  |   |                        |   |        |                            |  |   |             |   |  |              | (29,457 | ) |  |   |        |  
|Other, net                                   |  |                                         | 19,771  |   |                        |   | (17,561 | )                          |  |   | (2,253       | ) |  |              |        |   |  |   | (43     | )
|                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Income before income taxes                   |  |                                         | 29,457  |   |                        |   | 18,933  |                            |  |   | 25,033       |   |  |              | (29,457 | ) |  |   | 43,966  |  
|Income taxes                                 |  |                                         |        |   |                        |   | 7,727   |                            |  |   | 6,782        |   |  |              |        |   |  |   | 14,509  |  
|                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Net income                                   |  | $                                       | 29,457  |   |                        | $ | 11,206  |                            |  | $ | 18,251       |   |  | $            | (29,457 | ) |  | $ | 29,457  |  
|                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  



16



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##### Table of Contents

Condensed Consolidating Statements of Cash Flows



|                                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |         |  
|------------------------------------------------------------ |  | --------------------------------------- | ------- | - | ---------------------- | - | ------- | -------------------------- |  | - | ------------ | - | ------------ | - | - |  | - | ------- | -
|                                                             |  | For The Six Months Ended March 31, 2005 |        
|                                                             |  | Sybron Dental Specialties               |         |   | Guarantor Subsidiaries |   |         | Non Guarantor Subsidiaries |  |   | Eliminations |   | Consolidated |  
|Cash flows provided by (used in) operating activities        |  | $                                       | (50,204 | ) |                        | $ | 52,065  |                            |  | $ | 34,566       |   |              | $ |  |  | $ | 36,427  |  
|Cash flows from investing activities:                        |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |         |  
|Capital expenditures                                         |  |                                         | (1,609  | ) |                        |   | (3,416  | )                          |  |   | (1,317       | ) |              |   |  |  |   | (6,342  | )
|Proceeds from sales of property, plant and equipment         |  |                                         |        |   |                        |   | 373     |                            |  |   | 565          |   |              |   |  |  |   | 938     |  
|Net payments for businesses acquired                         |  |                                         |        |   |                        |   |        |                            |  |   | (46,049      | ) |              |   |  |  |   | (46,049 | )
|Payments for intangibles                                     |  |                                         |        |   |                        |   | (849    | )                          |  |   |             |   |              |   |  |  |   | (849    | )
|                                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |         |  
|Net cash used in investing activities                        |  |                                         | (1,609  | ) |                        |   | (3,892  | )                          |  |   | (46,801      | ) |              |   |  |  |   | (52,302 | )
|Cash flows from financing activities:                        |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |         |  
|Proceeds from credit facility                                |  |                                         | 86,000  |   |                        |   |        |                            |  |   |             |   |              |   |  |  |   | 86,000  |  
|Principal payments on credit facility                        |  |                                         | (70,300 | ) |                        |   | (5,307  | )                          |  |   |             |   |              |   |  |  |   | (75,607 | )
|Principal payments on long-term debt                         |  |                                         | (40     | ) |                        |   | (252    | )                          |  |   |             |   |              |   |  |  |   | (292    | )
|Proceeds from exercise of stock options                      |  |                                         | 10,254  |   |                        |   |        |                            |  |   |             |   |              |   |  |  |   | 10,254  |  
|Proceeds from employee stock purchase plan                   |  |                                         | 771     |   |                        |   |        |                            |  |   |             |   |              |   |  |  |   | 771     |  
|                                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |         |  
|Net cash provided by (used in) financing activities          |  |                                         | 26,685  |   |                        |   | (5,559  | )                          |  |   |             |   |              |   |  |  |   | 21,126  |  
|Effect of exchange rate changes on cash and cash equivalents |  |                                         | (1,507  | ) |                        |   | 3,070   |                            |  |   | 211          |   |              |   |  |  |   | 1,774   |  
|Net change in intercompany balances                          |  |                                         | 19,142  |   |                        |   | (47,276 | )                          |  |   | 28,134       |   |              |   |  |  |   |        |  
|                                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |         |  
|Net increase (decrease) in cash and cash equivalents         |  |                                         | (7,493  | ) |                        |   | (1,592  | )                          |  |   | 16,110       |   |              |   |  |  |   | 7,025   |  
|Cash and cash equivalents at beginning of period             |  |                                         | 7,402   |   |                        |   | (1,801  | )                          |  |   | 35,001       |   |              |   |  |  |   | 40,602  |  
|                                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |         |  
|Cash and cash equivalents at end of period                   |  | $                                       | (91     | ) |                        | $ | (3,393  | )                          |  | $ | 51,111       |   |              | $ |  |  | $ | 47,627  |  
|                                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |         |  
|Supplemental cash flow information:                          |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |         |  
|Cash paid during the period for interest                     |  | $                                       | 7,027   |   |                        | $ | 2,565   |                            |  | $ |             |   |              | $ |  |  | $ | 9,592   |  
|                                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |         |  
|Cash paid during the period for income taxes                 |  | $                                       | 8,274   |   |                        | $ |        |                            |  | $ | 5,293        |   |              | $ |  |  | $ | 13,567  |  
|                                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |         |  



|                                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |          |  
|------------------------------------------------------------ |  | --------------------------------------- | ------- | - | ---------------------- | - | ------- | -------------------------- |  | - | ------------ | - | ------------ | - | - |  | - | -------- | -
|                                                             |  | For The Six Months Ended March 31, 2004 |        
|                                                             |  | Sybron Dental Specialties               |         |   | Guarantor Subsidiaries |   |         | Non Guarantor Subsidiaries |  |   | Eliminations |   | Consolidated |  
|Cash flows provided by (used in) operating activities        |  | $                                       | (5,600  | ) |                        | $ | 13,775  |                            |  | $ | 19,728       |   |              | $ |  |  | $ | 27,903   |  
|Cash flows from investing activities:                        |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |          |  
|Capital expenditures                                         |  |                                         | (514    | ) |                        |   | (3,154  | )                          |  |   | (1,666       | ) |              |   |  |  |   | (5,334   | )
|Proceeds from sales of property, plant and equipment         |  |                                         |        |   |                        |   | 56      |                            |  |   | 138          |   |              |   |  |  |   | 194      |  
|Payments for intangibles                                     |  |                                         |        |   |                        |   | (441    | )                          |  |   | (118         | ) |              |   |  |  |   | (559     | )
|                                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |          |  
|Net cash used in investing activities                        |  |                                         | (514    | ) |                        |   | (3,539  | )                          |  |   | (1,646       | ) |              |   |   |  |   | (5,699   | )
|Cash flows from financing activities:                        |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |          |  
|Proceeds from credit facility                                |  |                                         | 35,500  |   |                        |   | 48,500  |                            |  |   |             |   |              |   |  |  |   | 84,000   |  
|Principal payments on credit facility                        |  |                                         | (25,500 | ) |                        |   | (81,395 | )                          |  |   |             |   |              |   |  |  |   | (106,895 | )
|Proceeds from long-term debt                                 |  |                                         |        |   |                        |   |        |                            |  |   | 2,469        |   |              |   |  |  |   | 2,469    |  
|Principal payments on long-term debt                         |  |                                         |        |   |                        |   | (42     | )                          |  |   | (8,688       | ) |              |   |  |  |   | (8,730   | )
|Proceeds from exercise of stock options                      |  |                                         | 3,353   |   |                        |   |        |                            |  |   |             |   |              |   |  |  |   | 3,353    |  
|Proceeds from employee stock purchase plan                   |  |                                         | 522     |   |                        |   |        |                            |  |   |             |   |              |   |  |  |   | 522      |  
|                                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |          |  
|Net cash provided by (used in) financing activities          |  |                                         | 13,875  |   |                        |   | (32,937 | )                          |  |   | (6,219       | ) |              |   |  |  |   | (25,281  | )
|Effect of exchange rate changes on cash and cash equivalents |  |                                         | (1,765  | ) |                        |   | 1,310   |                            |  |   | 1,963        |   |              |   |  |  |   | 1,508    |  
|Net change in intercompany balances                          |  |                                         | (10,309 | ) |                        |   | 17,313  |                            |  |   | (7,004       | ) |              |   |  |  |   |         |  
|                                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |          |  
|Net increase (decrease) in cash and cash equivalents         |  |                                         | (4,313  | ) |                        |   | (4,078  | )                          |  |   | 6,822        |   |              |   |   |  |   | (1,569   | )
|Cash and cash equivalents at beginning of period             |  |                                         | 3,817   |   |                        |   | 1,164   |                            |  |   | 17,887       |   |              |   |  |  |   | 22,868   |  
|                                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |          |  
|Cash and cash equivalents at end of period                   |  | $                                       | (496    | ) |                        | $ | (2,914  | )                          |  | $ | 24,709       |   |              | $ |  |  | $ | 21,299   |  
|                                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |          |  
|Supplemental cash flow information:                          |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |          |  
|Cash paid during the period for interest                     |  | $                                       | 6,770   |   |                        | $ | 3,549   |                            |  | $ | 123          |   |              | $ |  |  | $ | 10,442   |  
|                                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |          |  
|Cash paid during the period for income taxes                 |  | $                                       | 7,811   |   |                        | $ |         |                            |  | $ | 5,147        |   |              | $ |  |  | $ | 12,958   |  
|                                                             |  |                                         |         |   |                        |   |         |                            |  |   |              |   |              |   |   |  |   |          |  



10. ACQUISITION



In the first quarter of fiscal 2005, Sybron Canada Limited, one of the
Companys subsidiaries, acquired all of the common shares of Innova LifeSciences Corporation (Innova) for approximately $47,794. The purchase price represented a 33 percent premium over Innovas closing share price of C$1.06 on
the Toronto Stock Exchange on August 23, 2004, the date on which the Companys offer to purchase the common shares of Innova for C$1.4106 was announced. Innova is a Canadian manufacturer and marketer of dental implants and markets its products
to oral surgeons, periodontist, prosthodontists and general dentists. The addition of Innova provides the Company with an opportunity to participate in the growing dental implant market.



17



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##### Table of Contents

The preliminary allocation of purchase price to the acquired assets and assumed liabilities based on the
estimated fair values was as follows:



|                              |  |   |       
|----------------------------- |  | - | ------
|Cash                          |  | $ | 1,745 
|Accounts receivable, net      |  |   | 2,763 
|Inventory, net                |  |   | 3,981 
|Goodwill                      |  |   | 22,226
|Intangible assets             |  |   | 18,200
|Property, plant and equipment |  |   | 1,017 
|Other assets                  |  |   | 1,841 
|                              |  |   |       
|Total assets acquired         |  | $ | 51,773
|                              |  |   |       
|Liabilities assumed           |  |   | 3,979 
|                              |  |   |       
|Total purchase price          |  | $ | 47,794
|                              |  |   |       



The Company is
obtaining an independent valuation of the major asset categories of acquired assets and liabilities assumed. The preliminary valuation of identifiable intangible assets is $18,200. The Company expects to finalize the purchase price allocations in
the third quarter of fiscal year 2005. Amounts allocated to intangible assets are being amortized on a straight-line basis over their estimated useful lives ranging from five to thirty years. The condensed consolidated financial statements include
the operating results of this business from the date of acquisition. Pro forma results of operations have not been presented because the effect of the acquisitions was not material.



11. IMPAIRMENT OF LONG-LIVED ASSET



The Company recorded an impairment charge of $903 in selling, general and administrative expenses in the quarter ended March 31, 2005. The impairment
charge was related to the Companys fractional ownership of an aircraft. The Company received notice that the type of aircraft owned is being eliminated from the fleet of the service provider, which will result in the sale of the aircraft at a
price less than its net book value. The Company used the quoted market price from the service provider to determine the fair value of the aircraft.



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



When we use the terms SDS, we, us, Company, or our in this report, unless the context requires
otherwise, we are referring to Sybron Dental Specialties, Inc. and its subsidiaries. Our fiscal year ends on September 30 and, accordingly, all references to quarters refer to our fiscal quarters. The quarters ended March 31, 2005 and 2004 refer to
the second quarters of fiscal 2005 and 2004, respectively.



General



We are a leading global manufacturer and marketer of a
broad range of consumable dental products and related small equipment and a manufacturer and distributor of products for use in infection prevention in both the medical and dental markets. Our subsidiaries operate in two business segments:



| |  |  | Professional Dental. We develop and manufacture a variety of branded dental consumable products, small non-consumable equipment and consumable infection prevention products
sold through independent distributors to the dental industry worldwide, as well as to medical markets; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Specialty Products.We develop, manufacture, and market an array of consumable orthodontic products, small non-consumable endodontic products and implants to orthodontists,
endodontic specialists, oral surgeons, prosthodontists, and periodontists worldwide. This segment was previously referred to as the Orthodontics segment. The name was changed to more accurately describe the products of this segment. The composition
of this segment has not changed.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



18



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##### Table of Contents

Our primary subsidiaries in each of our business segments are as follows:



|                            |  |                                     
|--------------------------- |  | ------------------------------------
|Professional Dental         |  | Specialty Products                  
|Kerr Corporation            |  | Ormco Corporation                   
|Kerr Italia S.p.A           |  | Ormco B.V.                          
|Sybron Canada Limited       |  | Ormodent Group                      
|Pinnacle Products, Inc.     |  | Allesee Orthodontic Appliances, Inc.
|KerrHawe S.A.               |  | Innova LifeSciences Corporation     
|Metrex Research Corporation |  |                                     
|SpofaDental a.s.            |  |                                     



Results of Operations



Overview



Based upon the information we have available to us, we estimate the growth
of the worldwide dental market for the type of products we sell to be between 4% and 6%, with the U.S. market growing at the upper end of the range. The factors that we believe will allow the market to continue to grow in the 4% to 6% range are,
among others things, a steadily growing demand by consumers for endodontic, periodontic, orthodontic, cosmetic and other specialized procedures in an effort to retain and improve the appearance of their natural teeth; the aging baby-boomer segment
of the population who we think are more likely to require repair and reconstructive dental procedures, such as root canals and the placement of crowns or bridges; technological advances in dental products which reduce both the discomfort to the
patient and the treatment time thereby attracting more patients; an increasing worldwide population, creating more dental patients; and an expected growth in per capita and discretionary incomes in emerging nations which should result in healthcare,
including dental services, becoming a greater priority.



Our
net sales were $165.1 million in the second quarter of fiscal 2005, an increase of $14.1 million, or 9.4%, from net sales of $150.9 million in the comparable prior year period. The increase in our second quarter fiscal 2005 net sales is due to an
increase in internal net sales of 5.1%, a 2.1% increase due to favorable foreign currency fluctuations, and a 2.2% increase primarily from sales associated with acquisitions made in the preceding twelve month period. We incorrectly reported our
quarterly internal net sales growth and the factors related to our overall net sales growth in the announcement of our second quarter fiscal 2005 financial results made on April 25, 2005 and the conference call we hosted on April 26, 2005. The
correct internal net sales growth and the factors are: internal net sales growth of 5.1%, a 2.1% increase due to favorable foreign currency fluctuations and a 2.2% increase primarily from sales associated with acquisitions made in the preceding
twelve month period. The correct internal net sales growth for our international sales is 1.9%. The correct internal net sales growth for our consumable products is 5.8%. The revised internal net sales growth for the Specialty Products segment is
internal net sales growth of 7.9%. While it is difficult to calculate the effect of price increases we have implemented due to the variety of factors affecting our pricing and the numerous products we sell, we believe the internal net sales growth
of 5.1% includes the positive impact of price changes we have made of approximately 11/2% to 2%. We define
internal net sales as total net sales excluding foreign currency fluctuations and including only the organic growth of acquisitions made in the preceding twelve months.



Our overall net sales growth rate in the second quarter of fiscal 2005 is less than the overall growth rate in the second
quarter of fiscal 2004, during which our overall net sales growth rate was 12.4%. Our internal net sales growth for the fiscal 2005 second quarter of 5.1% was, however, greater than the 4.5% internal sales growth in the second quarter of 2004. The
overall net sales growth in the second fiscal quarter of 2004 benefited from the acquisition of Spofa Dental a.s. and currency fluctuations, which accounts for the higher overall net sales growth in that quarter.



The increase in our internal net sales growth rate is primarily attributable
to our Specialty Products segment, which experienced an 7.9% growth in internal net sales. The majority of the increase occurred in the segments international markets, as the internal net sales for those markets increased by 12.1%. The U.S.
market had an internal net sales growth rate of 4.0%. The higher growth rate in the international markets is primarily the result of increased sales in Asia.



The products that significantly contributed to the net sales increase for the Specialty Product segment include our family of Damon products, dental
implants (by our newly acquired company, Innova LifeSciences), the Elements Obturation device, and products made by our orthodontic laboratory. We plan to continue to focus our selling efforts on the Damon self-ligating bracket system, our Inspire
Ice ceramic brackets, our Titanium Orthos® brackets, dental implant products, and Ni-Ti endodontic files, as we believe those product lines have the greatest potential for increasing the sales of our Specialty Products over the next twelve
months.



The Professional Dental segment also contributed to
the improvement in our overall internal net sales growth rate, as its internal net sales growth rate of 2.8% for the second quarter of fiscal 2005 is greater than the 1.6% internal net sales growth rate it experienced in the second quarter of fiscal
2004. The increase in the segments internal net sales is attributable to an increase in the sales of its consumable products. The internal net sales growth rate of its consumable products increased to 4.7% in the second quarter of fiscal 2005
from 3.6% in the comparable prior year period.



The
Professional Dental segments growth occurred in the U.S. market where its internal net sales growth rate was 11.4%, an increase of 8.7 percentage points from the 2.7% growth rate it experienced in the second quarter of fiscal 2004. The
internal net sales



19



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##### Table of Contents

in the segments international markets declined by 7.0% in the second quarter of fiscal 2005 as compared to the second quarter of fiscal 2004, during
which its international sales grew by 6.7%. The decline in sales in the international markets was primarily the result of decreased sales in Asia.



The overall net sales growth of the Professional Dental segment is primarily attributable to an increase in the net sales of its Premise nanocomposite,
MaxCem self-adhesive cement, and its line of infection prevention products. The segment continues to experience the same decline it experienced in fiscal 2004 in the net sales of its LED curing light. The LED curing light, which was introduced in
fiscal 2003 and is unlike our consumable products which generate consistent sales as the products cannot be reused, has a life span of 4 to 5 years. As a result, we expect the sales of that product will continue to decline over the remainder of
fiscal 2005. The introduction of our next generation LED curing light in the second half of fiscal 2005 may help to offset this decline. We anticipate experiencing a slight increase in the internal net sales growth of our Professional Dental segment
during the remainder of fiscal 2005, as a result of the sales of products such as Premise and MaxCem, along with StandOut, our newest impression material.



Operating income in the second quarter of fiscal 2005 was $32.9 million, or 20.0% of net sales, which is slightly lower than the 20.8% of operating income
as percent of net sales we had in the second quarter of fiscal 2004. Gross profit, as a percent of net sales, improved from 54.7% in the second quarter of fiscal 2004 to 56.5% in the second quarter of fiscal 2005, while our selling, general and
administrative expenses in the second quarter of fiscal 2005 increased to 36.5% of net sales as compared to 33.9% in the second quarter of fiscal 2004 resulting in the decline in operating income as a percent of net sales. The improvement in gross
profit, as a percent of net sales, is primarily attributable to improved foreign currency rates, the reduction in costs as a result of our facility rationalization efforts last year in Eastern Europe and Mexico, the increased sales levels at each of
our business segments and an increase in the sales of higher margin products, partially offset by increased manufacturing expense. The aforementioned positive impact of price changes of 2% realized over the year ago quarter were offset by
approximately the same increases in our labor costs over the prior year period. The increase in the percentage of our sales attributable to our selling, general and administrative expenses was primarily caused by: the acquisition of Innova
LifeSciences, which has a higher selling, general and administrative expenses as a percent of net sales than our other operations, an impairment charge of $0.9 million due to the decrease in value of our fractional ownership of an aircraft, expenses
of approximately $0.6 million related to the transition of our Chief Financial Officer position in connection with the retirement of Gregory D. Waller in May 2005, and restructuring charges of approximately $0.5 million related to our consolidation
of the Demetron and Orascoptic operations in our Professional Dental segment. During the remainder of our 2005 fiscal year, we expect a flat or slight decrease in our gross profit percent relative to the second quarter of the fiscal year 2005 as we
amortize capitalized negative manufacturing variances over the remainder of the fiscal year. Selling, general and administrative expense, as a percent of net sales, should be approximately the same or slightly lower over the remainder of fiscal 2005
than the 36.5% experienced in the second quarter, resulting in operating income, as a percent of net sales, remaining approximately the same for the remainder of fiscal 2005, as we experienced in the second quarter.



An amendment to the Termination Agreement related to the retirement of Mr.
Gregory D. Waller, our Chief Financial Officer, eliminated the opportunity for Mr. Waller to extend the period during which he would have the right to exercise options previously granted to him to purchase our common stock. As a result of the
amendment, we will not incur the approximate $1.0 million non-cash charge we previously reported we might incur during our 2005 fiscal year.



Our interest expense in the second quarter of fiscal 2005 was $4.6 million compared to our interest expense of $4.9 million in the comparable prior year
period. Our average debt outstanding during the quarter was $237.9 million and our average interest rate was 7.9%, compared to the average debt we had outstanding in the second quarter of fiscal 2004 of $255.6 million and an average interest rate
for that quarter 7.6%. The increase in the average interest rate is the result of the reduction during the quarter of our floating rate debt, which carries a lower interest rate than our fixed rate debt. Additionally, the London InterBank Offered
Rate (LIBOR), which rate affects the interest rate in our Credit Facility for amounts borrowed under the Term B tranche and Revolver tranche, increased in the first half of fiscal 2005. We expect to experience a slight increase in our
average interest rate in the remaining quarters of fiscal 2005, as we anticipate continuing to pay down our adjustable rate debt, which has a lower interest rate than our fixed rate debt. Debt is expected to decrease over the remainder of the fiscal
year unless we make any significant acquisitions.



Income taxes
in the second quarter of fiscal 2005 were $9.1 million or 32% of income before taxes as compared to income taxes of $8.6 million, or 33% of income before taxes in the second quarter of fiscal 2004. The effective tax rate of 32% is based on current
assumptions regarding the income contributions from our various operations around the world. Should the income contributions from countries with higher tax rates exceed our expectations, our effective tax rate could be higher than 32%. We are
continuing to evaluate the impact of the American Jobs Creation Act of 2004 (the Jobs Creation Act). Should we decide to repatriate earnings of non-U.S. subsidiaries under the terms of the Jobs Creation Act, there may be a negative
impact on our effective tax rate.



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We entered into a new agreement with the International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America and its New West Side Local 174, effective as of February 1, 2005 with an expiration date of January 31, 2008, pertaining to the bargaining unit employees that are employed by us at our Professional Dental
business segments Romulus, Michigan facility. The new agreement, while substantially the same as the prior agreement, provides us greater flexibility in transferring workers to different work assignments and instituted a cost sharing
arrangement with respect to healthcare premiums for employees who retire during the term of the new agreement.



Quarter Ended March 31, 2005 Compared to the Quarter Ended March 31, 2004



Net Sales



|                    |  |                |         |            |   |        
|------------------- |  | -------------- | ------- | ---------- | - | -------
|Net Sales           |  | Fiscal2005     |         | Fiscal2004
|                    |  | (in thousands)
|Professional Dental |  | $              | 87,567  |            | $ | 83,849 
|Specialty Products  |  |                | 77,489  |            |   | 67,072 
|                    |  |                |         |            |   |        
|Total Net Sales     |  | $              | 165,056 |            | $ | 150,921
|                    |  |                |         |            |   |        



Overall Company.Net sales for the quarter ended March 31, 2005 increased by $14.1 million, or 9.4%, from the corresponding fiscal 2004 quarter.



Professional Dental.Increased net sales in the Professional Dental segment resulted primarily from: (a) net sales of new products (approximately
$3.9 million), (b) favorable foreign currency fluctuations (approximately $1.8 million), (c) the net sales of products from an acquired company (approximately $0.6 million), and (d) decreased rebate payments (approximately $0.2 million). The
increase in net sales was partially offset by: (a) decreased net sales of existing products (approximately $1.8 million), (b) the loss of the net sales of the prior years exited product lines (approximately $0.6 million), and (c) an allowance
for sales returns (approximately $0.4 million).



Specialty
Products.Increased net sales in the Specialty Products segment resulted primarily from: (a) net sales of new products (approximately $11.5 million), (b) net sales of products from an acquired company (approximately $4.8 million), (c) favorable
foreign currency fluctuations (approximately $1.3 million), and (d) decreased rebate payments (approximately $0.4 million). The increase in net sales was partially offset by: (a) decreased net sales of existing products (approximately $6.6 million)
and (b) an allowance for sales returns (approximately $1.0 million).



Gross Profit



|                    |  |                                    |        |                     |      |   |            |   |                     |  |      |  
|------------------- |  | ---------------------------------- | ------ | ------------------- | ---- | - | ---------- | - | ------------------- |  | ---- | -
|Gross Profit        |  | Fiscal2005                         |        | Percent ofNet Sales |      |   | Fiscal2004 |   | Percent ofNet Sales | 
|                    |  | (in thousands, except percentages) |       
|Professional Dental |  | $                                  | 49,465 |                     | 56.5 | % |            | $ | 46,426              |  | 55.4 | %
|Specialty Products  |  |                                    | 43,720 |                     | 56.4 |   |            |   | 36,159              |  | 53.9 |  
|                    |  |                                    |        |                     |      |   |            |   |                     |  |      |  
|Total Gross Profit  |  | $                                  | 93,185 |                     | 56.5 | % |            | $ | 82,585              |  | 54.7 | %
|                    |  |                                    |        |                     |      |   |            |   |                     |  |      |  



Overall Company.Gross profit for the quarter ended March 31, 2005 increased by $10.6 million or 12.8% from the corresponding fiscal 2004 quarter.



Professional Dental.Increased gross profit in the Professional Dental segment resulted primarily from: (a) gross profit relating to new products
(approximately $2.3 million), (b) an increase in sales of higher margin products (approximately $1.4 million), (c) favorable foreign currency fluctuations (approximately $0.6 million), (d) an increase in gross profit caused by the increase in
manufacturing volumes, causing the manufacturing overhead to be absorbed over a higher unit volume (approximately $0.5 million), (e) gross profit derived from the net sales of products of an acquired company (approximately $0.5 million), and (f)
decreased rebate payments (approximately $0.2 million). The increase in gross profit was partially offset by: (a) decreased net sales of existing products (approximately $1.1 million), (b) inventory adjustments (approximately $0.9 million), (c)
gross profit lost from the prior years exited product lines (approximately $0.3 million), and (d) an allowance for sales returns (approximately $0.2 million).



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Specialty Products.Increased gross profit in the Specialty Products segment resulted primarily
from: (a) gross profit relating to new products (approximately $6.9 million), (b) an increase in sales of higher margin products (approximately $3.6 million), (c) gross profit derived from the net sales of products of an acquired company
(approximately $3.0 million), (d) favorable foreign currency fluctuations (approximately $1.3 million), (e) decreased rebate payments (approximately $0.4 million) and (f) inventory adjustments (approximately $0.2 million). The increase in gross
profit was partially offset by: (a) decreased net sales of existing products (approximately $3.5 million), (b) a decrease in gross profit caused by the decrease in manufacturing volumes, causing the manufacturing overhead to be absorbed over a lower
unit volume (approximately $2.2 million), (c) increased royalty expense (approximately $1.7 million), and (d) an allowance for sales returns (approximately $0.4 million).



Selling, General and Administrative Expenses



|                                                   |  |                                    |        |                     |      |   |            |   |                     |  |      |  
|-------------------------------------------------- |  | ---------------------------------- | ------ | ------------------- | ---- | - | ---------- | - | ------------------- |  | ---- | -
|Selling, General and Administrative Expenses       |  | Fiscal2005                         |        | Percent ofNet Sales |      |   | Fiscal2004 |   | Percent ofNet Sales | 
|                                                   |  | (in thousands, except percentages) |       
|Professional Dental                                |  | $                                  | 30,686 |                     | 35.0 | % |            | $ | 27,786              |  | 33.1 | %
|Specialty Products                                 |  |                                    | 29,568 |                     | 38.2 |   |            |   | 23,336              |  | 34.8 |  
|                                                   |  |                                    |        |                     |      |   |            |   |                     |  |      |  
|Total Selling, General and Administrative Expenses |  | $                                  | 60,254 |                     | 36.5 | % |            | $ | 51,122              |  | 33.9 | %
|                                                   |  |                                    |        |                     |      |   |            |   |                     |  |      |  



Overall Company.Selling, general and administrative expenses for the quarter ended March 31, 2005 increased by $9.1 million or 17.9% from the corresponding fiscal 2004 quarter. All corporate general and administrative expenses are allocated to the
Companys business segments in proportion to each segments net sales, regardless of the extent to which a particular expense may relate to one segment or the other.



Professional Dental.Increased selling, general and administrative expenses in the Professional Dental segment
resulted primarily from: (a) increased selling and marketing expenses (approximately $1.6 million), (b) increased general and administrative expenses (approximately $0.9 million), (c) costs related to the closure of our Demetron facility
(approximately $0.5 million), and (d) expenses of an acquired company (approximately $0.1 million). The increase in selling, general and administrative expenses were offset by decreased expenses relating to foreign currency fluctuations
(approximately $0.2 million).



Specialty Products.Increased selling, general and administrative expenses in the Specialty Products segment resulted primarily from: (a) expenses of an acquired company (approximately $3.0 million), (b) increased selling and marketing expenses (approximately $1.6
million), (c) increased general and administrative expenses (approximately $0.8 million), (d) increased expenses related to foreign currency fluctuations (approximately $0.6 million), and (e) increased research and development expenses
(approximately $0.2 million).



Operating Income



|                       |  |                                    |        |                     |      |   |            |   |                     |  |      |  
|---------------------- |  | ---------------------------------- | ------ | ------------------- | ---- | - | ---------- | - | ------------------- |  | ---- | -
|Operating Income       |  | Fiscal2005                         |        | Percent ofNet Sales |      |   | Fiscal2004 |   | Percent ofNet Sales | 
|                       |  | (in thousands, except percentages) |       
|Professional Dental    |  | $                                  | 18,779 |                     | 21.4 | % |            | $ | 18,640              |  | 22.2 | %
|Specialty Products     |  |                                    | 14,152 |                     | 18.3 |   |            |   | 12,823              |  | 19.1 |  
|                       |  |                                    |        |                     |      |   |            |   |                     |  |      |  
|Total Operating Income |  | $                                  | 32,931 |                     | 20.0 | % |            | $ | 31,463              |  | 20.8 | %
|                       |  |                                    |        |                     |      |   |            |   |                     |  |      |  



As a result of the
foregoing, operating income for the quarter ended March 31, 2005 increased by 4.7% or $1.5 million from operating income in the corresponding quarter of fiscal 2004.



Interest Expense



Our interest expense in the second quarter of fiscal 2005 was $4.6 million compared to our interest expense of $4.9 million in the comparable prior year
period. Our average debt outstanding during the quarter was $237.9 million and our average interest rate was 7.9%, compared to the average debt we had outstanding in the second quarter of fiscal 2004 of $255.6 million and an average interest rate
for that quarter of 7.6%. The increase in the average interest rate is the result of the reduction during the quarter of our floating rate debt, which carries a lower interest rate than our fixed rate debt. Additionally, the London InterBank Offered
Rate (LIBOR), which rate affects the interest rate in our Credit Facility for amounts borrowed under the Term B tranche and Revolver tranche, increased in the first half of fiscal 2005. We expect to experience a slight increase in our
average interest rate in the remaining quarters of fiscal 2005, as we anticipate continuing to pay down our adjustable rate debt, which has a lower interest rate than our fixed rate debt. Debt is expected to decrease over the remainder of the fiscal
year unless we make any significant acquisitions.



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Income Taxes



Taxes on income in the second quarter of fiscal 2005 were $9.1 million, or 32.0% of income before taxes, an increase of $0.5
million from the prior fiscal quarter taxes on income of $8.6 million, or 33.0% of income before taxes.



Six Months Ended March 31, 2005 Compared to the Six Months Ended March 31, 2004



Net Sales



|                    |  |                |         |            |   |        
|------------------- |  | -------------- | ------- | ---------- | - | -------
|Net Sales           |  | Fiscal2005     |         | Fiscal2004
|                    |  | (in thousands)
|Professional Dental |  | $              | 163,454 |            | $ | 155,293
|Specialty Products  |  |                | 150,642 |            |   | 127,485
|                    |  |                |         |            |   |        
|Total Net Sales     |  | $              | 314,096 |            | $ | 282,778
|                    |  |                |         |            |   |        



Overall Company.Net sales for the six months ended March 31, 2005 increased by $31.3 million, or 11.1%, from the corresponding fiscal 2004 period.



Professional Dental.Increased net sales in the Professional Dental segment resulted primarily from: (a) net sales of new products (approximately
$8.4 million), (b) favorable foreign currency fluctuations (approximately $4.0 million), (c) the net sales of products from an acquired company (approximately $1.1 million), and (d) decreased rebate payments (approximately $0.1 million). The
increase in net sales was partially offset by: (a) decreased net sales of existing products (approximately $3.9 million), (b) the loss of the net sales of the prior years exited product lines (approximately $1.2 million), and (c) an increase
in the allowance for sales returns (approximately $0.4 million).



Specialty Products.Increased net sales in the Specialty Products segment resulted primarily from: (a) net sales of new products (approximately $19.5 million), (b) net sales of products from an acquired company (approximately $9.1
million), (c) favorable foreign currency fluctuations (approximately $3.4 million), and (d) decreased rebate payments (approximately $1.3 million). The increase in net sales was partially offset by: (a) decreased net sales of existing products
(approximately $9.1 million) and (b) an increase in the allowance for sales returns (approximately $1.0 million).



Gross Profit



|                    |  |                                    |         |                     |      |   |            |   |                     |  |      |  
|------------------- |  | ---------------------------------- | ------- | ------------------- | ---- | - | ---------- | - | ------------------- |  | ---- | -
|Gross Profit        |  | Fiscal2005                         |         | Percent ofNet Sales |      |   | Fiscal2004 |   | Percent ofNet Sales | 
|                    |  | (in thousands, except percentages) |        
|Professional Dental |  | $                                  | 91,023  |                     | 55.7 | % |            | $ | 84,549              |  | 54.4 | %
|Specialty Products  |  |                                    | 87,529  |                     | 58.1 |   |            |   | 69,994              |  | 54.9 |  
|                    |  |                                    |         |                     |      |   |            |   |                     |  |      |  
|Total Gross Profit  |  | $                                  | 178,552 |                     | 56.8 | % |            | $ | 154,543             |  | 54.7 | %
|                    |  |                                    |         |                     |      |   |            |   |                     |  |      |  



Overall Company.Gross profit for the six months ended March 31, 2005 increased by $24.0 million or 15.5% from the corresponding fiscal 2004 period.



Professional Dental.Increased gross profit in the Professional Dental segment resulted primarily from: (a) gross profit relating to new products
(approximately $5.0 million), (b) an increase profit caused by the increase in manufacturing volumes, causing the manufacturing overhead to be absorbed over a higher unit volume (approximately $1.6 million), (c) favorable foreign currency
fluctuations (approximately $1.5 million), (d) an increase in sales of higher margin products (approximately $1.4 million), (e) gross profit derived from the net sales of products of an acquired company (approximately $0.9 million), and (f)
decreased rebate payments (approximately $0.1 million). The increase in gross profit was partially offset by: (a) decreased net sales of existing products (approximately $2.3 million), (b) inventory adjustments (approximately $0.8 million), (c)
gross profit lost from the prior years exited product lines (approximately $0.6 million), (d) an allowance for sales returns (approximately $0.2 million), and (e) increased royalty expense (approximately $0.1 million).



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Specialty Products.Increased gross profit in the Specialty Products segment resulted primarily
from: (a) gross profit relating to new products (approximately $11.7 million), (b) gross profit derived from the net sales of products of an acquired company (approximately $5.8 million), (c) an increase in sales of higher margin products
(approximately $5.5 million), (d) favorable foreign currency fluctuations (approximately $3.4 million), and (e) decreased rebate payments (approximately $1.3 million). The increase in gross profit was partially offset by: (a) decreased net sales of
existing products (approximately $4.8 million), (b) increased royalty expense (approximately $3.0 million), (c) a decrease in gross profit caused by the decrease in manufacturing volumes, causing the manufacturing overhead to be absorbed over a
lower unit volume (approximately $2.0 million), and (d) an allowance for sales returns (approximately $0.4 million).



Selling, General and Administrative Expenses



|                                                   |  |                                    |         |                     |      |   |            |   |                     |  |      |  
|-------------------------------------------------- |  | ---------------------------------- | ------- | ------------------- | ---- | - | ---------- | - | ------------------- |  | ---- | -
|Selling, General and Administrative Expenses       |  | Fiscal2005                         |         | Percent ofNet Sales |      |   | Fiscal2004 |   | Percent ofNet Sales | 
|                                                   |  | (in thousands, except percentages) |        
|Professional Dental                                |  | $                                  | 60,672  |                     | 37.1 | % |            | $ | 54,313              |  | 35.0 | %
|Specialty Products                                 |  |                                    | 57,567  |                     | 38.2 |   |            |   | 45,311              |  | 35.5 |  
|                                                   |  |                                    |         |                     |      |   |            |   |                     |  |      |  
|Total Selling, General and Administrative Expenses |  | $                                  | 118,239 |                     | 37.6 | % |            | $ | 99,624              |  | 35.2 | %
|                                                   |  |                                    |         |                     |      |   |            |   |                     |  |      |  



Overall Company.Selling, general and administrative expenses for the six months ended March 31, 2005 increased by $18.6 million or 18.7% from the corresponding fiscal 2004 period. All corporate general and administrative expenses are allocated to the
Companys business segments in proportion to each segments net sales, regardless of the extent to which a particular expense may relate to one segment or the other.



Professional Dental.Increased selling, general and administrative expenses in the Professional Dental segment
resulted primarily from: (a) increased selling and marketing expenses (approximately $2.5 million), (b) increased expenses relating to foreign currency fluctuations (approximately $1.8 million), (c) increased general and administrative expenses
(approximately $1.8 million), (d) costs related to the closure of the Demetron facility (approximately $0.5 million), and (e) expenses of an acquired company (approximately $0.1 million). The increase in selling, general and administrative expenses
were offset by decreased research and development expenses (approximately $0.3 million).



Specialty Products.Increased selling, general and administrative expenses in the Specialty Products segment resulted primarily from: (a) expenses of an acquired company (approximately $5.2 million), (b)
increased selling and marketing expenses (approximately $3.5 million), (c) increased general and administrative expenses (approximately $2.3 million), (d) increased expenses related to foreign currency fluctuations (approximately $1.1 million), and
(e) increased research and development expenses (approximately $0.1 million).



Operating Income



|                       |  |                                    |        |                     |      |   |            |   |                     |  |      |  
|---------------------- |  | ---------------------------------- | ------ | ------------------- | ---- | - | ---------- | - | ------------------- |  | ---- | -
|Operating Income       |  | Fiscal2005                         |        | Percent ofNet Sales |      |   | Fiscal2004 |   | Percent ofNet Sales | 
|                       |  | (in thousands, except percentages) |       
|Professional Dental    |  | $                                  | 30,351 |                     | 18.6 | % |            | $ | 30,236              |  | 19.5 | %
|Specialty Products     |  |                                    | 29,962 |                     | 19.9 |   |            |   | 24,683              |  | 19.4 |  
|                       |  |                                    |        |                     |      |   |            |   |                     |  |      |  
|Total Operating Income |  | $                                  | 60,313 |                     | 19.2 | % |            | $ | 54,919              |  | 19.4 | %
|                       |  |                                    |        |                     |      |   |            |   |                     |  |      |  



As a result of the
foregoing, operating income for the six months ended March 31, 2005 increased by 9.8% or $5.4 million from operating income in the corresponding fiscal 2004 period.



Interest Expense



Interest expense was $9.6 million in the first six months of fiscal 2005, a decrease of $0.5 million from the corresponding fiscal 2004 period. The
decrease resulted from reduced average debt balances from $262.7 million in fiscal 2004 to $243.5 million in fiscal



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2005, partially offset by an increase in the average interest rate on debt from 7.56% in fiscal 2004 to 7.83% in fiscal 2005. The debt that was repaid in the
first six months of fiscal 2005 was adjustable rate debt with a lower average interest rate than the remaining debt. We expect to experience a slight increase in our average interest rate in the remaining quarters of fiscal 2005, as we
anticipate continuing to pay down our adjustable rate debt, which has a lower interest rate than our fixed rate debt. Debt is expected to decrease over the remainder of the fiscal year unless we make any significant acquisitions.



Income Taxes



Taxes on income in the first six months of fiscal 2005 were $16.2 million,
or 32.0% of income before taxes, an increase of $1.7 million from the prior fiscal period taxes on income of $14.5 million, or 33.0% of income before taxes.



Liquidity and Capital Resources



Our main source of liquidity is cash generated by operating activities and, to a lesser extent, borrowings under our credit facility (Credit
Facility). The borrowings under our Credit Facility are made from our $150.0 million revolving credit facility, which is part of our $350 million syndicated credit facility. As of March 31, 2005, $130.3 million of the $150.0 million revolving
credit facility was available for borrowing.



Cash provided by
operations for the six months ended March 31, 2005 was $36.4 million, as compared to $27.9 million in the comparable prior year period. Working capital increased to $187.1 million at March 31, 2005 from $161.4 million at September 30, 2004. The
current ratio increased to 3.1:1 at March 31, 2005 from 2.7:1 at September 30, 2004, primarily as a result of $36.4 million in cash provided by operating activities, $10.4 million in net borrowings, and $11.0 million received from stock option
exercises and the employee stock purchase plan; partially offset by $6.3 million in capital expenditures and $46.0 million paid for Innova LifeSciences Corporation.



Days sales outstanding (DSO) was 56.3 days at March 31, 2005, as compared to 56.7 days at March 31, 2004, and
58.8 days at September 30, 2004. Inventory days were 145 as of March 31, 2005, as compared to 133 days at September 30, 2004. Reasons for the increase from September 30, 2004 included the following: (a) the creation of additional inventory in both
the U.S. and Europe in anticipation of the January 31, 2005 expiration of our contract with union members at our Romulus, Michigan facility and (b) the acquisition of Innova LifeSciences in October 2004, which increased our inventory balances by
$4.0 million. We continue to examine the inventory needs of our business and expect our inventory days to decline over the remainder of the fiscal year, as we seek to reduce the inventory balances at our Romulus, Michigan facility and determine
whether the level of inventory historically maintained at Innova LifeSciences is required.



Capital expenditures for property, plant and equipment were $6.3 million and $5.3 million for the first six months of fiscal 2005 and fiscal 2004, respectively. We estimate our capital expenditures for all of fiscal
2005 to range from $18 to $23 million.



Net cash provided by
financing activities for the six months ended March 31, 2005 was $21.1 million, as compared to $25.3 million net cash used in financing activities for the same period in fiscal 2004. We borrowed $44.5 million in October 2004 to finance the
acquisition of Innova LifeSciences. Cash received from the exercise of stock options and the employee stock purchase plan of $11.0 million also contributed to the net cash provided by financing activities in the six month period ended March 31,
2005.



We expect to be able to finance our ordinary cash
requirements, including capital expenditures, debt service and operating leases from the funds generated from operations and amounts available under our existing Credit Facility.



Our ability to meet our debt service requirements and to comply with our debt covenants is dependent upon our future
performance, which is subject to financial, economic, competitive and other factors affecting us, many of which are beyond our control. We were in compliance with all such debt covenants as of March 31, 2005.



New Accounting Pronouncements



In December 2004, the FASB replaced SFAS 123, Accounting for Stock-Based
Compensation, with FASB Statement No. 123 (revised 2004), Share-Based Payment, (FAS 123R). FAS 123R requires companies to expense the estimated fair value of employee stock options and similar awards. On April 14, 2005, the U.S.
Securities and Exchange Commission adopted a new rule amending the compliance dates for FAS 123R. In accordance with the new rule, the accounting provisions of FAS 123R will be effective for us on October 1, 2005, the beginning of fiscal 2006. We
will adopt the provisions of FAS 123R using a modified prospective application. Under modified prospective application, FAS 123R, which provides certain changes to the method for valuing share-based compensation among other changes, will apply to
awards made after October 1, 2005, and awards outstanding on October 1, 2005 that



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are subsequently modified or cancelled. Compensation expense for outstanding awards for which the requisite service had not been rendered as of October 1,
2005 will be recognized over the remaining service period using the compensation cost calculated for pro forma disclosure purposes under FAS 123. At March 31, 2005, unamortized compensation expense, as determined in accordance with FAS 123, that we
expect to record during fiscal 2006 was approximately $1,337 before income taxes. We may incur additional expense during fiscal 2006, which cannot currently be determined, if new awards are granted during the remainder of fiscal 2005 and fiscal
2006. We are in the process of determining how the guidance regarding valuing share-based compensation as prescribed in FAS 123R will be applied to valuing share-based awards granted after the effective date and the impact the recognition of
compensation expense related to such awards will have on its consolidated financial statements.



In November 2004, the FASB issued SFAS No. 151, Inventory Costs,which clarifies the accounting for abnormal amounts of idle facility expense,
freight, handling costs, and wasted material. SFAS No. 151 will be effective for inventory costs incurred during fiscal years beginning after June 15, 2005. This statement also requires the allocation of fixed production overhead to the costs of
conversion be based on the normal capacity of the production facilities. We are currently assessing the effect that the adoption of SFAS No. 151 will have on our consolidated financial statements.



Off-Balance Sheet Arrangements



None.



Contractual Obligations



There have been no material changes to our contractual obligations outside the ordinary course of our business from those disclosed in our Annual Report
on Form 10-K for the fiscal year ended September 30, 2004.



Cautionary
Factors



This report contains, and other disclosures that
we make from time to time may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as anticipate, believe, continue, estimate,
expect, goal, objective, outlook, could, intend, may, might, plan, potential, predict, should, or
will or the negative of these terms or other comparable terminology signify forward-looking statements. You should read statements that contain these words carefully because they discuss our future expectations; contain projections of
our future results of operations or our financial conditions; or state other forward-looking information.



Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance or achievements to
be materially different from any future results, performance or achievements expressed or implied by any forward-looking statements. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee
future results. In addition to the assumptions and other factors referenced specifically in connection with such statements, the following factors could impact our business and financial prospects and affect our future results of operations and
financial condition:



We are a holding company and are
dependent upon dividends, interest income and loans from our subsidiaries to meet our debt service obligations.



We are a United States holding company and conduct substantially all of our operations through our subsidiaries, some of which are located in other
countries. Our ability to meet our debt service obligations will therefore be dependent on receipt of dividends, interest income and loans from our direct and indirect subsidiaries. Our subsidiaries may be limited in the amounts they are permitted
to pay as dividends to us on their capital stock as a result of statutory and other contractual restrictions. In particular, there are significant tax and other legal restrictions on the ability of non-U.S. subsidiaries to remit money to us. As a
result, some or all of our subsidiaries may not be able to pay dividends to us. If they do not, we may not be able to make debt service payments on our debt instruments.



We operate in a highly competitive industry and we cannot be certain that we will be able to compete effectively.



Numerous competitors participate in our business
segments, some of which have substantially greater financial and other resources than we do. Our principal competitors in the Professional Dental business segment include Dentsply International Inc., 3M ESPE and



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Ivoclar Vivadent Group; and in the Specialty Products business segment, our principal competitors include 3M Unitek, (an affiliate of 3M Company), GAC
International (a subsidiary of Dentsply), American Orthodontics, Align Technology, Inc., Nobel Biocare and Straumann. Some of the companies have a larger sales force and invest more heavily in research, product development and product marketing than
we do. As a result, we may not be able to achieve or maintain adequate market share or margins, or compete effectively, against these companies.



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



We rely upon our manufacturing operations to produce most
of the products we sell. While we do not presently anticipate any significant disruption of those operations, should a disruption occur, for any reason, such as strikes, labor disputes, or other labor unrest, power interruptions, fire, war, or other
force majuere, could adversely affect our sales and customer relationships and therefore adversely affect our business. In particular, we rely upon our facilities in Mexico to manufacture a substantial portion of our orthodontic products. Any
disruption in our ability to import those products into the United States could severely impact our orthodontics sales. Although most of our raw materials are available from a number of potential suppliers, our operations also depend upon our
ability to obtain raw materials at reasonable prices.



We
rely upon others to assist in the education and promotion of our products, and the loss of the participation of these individuals could adversely affect our net sales.



We work with various dental clinicians to educate the dental community on the features and benefits of our products. Some
clinicians, such as Dr. Dwight Damon, are a key component to our strategy for growing our sales. The inability or unwillingness of one or more of these clinicians to continue to assist us could negatively impact our ability to increase the sales of
certain significant products.



Our substantial level of
indebtedness could adversely affect our financial condition.



We presently have, and will continue to have, a substantial amount of indebtedness which requires significant interest payments. As of March 31, 2005, we had $230.8 million in total long-term borrowings (including current portion), and
$357.4 million in stockholders equity. In addition, subject to restrictions in the indenture for our Senior Subordinated Notes and our Credit Facility, we may incur additional indebtedness.



Our substantial level of indebtedness could have important consequences,
which include the following:



| |  |  | our ability to obtain additional financing for working capital, capital expenditures, acquisitions, or general corporate purposes may be impaired;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we must use a substantial portion of our cash flow from operations to service on our Senior Subordinated Notes and other indebtedness, which will reduce the funds available to us
for other purposes such as potential acquisitions and capital expenditures;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we are exposed to fluctuations in interest rates, to the extent our borrowings bear variable rates of interest, including through interest rate swap agreements;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we have a higher level of indebtedness than some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in planning for, or responding to,
changing conditions in our industry, including increased competition; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we are more vulnerable to general economic downturns and adverse developments in our business.
| | - |  | ----------------------------------------------------------------------------------------------



From time to time we have engaged in interest rate hedges to mitigate the impact of interest rate fluctuations. If we are
unable to, or elect not to employ interest rate hedges, it could have a material adverse effect on our profitability.



In addition, our Credit Facility contains numerous restrictive operating and financial covenants, which could limit our operating flexibility. Our ability
to pay or refinance our indebtedness will depend upon our future operating performance, which will be affected by general economic, financial, competitive, legislative, regulatory, and other factors beyond our control. Increases in interest rates



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would adversely affect our cash flows and therefore our results of operations. In addition, the terms of any additional debt or equity financing that we may
incur could restrict our operational flexibility and prevent us from pursuing business opportunities of value to our stockholders.



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



On October 1, 2002, we adopted SFAS No. 142, Goodwill and Other
Intangible Assets, which requires that goodwill and intangible assets that have an indefinite useful life be tested at least annually for impairment. Goodwill and other intangible assets with indefinite lives must also be tested for impairment
between the annual test in certain circumstances. As of March 31, 2005, goodwill and other intangible assets with indefinite lives represented approximately 43% of our total assets. If during the testing an impairment is determined, our financial
results for the relevant period will be reduced by the amount of the impairment, net of income tax effects, if any.



Future exchange rate fluctuations or inflation may adversely affect our results of operations.



We manufacture many of our products, including those in our Professional
Dental business segment, in our facilities in Mexico, Canada, Switzerland, Czech Republic and Italy. These products are supported by our sales offices in Europe, Japan, Australia, Czech Republic, South America and Mexico. In fiscal 2004, our foreign
facilities selling, general and administrative expenses represented approximately 34% of our consolidated selling, general and administrative expenses while our foreign sales represented approximately 46% of our total net sales.



We measure our financial position and results of operations from
substantially all of our international operations, other than most U.S. export sales, using local currency of the countries in which we conduct such operations and then translate them into U.S. dollars.



The reported income of our foreign subsidiaries will be impacted by a
weakening or strengthening of the U.S. dollar in relation to a particular local currency. Our U.S. export sales may also be affected by foreign currency fluctuations relative to the value of the U.S. dollar as foreign customers may adjust their
level of purchases according to the weakness or strength of their respective currencies versus the U.S. dollar. In addition, any future increases in the inflation rate in any country where we have operations may negatively affect our results of
operations. To the extent these local currencies depreciate against the U.S. dollar, our business, financial condition and results of operations could be adversely affected.



We have engaged in currency hedges to mitigate the impact of foreign currency fluctuations. If we are unable to, or elect
not to continue to employ currency hedges, it could have a material adverse effect on our net sales and profitability. As we expand our international presence, these risks may increase.



Acquisitions have been and continue to be an important part of our growth strategy; failure to consummate strategic
acquisitions could limit our growth and failure to successfully integrate acquisitions could adversely impact our results.



Our business strategy includes continued growth through strategic acquisitions, which depends upon the availability of suitable acquisition candidates at
reasonable prices and our ability to quickly resolve transitional challenges. Failure to consummate appropriate acquisitions would adversely impact our growth and failure to successfully integrate them would adversely affect our results. These
challenges include integration of product lines, sales forces and manufacturing facilities and decisions regarding divestitures, cost reductions, and realizing other synergies. Also, these challenges involve risks of employee turnover, disruption in
product cycles and the loss of sales momentum. We cannot be certain that we will successfully manage them in the future. Also, our Credit Facility and the indenture for the Senior Subordinated Notes limit our ability to consummate acquisitions by
imposing various conditions which must be satisfied.



Our
profitability may be affected by factors outside our control.



Our ability to increase sales, and to profitably distribute and sell our products, is subject to a number of risks, including changes in our business relationships with our principal distributors, competitive risks such as the entrance of
additional competitors into our markets, pricing and technological competition, risks associated with the development and marketing of new products in order to remain competitive and risks associated with changes in demand for dental services which
can be affected by economic conditions, health care reform, government regulation, and more stringent limits on expenditures by dental insurance providers or governmental programs.



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We strive to increase our margins by controlling our costs and by improving our manufacturing
efficiencies. There can be no assurance, however, that our efforts will continue to be successful. Margins can be affected by many factors, including competition, product mix, and the effect of acquisitions.



If we are unable to successfully manage growth and retain qualified
personnel, we may not be able to compete effectively and our revenues may drop significantly.



Our ability to continue to effectively promote and sell our products is dependent upon maintaining an experienced and qualified sales force. We
experience, from time to time, the loss of sales force personnel to our competitors and distributors. If, in any short period of time, we suffer the loss of numerous sales personnel we would likely incur a decrease in the sales of our products.



In addition, we intend to continue to expand our business over
time into new geographic regions and additional products and services, subject to the sufficiency of our cash resources and our ability to comply with the covenants in our various debt instruments. Our future performance will depend, in large part,
upon our ability to implement and manage our growth effectively. Our growth in the future will continue to place a significant strain on our administrative, operational, and financial resources. We anticipate that, if we are successful in expanding
our business, we will be required to recruit and hire a substantial number of new managerial, finance, accounting, and support personnel. Failure to retain and attract additional management personnel who can manage our growth effectively would have
a material adverse effect on our performance. To manage our growth successfully, we will also have to continue to improve and upgrade operational, financial and accounting systems, controls and infrastructure as well as expand, train and manage our
employees. Our failure to manage the future expansion of our business could have a material adverse effect on our revenues and profitability.



Our ability to hire and retain competent employees is also subject to a number of risks, including unionization of our non-union employees and changes in
relationships with our unionized employees. In particular, many of our non-management employees in Europe are subject to national labor contracts, which are negotiated from time to time at the national level between the national labor union and the
employees council. There is a risk of strikes or other labor disputes at our locations which are unionized or are subject to national contracts which could affect our operations.



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



In fiscal 2004, approximately 22% of our sales were made
through our top five independent distributors. Mergers and consolidation of our distributors have temporarily slowed sales of our products in the past and may do so in the future. We believe that the loss of either one of our top two distributors,
the only distributors who account for more than 5% of our consolidated net sales and who sell primarily into the dental segment, could have a material adverse effect on our results of operations or financial condition until we find alternative means
to distribute our products.



We are subject to product
liability litigation and related risks which could adversely affect our business.



Because many of our products are designed for use in and around a patients mouth, and because many of these products contain chemicals, metals, and other materials, we are subject to claims and litigation
brought by patients or dental professionals alleging harm caused by the use of or exposure to our products. We may need to devote substantial amounts of time and attention to defending ourselves and may also be required to pay large amounts in
settlement or upon judgment. We may also be required to or may voluntarily recall products, which would require substantial effort and cost. Litigation or a product recall could divert significant amounts of our managements time from other
important matters. Our business could also be adversely affected by public perceptions about the safety of our products, whether or not any such concerns are justified.



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



Our business is subject to quarterly variations in
operating results caused by a number of factors, including business and industry conditions, the timing of acquisitions, distribution chain issues, and other factors beyond our control. All these factors make it difficult to predict operating
results for any particular period. We may be subject to risks arising from other business and investment considerations that may be disclosed from time to time in our Securities and Exchange Commission filings or in other publicly written documents.



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Changes in international trade laws and in the business, political and regulatory environment abroad
could materially adversely affect our business.



Our
foreign operations include manufacturing facilities in Canada, Switzerland, Italy, the Czech Republic and Mexico. Accordingly, an event that has a material adverse impact on our foreign operations may materially adversely affect our operations as a
whole. The business, regulatory and political environments in countries where we have operations differ from those in the United States and our foreign operations are exposed to a number of inherent risks, including, but not limited to:



| |  |  | changes in international trade laws, such as the North American Free Trade Agreement, or NAFTA, affecting our activities in Mexico and Canada;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in local labor laws and regulations affecting our ability to hire and retain local employees;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | currency exchange restrictions and fluctuations in the value of foreign currency;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | potentially adverse tax consequences;
| | - |  | -------------------------------------



| |  |  | longer payment cycles;
| | - |  | ----------------------



| |  |  | greater difficulties in collecting accounts receivable;
| | - |  | -------------------------------------------------------



| |  |  | political conditions in countries where we have operations;
| | - |  | -----------------------------------------------------------



| |  |  | unexpected changes in the regulatory environment; and
| | - |  | -----------------------------------------------------



| |  |  | changes in general economic conditions in countries, such as Italy and Mexico, that have historically been less stable than the United States.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



If any of the events described were to occur, it could have a material
adverse effect on our business, financial condition and results of operations.



If we incur more indebtedness and greater interest expense, we may not be able to maintain our level of investment in research and development.



The indenture relating to our Senior Subordinated Notes and our Credit Facility permit us to incur significant amounts of
additional debt. If we incur additional debt, our interest expense will rise. We may find we do not have enough available cash to pay for the increased interest expense and other budgeted expenses. We may need to reduce our discretionary expenses,
including research and development, which could reduce or delay the introduction of new products. We may not be able to maintain our level of investment in research and development as we incur more indebtedness and greater interest expense.



Certain of our products and manufacturing facilities are
subject to regulation, and our failure to obtain or maintain the required regulatory approvals for these products could hinder or prevent their sale and increase our costs of regulatory compliance.



Our ability to continue manufacturing and selling those of our products that
are subject to regulation by the United States Food and Drug Administration, state laws or other domestic or foreign governments or agencies is subject to a number of risks, including the promulgation of stricter laws or regulations,
reclassification of our products into categories subject to more stringent requirements, or the withdrawal of the approval needed to sell one or more of our products. The costs of complying with these regulations and the delays in receiving required
regulatory approvals or the enactment of new adverse regulations or regulatory requirements may force us to cut back our operations, recall products, increase our costs of regulatory compliance, prevent us from selling a product or hinder our
growth.



We may be required to satisfy certain
indemnification obligations to Apogent, or may not be able to collect on indemnification rights from Apogent.



Pursuant to the terms of the agreements executed in connection with our spin-off from Apogent in December 2000, we and our U.S. subsidiaries, in general,
indemnify Apogent and its subsidiaries and affiliates against liabilities, litigation and claims actually or



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allegedly arising out of the dental business, including discontinued operations relating to our business. Similarly, Apogent and its U.S. subsidiaries
indemnify us and our subsidiaries and affiliates against liabilities, litigation and claims actually or allegedly arising out of Apogents business, including discontinued operations related to the laboratory business, and other operations and
assets not transferred to us. These indemnification obligations could be significant. The availability of these indemnities will depend upon the future financial strength of each of the companies. We cannot determine whether we will have substantial
indemnification obligations to Apogent and its affiliates in the future. We also cannot assure you that, if Apogent has substantial indemnification obligations to us and our affiliates, Apogent will have the ability to satisfy those obligations.



Except as may be required by applicable securities laws or
regulations, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



ITEM 3.Quantitative and Qualitative Disclosures About Market Risk.



Foreign Exchange Currency Risk Management



We operate internationally; therefore, our earnings, cash flows, and financial position are exposed to foreign currency risk from foreign currency
denominated receivables and payables, forecasted sales transactions, as well as net investments in certain foreign operations. These items are denominated in foreign currencies, including but not limited to the euro, Japanese yen, Swiss franc,
Mexican peso, Canadian dollar, Czech koruna and the Australian dollar.



For fiscal year 2005, our projected total foreign currency exposure is estimated to be approximately 80.8 million euros, 786.7 million Japanese yen, 7.7 million Canadian dollars, 17.5 million Australian dollars, 11.6 million Mexican peso,
60.8 million Czech koruna, and 18.1 million Swiss francs. We have put in place a strategy to manage our euro, Japanese yen, and Australian dollar cash flow exposure through the use of zero cost collar contracts. There were no such contracts in place
for the Canadian dollar, Mexican peso, Czech koruna and Swiss franc at March 31, 2005.



At March 31, 2005, an unrealized loss of $1.2 million (net of income tax), representing the fair value of the zero cost collars, is included in accumulated other comprehensive income. In addition, none of the foreign
currency cash flow hedges have been discontinued.



Zero cost
collar contracts in place as of March 31, 2005 are as follows (in thousands, except rates):



|         |  |            |  |                |  |              |  |                     |  |            |  |             
|-------- |  | ---------- |  | -------------- |  | ------------ |  | ------------------- |  | ---------- |  | ------------
|Currency |  | Trade Date |  | Effective Date |  | MaturityDate |  | LocalCurrencyAmount |  | Floor Rate |  | Ceiling Rate
|Euro     |  | 05/18/2004 |  | 04/15/2005     |  | 09/15/2005   |  | 21,000              |  | 1.17       |  | 1.22        
|Euro     |  | 10/22/2004 |  | 10/14/2005     |  | 12/15/2005   |  | 9,000               |  | 1.25       |  | 1.28        
|Euro     |  | 12/23/2004 |  | 01/17/2006     |  | 03/15/2006   |  | 9,000               |  | 1.33       |  | 1.39        
|Euro     |  | 03/18/2005 |  | 04/17/2006     |  | 06/15/2006   |  | 9,000               |  | 1.33       |  | 1.37        
|Yen      |  | 05/18/2004 |  | 04/15/2005     |  | 09/15/2005   |  | 360,000             |  | 115.00     |  | 107.30      
|Yen      |  | 10/21/2004 |  | 10/14/2005     |  | 12/15/2005   |  | 150,000             |  | 108.00     |  | 100.88      
|Yen      |  | 12/23/2004 |  | 01/17/2006     |  | 03/15/2006   |  | 150,000             |  | 104.00     |  | 94.80       
|Yen      |  | 03/18/2005 |  | 04/17/2006     |  | 06/15/2006   |  | 120,000             |  | 104.00     |  | 95.33       
|AUD      |  | 06/24/2004 |  | 04/15/2005     |  | 06/15/2005   |  | 1,800               |  | 0.67       |  | 0.69        
|AUD      |  | 06/24/2004 |  | 07/15/2005     |  | 09/15/2005   |  | 1,800               |  | 0.67       |  | 0.68        
|AUD      |  | 10/21/2004 |  | 10/14/2005     |  | 12/15/2005   |  | 1,800               |  | 0.71       |  | 0.72        
|AUD      |  | 12/23/2004 |  | 01/17/2006     |  | 03/15/2006   |  | 1,800               |  | 0.74       |  | 0.75        
|AUD      |  | 03/18/2005 |  | 04/17/2006     |  | 06/15/2006   |  | 1,800               |  | 0.75       |  | 0.80        



In June 2002, we
entered into four cross currency debt swap transactions to hedge our net investment in Hawe Neos and one cross currency debt swap transaction to hedge our net investment in SDS Japan. The agreements have effective dates of June 27, June 28, and July
1, 2002, and are contracts to exchange U.S. dollar principal aggregating a total amount of $45.0 million in exchange for a Swiss franc principal aggregating a total amount of 67.5 million and U.S. dollar principal amount of $4.0 million in exchange
for a Japanese yen amount of 486.0 million. Both the Swiss franc contracts and the Japanese yen contract mature on June 15, 2007. The mechanics of the agreements are similar to the original cross currency debt swap terminated on June 6, 2002.
However, the fixed interest rate to be paid to us on the U.S. dollar leg of the agreements is a rate equal to the Senior Subordinated Notes rate of 8 1/8%



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while the fixed interest rate to be paid by us on the Swiss franc leg of the agreements ranges from 6.39% to 6.45% and the Japanese yen leg of the agreements
is 3.65%, with the interest payments due semi-annually.



The
following are the details of the cross currency debt swaps (amounts in millions, except rates):



|           |  |                |  |          |  |     |      |          |       |   |        |            |          |       |  
|---------- |  | -------------- |  | -------- |  | --- | ---- | -------- | ----- | - | ------ | ---------- | -------- | ----- | -
|Trade Date |  | Effective Date |  | Maturity |  | US$ |      | Interest |       |   | FX Amt |            | Interest |      
|06/25/02   |  | 06/27/02       |  | 06/15/07 |  | $   | 15.0 |          | 8 1/8 | % |        | CHF 22.50  |          | 6.450 | %
|06/26/02   |  | 06/28/02       |  | 06/15/07 |  | $   | 15.0 |          | 8 1/8 | % |        | CHF 22.50  |          | 6.390 | %
|06/27/02   |  | 07/01/02       |  | 06/15/07 |  | $   | 7.5  |          | 8 1/8 | % |        | CHF 11.25  |          | 6.390 | %
|06/27/02   |  | 07/01/02       |  | 06/15/07 |  | $   | 7.5  |          | 8 1/8 | % |        | CHF 11.25  |          | 6.390 | %
|06/25/02   |  | 06/27/02       |  | 06/15/07 |  | $   | 4.0  |          | 8 1/8 | % |        | JPY 486.00 |          | 3.650 | %



At March 31, 2005, an
unrealized loss of $9.1 million (net of income tax), representing the fair value of the cross currency debt swap, was included in accumulated other comprehensive income.



Interest Rate Exposure - Interest Rate Risk Management



We use our Credit Facility and Senior Subordinated Notes to finance our operations. The Credit Facility exposes us to
variability in interest payments due to changes in interest rates. If interest rates increase, our interest expense increases. Conversely, if interest rates decrease, our interest expense also decreases. We entered into interest rate swap agreements
to manage fluctuations in cash flows resulting from interest rate risk. These interest rate swaps change a portion of our variable-rate cash flow exposure to fixed-rate cash flows. We continue to assess our exposure to interest rate risk on an
ongoing basis.



The table below provides information about our
debt obligations that are sensitive to changes in interest rates as of March 31, 2005. For these debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. Weighted average
variable rates are based on implied forward 3-month LIBOR rates in the yield curve at the reporting date. Fair value for fixed rate debt is based upon quoted market prices. Fair value for variable interest rate debt approximates the principle amount
of the debt. The information is presented in U.S. dollar equivalents.



|                      |  |                                    |       |   |      |   |       |      |  |   |       |   |  |      |        |   |            |   |       |            |  |   |         |   |  |   |        
|--------------------- |  | ---------------------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ------ | - | ---------- | - | ----- | ---------- |  | - | ------- | - |  | - | -------
|                      |  | Twelve Months Ending March 31,     |       |   |      |   |       |     
|Liabilities           |  | 2006                               |       |   | 2007 |   |       | 2008 |  |   | 2009  |   |  | 2010 |        |   | Thereafter |   |       | Fair Value
|                      |  | (in thousands, except percentages)
|Long-Term Debt:       |  |                                    |       |   |      |   |       |      |  |   |       |   |  |      |        |   |            |   |       |            |  |   |         |   |  |   |        
|Fixed Rate Debt       |  |                                    |      |   |      |   |      |      |  |   |      |   |  |      |       |   |            |   |      |            |  | $ | 150,000 |   |  | $ | 160,125
|Average Interest Rate |  |                                    | 8.125 | % |      |   | 8.125 | %    |  |   | 8.125 | % |  |      | 8.125  | % |            |   | 8.125 | %          |  |   | 8.125   | % |  |   |        
|Variable Rate Debt    |  | $                                  | 871   |   |      | $ | 769   |      |  | $ | 783   |   |  | $    | 53,989 |   |            | $ | 575   |            |  | $ | 23,763  |   |  | $ | 80,750 
|Average Interest Rate |  |                                    | 6.369 | % |      |   | 6.559 | %    |  |   | 6.719 | % |  |      | 6.879  | % |            |   | 7.024 | %          |  |   | 7.179   | % |  |   |        



For the quarter ended
March 31, 2005, the total net cost of converting from floating rate (3-month LIBOR) to fixed rate from a portion of the interest payments under our long-term debt obligations was approximately $0.2 million. At March 31, 2005, an unrealized loss of
$0.3 million (net of income tax) is included in accumulated other comprehensive income. Below is a table listing the interest expense exposure detail and the fair value of the interest rate swap agreements as of March 31, 2005 (in thousands):



|                 |  |                |        |      |         |       |          |           |           |          |           |                                |   |                     |  |   |      
|---------------- |  | -------------- | ------ | ---- | ------- | ----- | -------- | --------- | --------- | -------- | --------- | ------------------------------ | - | ------------------- |  | - | -----
|Loan             |  | NotionalAmount |        | Term |         | Trade |          | Effective |           | Maturity |           | Three MonthsEndedMarch 31,2005 |   | Fair Value(Pre-tax)
|Kerr B (Matured) |  | $              |       |      | 4 years |       | 1/2/2001 |           | 3/30/2001 |          | 3/31/2005 |                                | $ | 66.0                |  | $ |     
|Ormco B          |  |                | 25,345 |      | 5 years |       | 1/2/2001 |           | 3/30/2001 |          | 6/30/2006 |                                |   | 130.0               |  |   | 535.6
|                 |  |                |        |      |         |       |          |           |           |          |           |                                |   |                     |  |   |      
|Total            |  | $              | 25,345 |      |         |       |          |           |           |          |           |                                | $ | 196.0               |  | $ | 535.6
|                 |  |                |        |      |         |       |          |           |           |          |           |                                |   |                     |  |   |      



The fair value of
interest rate swap agreements designated as hedging instruments against the variability of cash flows associated with floating-rate, long-term debt obligations are reported in accumulated other comprehensive income. These amounts subsequently are
reclassified into interest expense as a yield adjustment in the same period in which the related interest on the floating-rate debt obligations affects earnings.



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ITEM 4.Controls and Procedures



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



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



PART II - OTHER INFORMATION



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



The Company, a Delaware corporation, held its Annual Meeting of Stockholders on February 8, 2005. A quorum was present at the Annual Meeting, with
37,806,010 shares out of a total of 39,720,311 shares entitled to cast votes represented in person or by proxy at the meeting.



PROPOSAL 1: To elect two directors to serve as Class II Directors until the 2008 Annual Meeting of Stockholders and until their respective successors are
duly elected and qualified.



The stockholders voted to elect
Dennis Brown and Kenneth F. Yontz to serve as Class II directors until the 2008 Annual Meeting of Stockholders and until their respective successors are duly elected and qualified. The results of the vote are as follows:



|              |  |            |  |           
|------------- |  | ---------- |  | ----------
|              |  | MR. BROWN  |  | MR. YONTZ 
|For           |  | 23,914,164 |  | 23,763,214
|Withheld From |  | 13,891,846 |  | 14,042,796



The terms of office as
directors of Floyd W. Pickrell, Jr., James R. Parks, Donald N. Ecker and Robert W. Klemme continued after the meeting.



PROPOSAL 2: To consider and vote upon a proposal to approve the Companys 2005 Outside Directors Stock Option Plan.



The stockholders voted to approve the Companys 2005 Outside
Directors Stock Option Plan. The results of the vote are as follows:



|                 |  |           
|---------------- |  | ----------
|For              |  | 25,460,542
|Against          |  | 8,828,487 
|Abstentions      |  | 1,154,394 
|Broker Non-Votes |  | 2,362,587 



PROPOSAL 3: To
consider and vote upon a proposal to approve the Companys 2005 Long-Term Incentive Plan.



The stockholders voted to approve the Companys 2005 Long-Term Incentive Plan. The results of the vote are as follows:



|                 |  |           
|---------------- |  | ----------
|For              |  | 23,928,830
|Against          |  | 10,367,548
|Abstentions      |  | 1,147,045 
|Broker Non-Votes |  | 2,362,587 



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##### Table of Contents

ITEM 6.Exhibits



See the Exhibit Index included on the last page in this report, which is incorporated herein by reference.





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##### Table of Contents

SIGNATURE



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



|                   |  |  |  |                                             
|------------------ |  |  |  | --------------------------------------------
|                   |  |  |  | SYBRON DENTAL SPECIALTIES, INC. (Registrant)
|                   |  | 
|Date: May 10, 2005 |  |  |  | /s/ GREGORY D. WALLER                       
|                   |  |  |  | Gregory D. Waller Vice President - Finance, 
|                   |  |  |  | Chief Financial Officer & Treasurer*        

---

|* | executing as both the principal financial officer and a duly authorized officer of the Company.
|- | -----------------------------------------------------------------------------------------------



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##### Table of Contents

SYBRON DENTAL SPECIALTIES, INC.

(THE REGISTRANT)

(COMMISSION FILE NO. 1-16057)

EXHIBIT INDEX

TO

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2005



|               |  |                                                                                                                                                                      |  |                                                                                                                                                             |  |              
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------
|Exhibit Number |  | Description                                                                                                                                                          |  | Incorporated HereinBy Reference To                                                                                                                          |  | FiledHerewith
|3.1            |  | (a) Restated Certificate of Incorporation of the Registrant                                                                                                          |  | Exhibit 3.1 to Amendment No. 2 to the Registrants Registration Statement on Form 10/A filed on November 9, 2000 (File No. 1-16057) (the Form 10/A No. 2) |  |              
|               |  |                                                                                                                                                                      | 
|               |  | (b) Certificate of Designation, Preferences and Rights of Series A Preferred Stock                                                                                   |  | Exhibit 3.1(b) to the Registrants Form 10-K for the fiscal year ended September 30, 2000                                                                   |  |              
|               |  |                                                                                                                                                                      | 
|3.2            |  | Bylaws of the Registrant                                                                                                                                             |  | Exhibit 3.2 to the Form 10/A No. 2                                                                                                                          |  |              
|               |  |                                                                                                                                                                      | 
|10.1           |  | Sybron Dental Specialties, Inc. 2005 Outside Directors Stock Option Plan                                                                                            |  | Exhibit 10.1 to the Registrants Form 8-K dated February 8, 2005 and filed on February 11, 2005                                                             |  |              
|               |  |                                                                                                                                                                      | 
|10.2           |  | Sybron Dental Specialties, Inc. 2005 Long-Term Incentive Plan                                                                                                        |  | Exhibit 10.2 to the Registrants Form 8-K dated February 8, 2005 and filed on February 11, 2005                                                             |  |              
|               |  |                                                                                                                                                                      | 
|10.3           |  | Form of 2005 Long-Term Incentive Plan Nonqualified Stock Option Agreement                                                                                            |  | Exhibit 10.1 to the Registrants Form 8-K dated May 4, 2005 and filed on May 5, 2005                                                                        |  |              
|               |  |                                                                                                                                                                      | 
|10.4           |  | Form of Indemnification Agreement for Directors                                                                                                                      |  | Exhibit 10.2 to the Registrants Form 8-K dated May 4, 2005 and filed on May 5, 2005                                                                        |  |              
|               |  |                                                                                                                                                                      | 
|10.8           |  | Termination Agreement dated as of November 16, 2004 between Sybron Dental Specialties, Inc. and Gregory D. Waller                                                    |  | Exhibit 10.1 to the Registrants Form 8-K dated November 15, 2004 and filed on November 16, 2004                                                            |  |              
|               |  |                                                                                                                                                                      | 
|10.8(a)        |  | Amendment to Termination Agreement dated as of November 16, 2004 between Sybron Dental Specialties, Inc. and Gregory D. Waller                                       |  | Exhibit 10.1 to the Registrants Form 8-K dated December 23, 2004 and filed on December 30, 2004                                                            |  |              
|               |  |                                                                                                                                                                      | 
|10.8(b)        |  | Second Amendment to Termination Agreement, effective as of November 16, 2004, between Sybron Dental Specialties, Inc. and Gregory D. Waller                          |  | Exhibit 10.1 to the Registrants Form 8-K dated March 31, 2005 and filed on April 11, 2005                                                                  |  |              
|               |  |                                                                                                                                                                      | 
|31.1           |  | Chief Executive Officers Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002           |  |                                                                                                                                                             |  | X            
|               |  |                                                                                                                                                                      | 
|31.2           |  | Chief Financial Officers Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002           |  |                                                                                                                                                             |  | X            
|               |  |                                                                                                                                                                      | 
|32             |  | Chief Executive and Chief Financial Officers certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 |  |                                                                                                                                                             |  | X            



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